Boston Real Estate


What are Boston condo special assessments?

What are special assessments? They may not be the sexiest part of Boston real estate discussion, but we have to know it all, friends!

Generally speaking, this situation comes up in a Boston condo building, when the condominium association doesn’t have enough money in the reserves to complete repairs. You have to have enough money in the reserves to cover repairs, OR the special assessment gets passed to the condo owner.

Example: If your condo building needs a new roof, and there’s not enough in the reserves, you have to pay for it!

My rule of thumb for HOA reserves can help out here. I recommend 10K per unit. 

Boston Real Estate and the Bottom Line

Before placing an offer on a Beacon Hill or Boston Seaport condo (any condo for that matter) ask if there are any scheduled special assessments


What You Need to Know About Boston Condo Special Assessments

As a Boston condo owner, imagine waking up one morning to a hefty bill landing at your doorstep— a bill you didn’t anticipate or budget for. That’s exactly the surprise that a special assessment can bring. Amid Boston’s dynamic landscape of historic brownstones and modern high-rise living, understanding what special assessments are becomes crucial to navigating condo ownership in the famed city. Brace yourself as we delve into the ins and outs of Boston condo special assessments – the icebergs lurking beneath the enticing surface of urban condominium living.

Condo special assessments in Boston refer to a fee that can be assessed to individual unit owners for unexpected expenses, such as major repairs or improvements. These fees are typically proportional to the size of the owner’s unit and can be one-time payments or spread out over a period of time. It is important for potential buyers to understand the possibility of these fees when purchasing a condo in Boston and to budget accordingly to avoid any financial surprises.

Understanding Boston Condo Special Assessments

Living in a condo radiates a sense of community living that many homeowners find fulfilling. Yet, even with this cohesiveness, it’s not uncommon to encounter special assessments for the maintenance and upkeep of the complex’s common areas. It is imperative to acquire a complete understanding of this process to avoid any surprises down the line.

In 2016, residents of a luxury Boston condo were hit with an unexpected $3 million special assessment for renovations, catching them entirely off guard. This expense was distributed among the residents over three years, making it more manageable but still financially straining.

Think of special assessments like going to the dentist for a filling. When you neglect regular check-ups and cleanings, it can lead to invasive procedures and steep costs.

A special assessment is when all owners in a condominium complex share the cost of a particular expense or expenses, usually related to unexpected costs or capital improvements. These can come at any time and are in addition to your regular monthly condo fees that cover recurring operational expenses.

These funds are used for shared spaces within the building or the HOA itself rather than on individual units’ repairs or replacements. The purpose can range from critical repairs following an emergency or damage caused by age or natural wear-and-tear to upgrade facilities. Often times they cover things such as roof repair/replacement, elevator upgrades, lobby renovations or energy infrastructure installations.

The main disadvantage of special assessments is the lack of predictability regarding if and when an assessment will occur and how much it will cost each individual owner. Many homeowners struggle with having to budget for another monthly payment above what they have grown accustomed through association fees; however, emergency situations do arise that require immediate attention beyond what normal reserves can cover.

Let’s take a closer look at the different types of special assessments that homeowners in Boston condos may encounter.

Different Types of Special Assessments

There are several kinds of special assessments. Understanding the different types of special assessments will help you understand their underlying conditions and requirements.

Individual Assessments: This kind of evaluation applies to critical repairs or replacement costs initiated by individual unit owners. For example, it can be as small as fixing interior damage or preventing moisture from seeping through bathroom tiles into adjacent units.

Let’s say an owner installs a new water heater based on a personal preference rather than general consensus. The cost of this installment becomes the individual owner’s responsibility, and they are required to pay for the upgrade in full.

Capital Improvement Assessments: These assessments are for upgrades or improvements made throughout the entire condominium project, and they’re viewed as capital investments. These range from installing high-tech security systems to upgrading elevators to enhance energy efficiency throughout the complex. Capital improvement assessments usually require a more extended payment plan as they tend to cost significantly more than regular operational expenses.

Emergency Assessments: These evaluations come up when immediate attention is significant for unexpected mishaps in need of urgent attention, such as storm damage, plumbing nightmares, fire damage, and so on. They require fast payments by owners regardless of how long they’ve had ownership in the complex.

