When is a Special Assessment not a Special Assessment?

By Joel Maxson

Source: When is a Special Assessment not a Special Assessment?

Three different sections of the Florida Realtors/Florida Bar contract cover special assessments. For buyers and sellers to figure out which section applies, they have to understand which entity imposed the special assessment“ a condo association, HOA or other public body like a city or county.

ORLANDO, Fla. “ When is a special assessment not a special assessment? When a buyer or seller is looking at the right words (special assessment), but the wrong section of the contract. There are three completely different sections in the Residential Contract for Sale and Purchase prepared by the Florida Realtors and Florida Bar that talk about special assessments. The Condominium Rider covers special assessments imposed by a condominium association. The Homeowners Association/Community Disclosure addresses special assessments imposed by an HOA. Finally, Section 9(f) of the contract addresses special assessments imposed by any other public body. Since they all use different language (see below), it’s very important for parties to ensure they are reading the section that applies to their specific special assessment. A special assessment is generally an amount of money a property owner must pay some sort of entity to cover a mandatory expense outside that entitys normal budget. For example, if a city obligates all homeowners in their area to pay for electrical wires to be installed underground, it could make them pay for it as a special assessment thats above and beyond the annual property tax bill. In the same way, a condo association or HOA might impose a special assessment for a cost not included in the annual budget and collect money in addition to regular assessments. These assessments might be collected as a one-time payment, or they might be collected in multiple installments. Sometimes, a property owner can choose whether to pay all at once or in installments. Special assessments typically cost enough money that an average consumer will sit up and take notice when one is imposed. Thats why its very important for both a buyer and seller to find out before signing a contract if any special assessments exist for the property and, if so, how much they are. Buyers should also investigate whether any special assessments are proposed but not yet approved. If either side discovers special assessments in any stage of the process, they should carefully read whichever one of these three sections applies. Although these three sections are very similar to one another, there are also a fair number of differences. Condominium Rider Section 3(c)

1. Seller represents that Seller is not aware of any special or other assessment that has been levied by the Association or that has been an item on the agenda, or reported in the minutes, of the Association within twelve (12) months prior to Effective Date, (“pending”) except as follows: ____________________________
2. If special assessments levied or pending exist as of the Effective Date are disclosed above by Seller and may be paid in installments (CHECK ONE): ? Buyer ? Seller (if left blank, then Buyer) shall pay installments due after Closing Date. If Seller is checked, Seller shall pay the assessment in full prior to or at the time of Closing.
3. If special assessments levied or pending exist as of the Effective Date and have not been disclosed above by Seller, then Seller shall pay such assessments in full at the time of Closing.
4. If, after Effective Date, the Association imposes a special assessment for improvements, work or services, which was not pending as of the Effective Date, then Seller shall pay all amounts due before Closing Date and Buyer shall pay all amounts due after Closing Date.
5. A special assessment shall be deemed levied for purposes of this paragraph on the date when the assessment has been approved as required for enforcement pursuant to Florida law and the condominium documents listed in Paragraph 5.
6. Association assets and liabilities, including Association reserve accounts, shall not be prorated.

Homeowners Association/Community Disclosure Part B, Section 2(b) If levied special or other assessments exist as of the Effective Date, or an assessment is levied after the Effective Date and prior to the Closing Date, and any such assessment(s) may be paid in installments, then Seller shall pay all installments due before Closing Date and (CHECK ONE):____Buyer____Seller (if left blank, then Buyer) shall pay installments due after Closing Date. If Seller is checked, Seller shall pay the assessment in full prior to or at the time of Closing.Post-Closing Payment of Municipal Special Assessments (Section 9(f) of the Contract)SPECIAL ASSESSMENTS: At Closing, Seller shall pay: (i) the full amount of liens imposed by a public body (public body) does not include a Condominium or Homeowners Association) that are certified, confirmed and ratified before Closing; and (ii) the amount of the public bodys most recent estimate or assessment for an improvement which is substantially complete as of Effective Date, but that has not resulted in a lien being imposed on the Property before Closing. Buyer shall pay all other assessments. If special assessments may be paid in installments (CHECK ONE): (a) Seller shall pay installments due prior to Closing and Buyer shall pay installments due after Closing. Installments prepaid or due for the year of Closing shall be prorated. (b) Seller shall pay the assessment(s) in full prior to or at the time of Closing. IF NEITHER BOX IS CHECKED, THEN OPTION (a) SHALL BE DEEMED SELECTED. This Paragraph 9(f) shall not apply to a special benefit tax lien imposed by a community development district (CDD) pursuant to Chapter 190, F.S., which lien shall be prorated pursuant to STANDARD K. Joel Maxson is Associate General Counsel © 2019 Florida Realtors®

Source: When is a Special Assessment not a Special Assessment?