Condo owners have to pay various yearly charges in maintenance costs, common expenses, and more. An unexpected expense that many owners dread is a special assessment condo.
This expense can cause a condo owner to exceed their yearly budget and disrupt their savings. If you’re facing such a condo fee and want to fight it or know more about it, dive into the guide below.
What Is A Special Assessment Condo?
A special assessment condo is an unexpected one-time yearly fee that a condo owner may be required to pay. It is implemented to cover major repairs such as the re-roofing of the building after a rainstorm.
Other things that may be covered under a special assessment include:
- Repainting
- Repaving
- Funding of a lawsuit involving your condo’s corporation
Remember, a special assessment condo can only be imposed if the corporation’s common expenses and reserve funds are inadequate.
Common Expenses Condo Decoded
A common expense is an expense that covers the repair or maintenance of common elements of a condo. The board of directors imposes it according to The Condominium Act.
For example, an elevator in your condo unit may require repairs due to an electrical fault. In such cases, the condo corporation can use the common expenses fund to fix the issue.
Typically, all unit owners contribute to the common expenses fund. This also includes people who don’t use common elements.
Your board of directors will determine the amount each owner must contribute towards the common expenses fund. Owners can pay the amount in installments according to the due dates set by the condo bylaws.
When the common expenses fund isn’t enough to cover the repair of a common element, a special assessment condo may be necessary.
Reserve Funds: How Do They Affect Special Assessment Condo
A reserve fund is created by a portion of the common expenses fund for major repairs of assets in a condo every year.
The specific amount that is allotted to the reserve fund from every common expense payment is determined by the condo corporation.
You can consider it as a rainy day fund that is only used for major repairs after disasters or other incidents. However, sometimes a reserve fund may not be adequate to cover specific damages.
In such cases where a reserve fund and common expenses fund are inadequate, a special assessment must be determined and imposed.
How Are Condo Assessments Determined?
A condo special assessment is a special charge that may be implemented to cover the remaining cost difference after the reserve fund and common expense funds are used up completely for a repair.
Let’s look at how condo assessments are determined and imposed in Ontario:
1. The Board Determines The Work That Has To Be Done
Before a special assessment can be imposed, the board of directors must determine the extent of work to be done in a condo unit.
For example, if a non-functional elevator requires replacement, the directors must determine the work to be done to get a new elevator.
When getting a new elevator, the overall expenses will include:
- Cost of the new elevator
- Installation fee
- Transportation fees for getting the elevator from the seller to the condo
The board will have to estimate the costs of all these things to determine the overall work to be done and its expenses.
2. Advice From Professionals Is Sought About The Need For A Special Assessment Condo
Once the scope of work that must be done is determined by the board, a review by professionals should be conducted. An expert must check whether the estimated costs are accurate and if they require any changes.
A professional will also check whether the common expenses fund and reserve fund can cover the total expenses. If they cannot, the expert will then have to determine the total special assessment amount.
The board will also have to calculate the special assessment cost that each condo owner will have to pay. That is because the contribution each person must make will be different, depending on their unit size and other factors.
3. Property Owners Are Informed About The Special Assessment Condo
Special assessment condo is determined by expert analysis of condo funds to decide the contribution each owner must make towards the cost difference to cover major damages.
Once this cost is determined, an information meeting is held by the board of directors to inform all owners about the special assessment to be imposed.
Condo Special Assessment Rules
Every board must follow condo special assessment rules before imposing one. If your board violates the rules, you may learn how to fight a special assessment Ontario and prove the violation.
So here are the condo special assessment rules you must know about before learning how to fight a special assessment Ontario:
1. Every Condo Owner Must Be Notified Before A Special Assessment Condo
A condo special assessment cannot be implemented before all owners are notified about the special charge. This is why the condo corporation is required to hold a meeting once the special assessment fee is determined.
The board must also explain the reasons for imposing special condo expenses and the payment conditions every owner will be expected to follow.
They must offer written evidence to prove the charge they’re demanding is fair. The corporation’s lawyer must also be present in the meeting to clear any doubts that may arise in the meeting.
2. All Condo Owners Must Pay Special Assessment Condo
Once the board has explained the need for special condo expenses, all condo owners must pay the fee. A specific timeline will be set for the payment of the special assessment.
For example, your board may set up an installment plan of three quarterly payments. You must follow the deadlines and pay the fee to avoid any consequences.
Of course, if you don’t want to pay the charge, you may consider protesting against the special assessment. However, if the results aren’t in your favour, you will have to pay the condo expenses regardless of your will.
3. An Owner Must Face Consequences If They Don’t Pay Special Assessment
Condo special assessment rules state that owners must face the consequences if they’re avoiding payments. For example, the condo corporation can put a lien on your unit.
