StreetSide Developments Blog

Everything You Need To Know About Condo Assessments

Posted on December 23, 2016

everything-need-know-about-condo-assessments-featured-image.pngWhether you’re a new condo owner or a prospective buyer, you probably know that every condominium board collects condo fees, which contribute to the maintenance and repair of the building and grounds. On occasion, condo boards also exercise what’s called a condo assessment – or special assessment. These happen to cover the cost of a specific repair or upgrades. While extremely rare (especially in a new condo development) it’s important to understand the particulars should the term arise when buying your new Calgary condo and how it differs from your regular condo fees.

What Is A Condo (Special) Assessment?

A condo assessment is a set payment levied by a condominium board and designated for a specific repair or upgrade.  

How Are Condo Assessments Different Than Condo Fees?

A condo assessment is not included in a condo fee. Condo fees contribute to the on-going maintenance and repairs that are part of low maintenance condo living. Condo assessments are financial contributions that can be requested of condominium unit holders in addition to the condo fees.

How Are Condo Assessments Different Than Reserve Funds?

A condo reserve fund is money set aside by the condominium corporation for significant, long-term repairs to a condo building. These can include things like a roof replacement or parking lot repaving. A portion of every unit holder’s condo fee contributes to the reserve fund. 

Condo assessments are one-off fees that are usually designated for an unexpected, critical repair or replacement that exceeds the reserve fund.

everything-need-know-about-condo-assessments-origins-at-cranston-development-image.pngWhen Do Condo Assessments Typically Arise?

Condo assessments are far more common in older condo developments. This is due to the higher degree of maintenance and repairs needed to keep up with an aging building. Even then, assessments are typically only imposed under extraordinary circumstances such as emergency repairs arising from unforeseen circumstances, like major damage from a hailstorm.

Common examples might include a critical repair or a capital expense that exceeds the condominium’s operating budget.

How Are Condo Assessments Determined?

Condo assessments are typically imposed by the condominium board in the same way a condo corporation's operating budget is determined by the board. 

How Are They Calculated?

Condo assessments are calculated based on unit factor. A unit factor is a proportionate share of the common property divided amongst each unit. This determines the unit owner's share for special assessments. Unit factors are generally proportional to the size of the owner’s condominium unit.

How Are Condo Assessments Paid?

Condo assessments are usually paid as a one-time lump sum or an additional regular payment for a pre-determined period of time.

As A Prospective Homebuyer, What Should I Know?

As a prospective unit holder, it is important to ask if there are any pending or on-going condo assessments. Special assessment fees can dramatically increase a total monthly payment, depending on a repair.

Requesting a history of condo assessments is also important for prospective homeowners. If a condominium has a history of special assessments, it’s important to inquire about the integrity of the build before purchasing. It's also helpful to ask about the condo reserve fund and its readiness for future repairs and upgrades.

Condo assessments in new developments are highly unlikely. New developments benefit from durable, high-quality materials and are backed by a new home warranty. In the rare event an assessment does occur, condo fees and reserve funds usually cover the vast majority of repairs, both on-going and long-term. As a general principle, it’s wise to take a good look at the history of a condominium building and understand the fee structure, prior to purchasing a unit.

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Topics: condo fees, condo living, mortgage & financial

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