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The Hottest Topic Of All

October 27th, 2014

By far the most common concern among prospective condo purchasers and the most common complaint from property owners is the dreaded Special Assessment.  No one likes to get a letter from the management company that tells them that there is a special assessment on their property and they now have a large bill they need to pay. But, they are a reality, they are common and in many cases they are necessary.

The only reason a special assessment is EVER levied is there is not enough money in the reserve fund to deal with a major repair. Condominium boards are obliged to have a five year reserve plan study done, rarely is there a surprise repair that falls outside of the study but it happens and has to be dealt with. Its important to understand that the likelihood of getting a special assessment is tied directly to the condominium fees you pay and whether they are adequate to build your reserve fund to a level that unanticipated expenses can be covered.

Often, condo buyers will gravitate to a particular property when they see the condominium fees are low. The assume that means the building is well run and that the condo fees are a good deal. In reality though that is not the case. If your condo fees are at a level comparable with other buildings of the same age and style they are probably set properly, if the are significantly below other comparable though there is a significant possibility that building the reserve fund has been sacrificed to keep them low.

As the old adage goes....You can pay now....or you can pay later. Nothing is more true than that when it comes to maintaining your building. You will either pay realistic fees now with little chance of a special assessment down the road...or low fees now with a much greater chance of a special assessment in the future.

On occasion, even the best run buildings with the most robust reserve funds can run into issues. An expensive repair required that no one could have anticipated can blind side even the most diligent of condo boards. When that happens it really should be viewed the same way it would be if you owned a house and the way you would view it if your 6 year old furnace had a major breakdown one year after warranty expires but not even half way through its lifecycle. Things happen and nothing is guaranteed.

My advice is simple. When you are looking at purchasing a condo pay special attention to the reserve fund, make sure you get a copy of (and read) the reserve fund study and compare your condo fees to other similar buildings. Whether they are lower than they should be (which obviously means the risk of special assessment is higher) or the same or higher than comparable properties, don't make your decision to purchase based on them and understand that really, if you are paying higher condo fees you really are only just paying in advance to avoid a special assessment and if you are paying low condo fees your saving money every month now but there is a likelihood that you will be paying back what you save now in a lump sum sometime in the future.

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"There is something to be said for Intuition and Experience. When Connie looked at my condo she told me that my building was undervalued and that we could ask more for my unit than any unit had sold for in the building before. Throwing the Market Analysis aside she said lets try it. Within a month my unit was sold for far more than I had ever expected and now...everyone in the building loves her because everyones unit has gone up in price. Just an Awesome Realtor !"

M. Muzzolini - June 2014

"Decided to downsize and move to the river valley. Could not be happier, not only does our condo match our lifestyle but Connie was great when it came to negotiating on my behalf. When she speaks....other realtors listen and Im sure that her guidance and reputation were critical in getting the perfect condo at a fair price for both me and the seller."

W. Strang - August 2014