The board may also perform other actions such as:
- Asking your mortgage lender to pay the special assessment if your mortgage payments are still left
- Place interest on the unsettled amount
- File a lawsuit against you
To avoid these consequences, you must protest the special assessment and win the case or pay the expenses on time.
How To Fight A Special Assessment Ontario?
To protest condo expenses, you must know how to fight a special assessment Ontario. So let’s look at how you can do that:
1. A Large Group Can Bring Concerns About Special Assessment Condo In Front Of The Board
Everyone who knows how to fight a special assessment Ontario knows that the first step must always be negotiating with the board. You must bring your concerns about the special charge to the condo’s corporation.
The board may listen to you and cancel the special assessment. This is especially true if a large group of condo owners protest against the expenses.
However, your request is likely to be denied if you’re protesting against the charge alone.
2. Prove The Board Is In Violation Of The Condominium Act Or Bylaws
If negotiating with the board doesn’t prove to be fruitful, a condo owner can pursue the legal path. You can hire a special assessment condo lawyer to help you fight against the corporation.
Remember a legal win will only be possible if you can prove the board is violating the condo’s bylaws. You can also make a case if the corporation is violating The Condominium Act.
When condo owners cannot prove the fee is unlawful, the court will decide in favour of the corporation. So you will be required to pay the charge if you don’t have an expert lawyer who can help you win.
Myths About A Special Assessment Condo
A special assessment condo is a unique charge that may not imposed every time a repair is required. This is why many owners believe in misconceptions about it. Here’s what you need to know about them:
1. The Value Of Special Assessment Condo Never Changes
Special assessment condo is always determined according to the reserve fund a condo corporation has and the amount remaining to complete the repair.
This means the value of special assessment will never be constant. It will change according to the repair done.
If you paid $1,000 five years ago in special assessment, this does not mean the next special assessment will cost you the same.
You may be required to pay more than $1,000 the next time a major repair is being done and a special assessment is imposed. The charge may also be $500 if the reserve fund is covering most of the cost.
So you must never expect special condo expenses to always be the same.
2. Condo Special Assessment Covers Luxury Amenities
Various condos have luxury amenities such as a spa and private pool zone for owners. However, these luxuries are not covered by special assessments usually.
A special assessment will only cover the difference cost of a major repair of a common element in a condo. So every time you pay a special fee, you should not expect any improvements in the luxury amenities of your condo.
3. All Your Condo Needs Will Be Covered By Condo Special Assessment
Many condo owners believe that special assessments will cover repairs of their individual homes, but that’s not true. This additional charge is only for major repairs of the entire building.
This means you will still have to maintain your home and get its repairs done on your own. Getting your unit inspected biannually may help you keep up with any repairs that may be needed in your home.
4. Special Assessment Condo Ontario Increases After Every Few Years
It is not necessary for special assessment Condo Ontario to increase after every few years. The amount is determined according to the repair being done.
So the amount may be more or less than what you paid in previous years in special assessments.
5. You Have To Pay Special Assessment Condo Ontario Only Once In Your Lifetime
Special assessment is a one-time yearly charge that condo owners may have to pay for repairs. It is not a once-in-a-lifetime charge because your condo may have damages in the future that may not be covered by the reserve fund.
So while a special assessment can only be charged once a year, it can be demanded multiple times over the next few years.
The frequency of the charge usually depends on the budgeting of condo expenses and how much reserve fund the corporation has.
FAQs
What Is A Special Assessment Condo Example?
If your condo experiences paint damage after a rainstorm, repairing it may require a special assessment to cover repair costs.
Are Condo Special Assessments Tax Deductible In Canada?
Condo special assessments are not tax deductible in Canada, especially if you’re using the place as your primary residence.
Does Title Insurance Cover Special Assessments In Ontario?
Title insurance can only protect you against special assessments that were not disclosed in the Status Certificate. If they were disclosed, the title insurance will not cover the assessments.
Who Pays Special Assessments At Closing In Ontario?
The seller is required to pay special assessments at house closing until the ownership is officially transferred.
If the buyer has ownership during closing on paper, they will be required to complete the remaining special assessment payments.
Phone Us Today To Fight Your Special Assessment Condo In Ontario
Special assessment Condo is an additional charge to cover the cost difference remaining after the usage of reserve funds. You can protest the charge on different grounds, such as the violation of the condo bylaws by the board.
Whether you want to understand special assessments or fight against them, having an expert lawyer with you will be helpful. So phone us today to meet our team of attorneys.
Author Profile
- Barnett Law is a trusted and knowledgeable lawyer in Scarborough. Her expertise spans real estate law, family law, adoptions and fertility law. A lawyer by profession and a humanitarian by heart, Athena Narsingh Barnett wants to help people become more familiar with the legal system and be well-informed to make important legal decisions.
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