What is a Special Assessment ?

A "Special Assessment" is a charge levied against every Unit Owner in a Condominium to pay for necessary repairs when the 'Reserve Fund' is not adequate to cover them.

Depending upon the amount involved the Special Assessment might be a lump-sum payable by a certain date or it might be a series of Installment Payments.

Generally the total will be pro-rated among the Unit Owners in the same proportion as the regular fees, with larger Units paying more than smaller units

Why isn't the Reserve Fund adequate ?

Because the monthly fees have not been sufficient to pay for all of the normal Current Expenses while still providing an adequate reserve.

This may be due to an unexpected major Repair of the structure or facilities which should normally not have been required at this time.

Sometimes it reflects poor planning by the Board and Management Company.

In most cases it means that a majority of the Unit owners resisted Increases in the Monthly Fees that would have provided money for the work. ( Everyone knew that the Roof would need replacing but didn't want a fee increase and now the Roof  has failed and price must be paid)

How does this affect the property value ?

There are 2 things to consider :

1/ Short Term. A Unit Owner selling a property for which he has received a 'Notice of Special Assessment' should disclose this information to potential buyers through the Listing 

It may be that the Assessment is not payable until after the 'completion date' of the purchases. In this case an informed buyer will want the Seller to pay the cost or to reduce the property price accordingly.

Your Buyer Agent should ensure that any Offer on a Condo Property is "Conditional upon reviewing and finding satisfactory the Condominimum Status Certificate and Documents"

Thes documents will reveal the existence of any Special Assessment already levied or even under consideration,  the amount applicable to the Unit and whether or not it has already been paid. Even if there are no Special Assessments these Documents also show the amount of the Reserve Fund and any Engineering Study that has been undertaken so that you can make a more informed decision on the likelihood of any future Special Assessments or abnormal fee increases. 

See "Condo Documents Checklist" under "News and Advice"

If important information has been concealed your Buyer Agent  will be in a position to either force the seller to put it right or, if you prefer,to get you out of the deal with no penalty.

It is also likely that in the short-term there will be more Listings than normal in a Condo that has a Special Assessments as some owners may not have the cash to pay and may feel they have no choice but to sell.

However, on the face of it, provided the seller puts it right, you may actually be better off in the short-term as you will have a new Roof ( or Windows etc as the case may be ) that you did not exepect when you agreed the price.

2/ Longer Term You need to consider whether the normal Monthly Fees are likely to have  higher than normal increases to re-build the Reserve Fund following the current problem.

Also, if a majority of Unit owners are reluctant to pay the level of fees that is necessary to keep the development in good condition, are similar problems going to recur ?

It may be helpful to talk to a couple of other Unit owners and get a sense of whether there is discord among them or dis-satisfaction with the Board or Management Company.

Certainly you will not get the level of value growth in a poorly maintained Condo as you will get in one that has adequate funds and takes care of issues before they become major.