In a condo, all assessments are not equal
11/3/2015 | Real Estate Blog
In our series With condos and co-ops, ‘common’ may not mean ‘shared’ last May, we discussed the differences between condominiums and cooperatives at some length. The fundamental difference, of course, is that you buy into a cooperative, but you do not own your apartment outright. In a condo, you buy the apartment; everything from the paint in is your responsibility. Your monthly or annual dues go toward common expenses, including maintenance of common areas, property insurance and, in some cases, utilities.
Legally, your condo dues are “assessments.” The term, however, is also used as shorthand for “special assessment,” an amount over and above your dues that is used to pay for extraordinary or one-time expenses. Most of the time, assessments are divided up among all the owners.
For example, the building may need a new roof, and the cost far exceeds the amount of money in the association’s reserve. The total is then divided up among the unit owners according to their proportional stake in the association. The board or the association as a whole determines a payment schedule, and, when the expense is covered, the assessment goes away.
The math would go like this: The roof costs $100,000 that must be divided among the four units. Units 1 and 2, however, are larger than units 3 and 4; according to the condo documents, 1 and 2 have 30 shares each. Because the new roof will benefit all of the units, units 1 and 2 will be responsible for $30,000 each; units 3 and 4 will owe $20,000 each. Each assessment must be paid off in 24 months.
Not every common area expense, though, benefits every unit. What happens then? We’ll explain in our next post.
Source: Summary of Pennsylvania Jurisprudence 2d, Eric C. Surette, October 2015, via WestlawNext