A Boston condo resident experienced $30k in water damage due to failure to properly insulate piping during bitter winter months caused by an elongated power outage. The association gave residents only two weeks’ notice before needing to issue an emergency assessment payment for the needed repairs.

A common misconception among owners is that HOAs have sufficient enough reserve funds for emergencies so no further contributions from themselves would be necessary. However, while it is the operating board’s responsibility to budget for and appropriately build reserve funds, there can be unexpected costs that quickly exhaust existing funds.

  • According to the Council of Boston Residential Buildings, as of 2022, approximately 40% of condo associations in Boston had imposed a special assessment in the previous five years.
  • A study by Community Associations Institute found that, out of those condos imposing special assessments, nearly 50% leveraged them to cover general maintenance costs unaccounted for in regular HOA fees.
  • The same study reported that the average special assessment fee in Boston in 2021 was $5,000 per unit.

The Procedure for Levying a Special Assessment

If you are a Boston condo owner, understanding the procedure for levying a special assessment is crucial because it ensures that you comply with the process and pay the correct amount. The responsibility of levying a special assessment falls on the condo association’s board of directors, who must follow strict guidelines to avoid legal conflicts.

In most cases, the decision to levy an assessment begins with the discovery of a significant repair or maintenance issue that exceeds the budgeted funds. For example, if there is damage to the common areas due to natural disasters such as earthquakes or floods or unforeseen circumstances such as accidents that cause property damage. In such cases, a meeting of the board must be called immediately so that they can evaluate the situation and decide whether a special assessment is necessary.

For instance, let’s say there has been heavy snowfall in Boston during winter, which led to extensive roof damage. If this happens, the board may decide that immediate repairs are necessary to prevent further damage to other units’ roofs and adjust their budgets accordingly by levying a special assessment on all unit owners.

After making this decision, the board must notify all unit owners about the need for a special assessment in writing. They should also specify the amount required for payment and when they are due. Unit owners have the right to weigh in on any proposed assessments and can contest it by submitting written objections within a specified period.

If objections are raised, the board will hold another meeting after considering them where unit owners can present their arguments face-to-face before reaching a final decision.

Now that you understand how special assessments come about and how they are determined, let’s look at what obligations exist for new and existing condominium owners.

Obligations of New and Existing Owners

When you plan on purchasing a Boston condo unit or become an excising owner, always take the time to read the condo association’s by-laws thoroughly. Doing this will equip you with detailed information on the extent of your responsibilities as a unit owner.

When a new owner purchases a Boston condo, they automatically inherit all special assessment obligations that existed during the property’s previous period. Still, they are free from any future assessments for repairs or maintenance conducted before they got in possession of the property. However, new owners become liable for all previous and future assessments if there was not an official closing before levying any assessment.

So let’s say a new buyer purchased a condo in Boston on August 1st, and on September 1st, an assessment was issued to retrofit the elevators. In this case, since the closing did not happen before September 1st, the new owner will have to pay their share of this assessment.

Furthermore, existing owners must keep up with their payments even if they decide to sell their unit midway through an assessment period. This is because the duty to pay any assessment doesn’t end when a unit is sold; it transfers over to the next buyer.

It’s essential to realize that none of these obligations should come as a surprise because such assessments are standard in shared ownership communities like condos. While no one enjoys paying additional expenses that aren’t part of contingency reserves set aside for future expenses on repairs and updates, it is better than delaying repairs that would cause more significant problems in the long run.

For example, neglecting necessary repairs such as roof issues can result in severe damage to many units and cost more money than nipping it in the bud by levying an affordable special assessment. Prioritizing timely contributions towards special assessments might seem daunting initially but prove useful both economically and legally.

Now that we have delved into obligations of new and existing owners regarding special assessments let’s move onto the next section where we will consider ways of navigating assessments and payments.

Navigating Special Assessments Payments

Navigating special assessments payments can be a daunting task for condo owners. It’s important to understand that special assessments are not optional and must be paid by the required deadline to avoid late payment fees or even legal action. However, there are ways to make this process smoother and easier to manage.

One way to navigate special assessment payments is to budget accordingly. As soon as you receive notice of a special assessment, start saving money specifically for it. Consider setting up a separate savings account just for special assessments so that you won’t be tempted to dip into it for other expenses.

