Dec 12, 2012
Condo Special Assessments (again)
I had several follow up questions from Realtors regarding my last email to you. Basically the concern was this:
“How do we protect the Buyer from the situation you described in your last email?”
In my last email I described a file in which the condo board had borrowed funds to pay for a new roof and $15,169.70 per condo unit was outstanding on the loan on the Sale Completion Day. It was being repaid by payments of $118.00 per month. The Buyer wanted the Seller to pay it out in full on completion but we argued successfully that the Buyer had to assume the payments of $118.00 per month after closing so that the Buyer was left to pay the $15,169.70 over time.
In that case, the Buyer would not have had to pay the $15,169.70 if the following clause had been written into the contract:
“The Seller will pay out in full all special assessments currently assessed even if they are due or payable after the Completion Date.”
If that had been written into the contract, then that would have superceded Clause 4.7 of the contract which says “Unless otherwise agreed in writing, the Seller is responsible for special assessments that are due and payable on or before the Completion Day, and the Buyer is responsible for any special assessments due and payable after the Completion Day.”
Of course getting this into a contract is negotiable and a Seller would not want to agree to that. In fact I can confirm that in our particular file, the Seller would not have agreed to that term in the contract. But at least if it had been raised by the Realtors, then the Buyer would have know what they were incurring before committing to the transaction.
Therefore, I think it is a good idea for Realtor acting for the Buyer to ask for that clause when special assessments are an issue. Even if the Seller does not agree, then at least the parties will go into the transaction aware of the cost and effect of any special assessments.
Merry Christmas and Happy Holidays!
– Bill Fric