Special Assessments 7 Years in a Row!

D.M. from Hartford County writes:

Dear Mister Condo,

Is it legal to have a special assessment for 7 years in a row? It has caused 2 foreclosures and 2 more units to go up for sale.

Mister Condo replies:

D.M., I don’t think it is a question of legality as much as it is a question of financial competency and questionable budget preparation. Special assessments are used when the Board is faced with expenses that cannot be paid for from monies that are available in the operating fund. Unit owners contribute to the association’s operating fund in the form of monthly common fees. Special assessments are used when the budget falls short of the expenses. Ideally, the budget is developed with enough elasticity that regular and known expenses can be planned for ahead of time and common fees adjusted to handle the future expense. For special assessments to be needed seven years in a row, I have to question whoever is preparing the budget and ask if they have been surprised all seven years. It is more likely that the community applied pressure to keep the common fees too low at a time when they should have been higher. The resulting foreclosures and homes for sale are not surprising based on what you are telling me. The good news is that the community has a chance to stabilize and avoid these costly mistakes in the future now that these expenses are behind you. I would think a Reserve Study and some budgeting expertise are called for here to avoid a repeat of this unpleasant and fiscally dangerous practice of annual assessments.