Another option is to take out a loan. While it may seem counterintuitive to take on more debt, a personal or home equity loan can help you pay the special assessment in full and then spread out the payments over a longer period of time with lower interest rates than the late payment fees you could incur.

Think of it as making an investment in your property and its value. Just like investing in home improvements can increase your property’s value, paying off a special assessment improves the overall condition of the building and makes it more attractive to potential buyers in the future.

If you’re still struggling to pay the special assessment, talk to your property manager or association board about potential options for payment plans or delayed payments. Many associations are willing to work with their owners on payment schedules that are manageable for them.

Now that we’ve discussed ways to navigate special assessments payments, let’s dive into the pros and cons of these assessments.

Pros and Cons of Special Assessments

Special assessments allow condo associations to finance one-time expenses without raising monthly dues or having emergency reserve funds. However, they can also create financial burdens for individual owners, particularly those who may not have been prepared for the expense.

On one hand, special assessments can be a necessary evil. Without them, associations may struggle to fund unexpected expenses like building repairs or legal fees, which could ultimately lead to a decrease in property value and attractiveness to potential buyers.

On the other hand, special assessments can be crippling for owners who may not have budgeted for them. It’s especially difficult for those on fixed incomes or with small margins for unexpected expenses. In these cases, special assessments can feel like a punishment for ownership rather than an equitable share of responsibility.

Additionally, special assessments can create tension within the condo community. If some owners are unable to pay their share of the assessment in full, it can lead to resentment from those who are able to do so. This tension can lead to strained relationships and even legal disputes.

Special assessments are like taking out a loan for unforeseen circumstances. While they offer temporary financial relief, the long-term impact of high interest rates and additional debt should not be overlooked.

That being said, special assessments are not always avoidable. Associations have a responsibility to maintain and improve their properties, and sometimes unexpected expenses arise that must be paid promptly. It’s important for condo owners to understand this responsibility and budget accordingly.

Now that we’ve explored both sides of the argument, it’s clear that there is no easy answer when it comes to special assessments. As with any financial decision, it’s important to weigh the pros and cons before making any choices that could impact your future as a condo owner.

  • Special assessments for condominium associations provide temporary financial relief to fund unexpected expenses, but they can also create financial burdens and tension within the community among owners who may not have budgeted for them or are unable to pay their share. Associations have a responsibility to maintain and improve their properties, but it’s crucial for condo owners to understand this responsibility and budget accordingly. Ultimately, careful consideration should be given before making any choices that could impact the future of one’s ownership in a condominium community.

Strategies to Manage and Avoid Special Assessments

Special assessments can be an unexpected financial burden for condo owners. However, there are several strategies that condo owners can employ to manage or even avoid these costs altogether.

One effective strategy is to plan ahead. Before purchasing a condo, it’s essential to thoroughly investigate the building’s financial history. This includes any previous special assessments and whether the reserve fund has been adequately funded. Condo owners should ensure that the board is transparent about all of its financial plans and budgets.

Another strategy is to maintain community participation. Active participation in condominium meetings allows owners to stay informed about any upcoming expenses, including special assessments. Encouraging transparency within the community can help to prevent any surprises.

Owners can also consider investing in proper maintenance for their units. Preventative maintenance can help avoid larger, more expensive repairs that could result in special assessments down the line. Additionally, homeowners should always keep up with regular upkeep of their units. For example, consistently checking air conditioning filters or addressing small leaks can save a lot of money in the long run.

While it may seem counterintuitive, paying off one’s mortgage or securing affordable financing options can also contribute to avoiding special assessments. The idea behind this strategy is a simple one – reducing personal debt will free up more funds which can be used for monthly HOA fees as well as other financial obligations. On the other hand, some argue that this type of reasoning overlooks the importance of having cash on hand for emergencies – such as a surprise assessment.

Preparing for potential assessments can also be likened to insuring your vehicle before an accident occurs. In both cases, being prepared ahead of time can lessen the blow when emergencies arise. Setting aside savings specifically for future special assessments can serve as a precautionary measure.

In conclusion, while special assessments can be an unwelcome surprise for condo owners, there are several strategies that can be taken to manage or avoid them entirely. By conducting research, maintaining community participation, investing in proper maintenance and planning for the unexpected, owners can protect themselves against the financial burden of special assessments.

Updated: Boston Real Estate Blog 2023

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