Condominium Special Assessments
Clause 10.4 of the current Residential Resale Condominium Property Purchase Contract reads as follows:
“Regardless of when a resolution for a special assessment contribution states that a levied payment is due and payable:
(a) the seller is responsible for special assessment payments passed by a resolution on or before 12 noon on Completion Day and will make such payments on or before Completion Day; and
(b) the buyer is responsible for special assessment payments passed by a resolution after 12 noon on Completion Day.”
Last month, I had a file where I thought the realtors did an excellent job. I was acting for the purchaser. There had been a Special Assessment of $7,850.00 levied by the condo corporation. Clearly under Clause 10.4 that had to be paid by the seller. However, there had been talk of another special assessment being levied against the property. It was expected to be approximately $22,000.00. Under the wording of Clause 10.4, that would not be payable by the seller as there had been no resolution passed.
What the realtors did here was devise an addendum that said basically this:
1. A special assessment could become payable in the approximate amount of $22,000.00.
2. That the buyer and seller were doing a reduction of $22,000.00 in the purchase price made by way of amendment to the Purchase Contract dated the same date as the Addendum, and that reduction was in consideration of the potential special assessment.
3. They made it clear that the seller would also pay the existing special assessment of $7,850.00 on closing date from the sale proceeds.
4. The buyer further agreed to execute a Release in regards to all outstanding and potential special assessments and to deliver that Release on closing.
I met with the buyers. They felt they fully understood the risks of what they were doing and were delighted to purchase the property with the reduction in purchase price of $22,000.00 regardless of the risk. They were hopeful that this future special assessment would be less than $22,000.00, and were prepared in case it turns out to be more.
Here I think the realtors did an excellent job because the parties clearly knew what they were getting into; the parties knew there was a risk and they did their best to resolve it;
and the deal was closed on the possession date with no holdbacks and no ongoing grounds for dispute.
There is another change in the new AREA Contract affecting special assessments. I will do another email on that change, and some possible ways you may wish to deal with that change, in my next email.