Special Assessments
Also see: Assessment of Common Expenses
Short Answer
A demand for unit owners to
pay an additional contribution to the common expenses over and above the amount
determined in reference to the condominium budget.
Definition
A condominium board of directors has authority generally to impose assessments of common expense contributions on unit (or POTL) owners. Typically, a budget is made which determines in advance what the expenses of the condominium should be, and the contributions of the owners toward providing funds to pay such expenses is determined by applying the percentages allocated to the units (or POTLs) in the declaration (under the current legislation, these are set out in Schedule D). Regular common expense contributions are typically required to be paid monthly, usually at the first of the month, comparable to the usual manner in which a landlord collects rent.
At times, expenses arise that were not, or not adequately, budgeted for, but for which the condominium must nevertheless pay. There can also be unexpected, or unexpectedly early, costs arise that deplete reserve funds to an extent, or at a time, not contemplated by the condominium's reserve fund study and plan. The condominium corporation cannot be excused from paying such costs simply because they were not contemplated or simply because planning or budgeting was not sufficiently accurate.
In such cases, the board of directors may have no choice but to impose a 'special assessment' of common expense contributions on the unit owners. Sometimes this is also called an 'extraordinary' assessment.
There are no provisions in the Condominium Act, 1998, that talk about special assessments. The need for a special assessment can arise whenever there is an unanticipated expense that is not able to be covered by the existing and anticipated available funds of the corporation.
At times, expenses arise that were not, or not adequately, budgeted for, but for which the condominium must nevertheless pay. There can also be unexpected, or unexpectedly early, costs arise that deplete reserve funds to an extent, or at a time, not contemplated by the condominium's reserve fund study and plan. The condominium corporation cannot be excused from paying such costs simply because they were not contemplated or simply because planning or budgeting was not sufficiently accurate.
In such cases, the board of directors may have no choice but to impose a 'special assessment' of common expense contributions on the unit owners. Sometimes this is also called an 'extraordinary' assessment.
There are no provisions in the Condominium Act, 1998, that talk about special assessments. The need for a special assessment can arise whenever there is an unanticipated expense that is not able to be covered by the existing and anticipated available funds of the corporation.
What you need to know…
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…as a Unit Owner
Unit (or parcel of tied land) owners have the same obligation to pay special assessments of common expenses as they have to pay regularly assessed common expenses. A failure or refusal to pay a special assessment as and when required by the board of directors gives rise to a lien against the owner’s unit. Condominium boards do not require unit owner approval for a special assessment, unless the by-laws of the condominium specifically require it. |
…as a Board Member or Manager
The decision whether or not to impose a special assessment is to be made by the board of directors, who should seriously consider and compare all other reasonable funding options before making this decision. Notice of a special assessment should be delivered in writing to the unit owners. The notice needs to be clear as to the amount due, when it is due, and the permitted method(s) of payment. A lack of clarity can cause difficulties later when it is necessary to enforce payment. Directors and managers also need to ensure that current and known upcoming special assessments are adequately disclosed in status certificates, or the owner who relied on the same when purchasing his or her unit might be released from the obligation to pay. A special assessment should not be used for the purpose of creating a surplus. |