Dealing with Special Assessments Paying the Price

Boston, Massachusetts may seem worlds away from New York City, but the story of one embattled condo building there represents a dire cautionary tale for boards and managers everywhere.

A couple of years ago, the residents of Boston’s Harbor Towers Condominium were hit with a $75.6 million special assessment—believed to be the highest ever in Boston—to cover the costs of repairing and replacing the heating and cooling systems of their two waterfront mid-rises. The one-time assessment, ranging from $70,000 to $400,000 per unit owner, led to a bitter political struggle and panic on the part of some residents who would likely have to sell their units to pay the huge bill, due in November of 2007. According to a letter issued by the Harbor Towers board, 95 percent of the assessment has been collected—but the close-knit building community was torn apart over the issue, and the possibility of a similarly massive assessment being charged in an New York City co-op or condo is not purely theoretical. What if it were to happen in your building, and could it be prevented? The answer is a definite…maybe.

Why Assess?

A number of circumstances can lead a board to level a special assessment on the residents of a building. The financial need could be due to a large emergency repair, such as a leaking roof that must have extensive renovations immediately, or some other unexpected outlay. Whatever the reason, special assessments are never popular with residents, and because of that, board members usually hate recommending the fees.

This means that such assessments often come after all other options have been considered and rejected. Sometimes a special assessment is unavoidable, but it is important to know the difference between when an assessment is unavoidable, and when it would be foolish to charge residents with an assessment simply to raise some money.

Time To Pay

If a board is considering a special assessment, the situation should be fairly dire. A board often will consider a special assessment to fund capital improvements, if the capital reserve fund is too low, or even for increases in operating costs, which is a move that some experts advise against. The need for the assessment must truly be pressing for the assessment to be completely necessary, and the necessity of the fee is what will make it more acceptable to the residents who will have to pay it.

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9 Comments

  • What is the issue with giving back the Coop Abatemtment one month and then having a assessment in the other - that negates the abatement benefit
  • I live in an 8-unit co-op that has a thin reserve fund. We have just been hit with $8,000 of fines for elevator violations that were not our fault - they were the fault of our elevator maintenance company - but the NYC Department of Buildings requires owners to pay the fines. The Board feels it has no choice but to assess the shareholders equally for the $8,000, meaning $1,000 per shareholder. Is this legal? Or must special assessments, such as this fairly limited one, be calculated based on the number of shares one owns?
  • Is there any law that limits the amount of an assessment or regulates assessments at all? Or can a board assess a building $10 million and force the unit owners to pay it.
  • Yes, I would also like to know if there is a cap on how much an HOA can charge a homeowner? We were hit with 30K charge payable in three months. Plus the job is being done by the President of the Board's husband.
  • Can a board undertake an enormous renovation without consultation with tenant sharehoders in a co-op? Once the work is underway, what recourse does nte shareholder have?
  • If my co-op is seller financed, who should pay a special assessment?
  • We have a Condo situation wherein even though the Managers claimed we were in dire straits as regards reserves, nevertheless undertook a clubhouse renovation, resurfacing the tennis court, together with replacing the fencing and retiled the swimming poo, leading to a $1,200 yearly assessment. The Board, however, to incentivize full payment by reducing the assessment to $1,000 while those who paid monthly had to accept the $1,200. Many of the residents complained feeling that it was discriminatory and financially burdensome. Can a Board adopt such an assessment plan?
  • We have been assessed over $14,000.00 in the past 15 years, and now we are being assessed for another $9-10,000.00. We have a Condo and Hoa Combo and ruled by a Master Board. The condos are never assessed as much as as the home owners, neither of which have a reserve and the work being done is mainly in the condo section. The president of the Master Board lives in the Condos. Is it fair that he is president and makes rules that he is not involved in? He is also a snowbird and not here 6 months out of the year. Something is very wrong here. How can we proitest?
  • I own a condo worth less than $15,000. My condo fee is $177/mo and 0ne person owns 89 and another 4 are owned by different individuals. A mgmt company manages the 89 as well as have maint for repairs etc. We were just hit with a $800 assessment. Our $177 monthly fee is not justified! We have no idea who the board is and not given information on the other 4 owners because the owner of the 89 units claims it's a privacy issue. I've owned since 2009 and only informed of 2 mtgs.