A client of mine is selling a condo that recently had a large assessment levied for roof repairs that were done on the complex. To make the costs affordable for each owner the assessment was broken into a 4 year payment plan. We found this out just a week or so before we went on market and there was much teeth grinding among the owners, including my client. His question was, “should I still try to sell and do you think the place WILL sell?”
Considering he had the cutest place in the development (from what I could see) I told him that it was very likely he could sell but he’d have to make an adjustment in the strategy of the sale. As we got closer to going on market I was calling and interviewing other agents with units for sale in the complex. During this process I learned that some had been able to work out credit situations and others were considering credits and/or price reductions.
We ended up doing a combination of things; we dropped our asking price from our originally chosen dollar amount and we offered a small credit. The credit comes out to roughly 7 months of payments and the price drop definitely covers the complete cost of the assessment. Not only did we have to consider what the client’s complex was doing in terms of sales but we also were looking at some competing properties nearby.
With everything prepped and ready we went on market. The great news is that we got an offer within about 12 hours of going on market. The buyers were willing to accept the assumption of the assessment as well. Timing is everything because we got some folks in for only 1 week that needed to buy something that weekend. It was great that we were the best looking place on market at the time. 🙂
So, were we out of the woods? Nope. During the negotiation of the sale (there were some personal items the new buyer wanted) we were concerned by a comment the property manager shared with us saying that the assessment must be paid in full at closing. I asked him “why?” because I hadn’t seen anything yet that backed this up in terms of the governing documents for the Homeowner’s Association (HA). But, because the guy was adamant (I told him to let me handle it) we had my attorney review the documents, we contacted the title company that had opened up preliminary title (make ’em earn their pay!) and we made contact with the Treasurer of the HA who confirmed that assumption of the assessment was indeed possible.
Now, with all of that in our arsenal we went back to the buyer’s agent and shared the details so she could discuss it with her clients. We feel confident that the deal can move forward without the surprise of a change at closing. When there was a concern that my client might be forced to pay off the assessment we got my attorney involved to write up an addendum to say that if the payoff was required that there would be a pricing adjustment to cover it. It seems that won’t be necessary but at least all parties are aware and doing full due diligence to make sure things work out.
If you are in a HOA and there is an assessment that may impact your sale – be sure to review your governing documents, have an attorney do it for you, have a title company do it and get your board involved. This will help you determine the correct course of action for your situation. In some instances a special assessment must be paid at closing so you’ll want to know the rules before you go on market.
As a buyer, you’ll want to do your job of due diligence to make sure there aren’t any surprises coming up either. My client said that many brand new owners were very upset at the meeting this past week and it tells me that they likely didn’t get the meeting minutes read from the most recent board and association meetings where the assessment had been discussed.
