Buying a condominium in Illinois means taking on more than the cost of the unit. You also become part of a condominium association that manages shared spaces, repairs, maintenance, and building expenses. Sometimes, the association collects extra money from unit owners to cover costs that regular monthly fees cannot meet. This extra charge is called a special assessment.
Before signing the final closing documents, buyers should review the association’s financial records, meeting minutes, assessment notices, and other condominium documents. This review can help you understand both the immediate cost and the possible future expenses.
What Is a Condominium Special Assessment?
A special assessment in a condominium refers to any extra charge made by the condo association from its unit owners so as to raise funds beyond those within its normal operating budget.
Most of the time, the monthly association fees cover common charges like janitorial service, landscaping, insurance, maintenance charges, and management. Some charges might prove to be too costly for the association to handle on its own and thus need extra funds.
Some of the issues that might prompt an association to issue a special assessment are:
- Replacement or repair of the roof of the building
- Repair or installation of elevators
- Repairs of the building structure
- Maintenance of parking areas
- Plumbing and wiring upgrades
- Repairs of exterior walls and balconies
- Repairs for emergencies
Why Do Condo Associations Introduce Special Assessments?
Special assessments often arise when an association faces a large expense that its regular budget or reserve fund cannot cover. One common reason is an unexpected repair. For example, a building may develop water damage that requires urgent work. The association may need to collect additional money to complete the repairs.
Another reason is poor reserve planning. Associations should plan for major repairs and future replacement costs. If the reserve fund is too small, owners may face extra charges when expensive work becomes necessary. Other situations include rising insurance costs, legal expenses, building code requirements, and improvements to shared property.
What Should Buyers Check Before Closing?
A condo buyer should look beyond the advertised purchase price and monthly association fee. The association’s records can reveal financial and maintenance issues that may affect future ownership costs.
Check for Approved and Pending Special Assessments
Start by asking whether the association has approved a special assessment. Find out how much each unit owner must pay, what the money will cover, and when payments are due. Also check whether the assessment is payable in one payment or through installments.
Do not stop at approved charges. Ask whether the board has discussed or proposed another assessment. Meeting minutes and recent notices may reveal plans that have not yet become a formal charge. A pending assessment can still affect your financial planning, even if the association has not approved it.
Review the Association’s Reserve Fund
A reserve fund helps the association pay for major repairs and replacement work. Ask for the latest reserve balance and any available reserve study. A reserve study estimates the future cost of maintaining major building components and helps the association plan its finances.
A low reserve balance does not automatically make a condominium a bad purchase. However, it may increase the risk of future special assessments. Pay attention to whether the association has enough funds for expected repairs, especially if the building is older or has expensive shared facilities.
Examine the Association’s Budget and Financial Records
The annual budget can help you understand how the association manages its money. Check its income, regular expenses, reserve contributions, insurance costs, and outstanding debts. Compare recent budgets if they are available.
Look for signs that the association regularly spends more than it collects. Also check whether it has delayed important maintenance or relied on special assessments to cover routine expenses. A pattern of financial shortfalls may suggest that monthly fees are too low to support the building’s actual needs.
Read Board Meeting Minutes
Problems may also be found in the minutes of the board meetings even if they are not included in the budget and the resale disclosure forms. Look for mentions of the following: roof leaks, foundation problems, plumbing problems, elevators, insurance claims, and problems with contractors.
Watch out for talks about future repairs and special assessments. The board could have discussed replacing the heating system in the building but not necessarily approved the project. This will give you an idea of the future costs.
Check the Scope of Planned Repairs
If the association has approved the special assessment, find out more about the planned repairs. Ask about the planned scope of work, hiring a contractor, and getting estimates.
Also, find out whether the special assessment covers the entire cost of the work or just a portion of it. A vague notice may cause confusion for the buyers.
Review Pending Lawsuits and Insurance Coverage
Legal disputes and insurance problems can create additional financial pressure for a condominium association.
Check whether the association is involved in any pending lawsuits. Find out whether the dispute concerns construction defects, property damage, contractor claims, or another issue.
You should also review the association’s insurance coverage. Check whether the policy covers major shared areas and whether there are significant exclusions or high deductibles. A major uninsured loss or legal expense may lead to another special assessment.
Make an Informed Condo Purchase with EJR Law Office
A condominium may look like the right home, but an unexpected special assessment can change your ownership costs. EJR Law Office helps Illinois home buyers review condominium documents, understand association obligations, and identify potential legal concerns before closing. From reserve fund questions to approved repair assessments and unclear association records, our team can help you understand the documents and make informed decisions. Contact EJR Law Office for guidance before completing your condominium purchase.
FAQs
- What is a condo special assessment in Illinois?
It is an extra charge collected by a condominium association to cover expenses that regular monthly fees or reserve funds cannot meet.
- Can a condo association introduce a special assessment without warning?
Associations must follow the Illinois Condominium Property Act and their governing documents when adopting assessments. Certain emergency or legally required expenses may follow different approval rules.
- How can buyers find out about a pending special assessment?
Buyers can review association meeting minutes, financial records, budget documents, and resale disclosures. They should also ask the association about proposed assessments.
- Does a special assessment affect the value of a condo?
It can. A large assessment or repeated financial shortfall may affect buyer interest and the property’s overall appeal.
- Should a real estate attorney review condo special assessments?
Yes. An attorney can review the association’s documents, explain the legal and financial implications, and help buyers understand potential risks before closing.
