H.H. from New Jersey writes:
Dear Mister Condo,
Does a special assessment, one that is designated and collected for monthly for three years, have to be put in a separate account or can it be transferred to a reserve account where it could be used for work other than originally specified?
Mister Condo replies:
H.H., it is customary for Special Assessments to be used specifically for the purpose for which they were assessed. Any other use of the money may be illegal and challenged by unit owners. Where the money is physically banked is not necessarily a problem; how the money is spent certainly is. Unit owners, such as yourself, have every right to demand an accounting of the moneys collected and spent from a Special Assessment. For instance, if $200K was assessed to unit owners for a new roof and the job was completed for $175K, the remaining $25K should be returned to unit owners according to the same formula used to collect the Special Assessment. The Board cannot just hold on to the remaining $25K and throw it into the general operating fund and pay for regular expenses like trash removal, management fees, etc. with that money. It was assessed for a particular purpose and must be used for that purpose or returned to unit owners. Hope that helps!