What would happen if there was a special assessment on your recently purchased condo?

Categories: Condo

 

Hi David,

Great job as usual. I thought I would just suggest a good topic on the perils of what can happen. I know you had mentioned those Carr Townhouses on Bathurst and Queen a few entries ago (how economists have no idea what it’s really like). I have a friend who bought and lives there since Jan 2013 when they were in the mid-300s.

Just this past week, all the residents per unit had gotten a ~$20K special assessment due to some issues with the roofs and some leaking. Total cost is something in the $2 mil range. The contract did go through a tender process.

My friend’s fortunate in that she has significant equity built up, makes good money as a corporate banker (although did spend some $$ on hardwood right before). And even then, she’s stressed out as it throws a huge wrench in her financial planning. She’s planning to use a line of credit to fund it.

However, given your statements that strata housing purchasers are forgoing any sort of conditions to win the bid, I’m wondering what would have happened to people who bought a few weeks ago, but are expected to close soon? Would they be on the hook for this? What if they’re stretched. Would the bank finance it somehow? I thought it would be an interesting topic on this and ‘what if’ scenarios that can play out, or at the least, an fyi for you since it’s really relevant to today’s market, your raising the red flags on it, and the pitfalls of what can happen today.

Thanks.

Ruben.

 


 

Hi Ruben,

Thanks for your email – I heard about this too from a client in the complex.

I had a client sell last fall, and the offer we received was unconditional as well.   But the Status Certificate hadn’t mentioned anything about the special assessment.

If the buyer made an offer, unconditional, on a property where a special assessment had already been levied, and that assessment was due AFTER the completion date, then the buyer would be on the hook, and there’s nothing he or she could do about it, short of walking away from the deal and forfeiting the deposit.

Good blog topic – I’ll put it in the queue!

David.

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  1. Richard Forster says:

    Buyers can be protected from surprise special assessments with title insurance. Keep that in mind too!

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