SPECIAL ASSESSMENT AND MASTER LOAN
What is a Special Assessment?
When substantial repairs or improvements need to be done to the condo property, funds may be appropriated by vote to pay for the undertaking. If the project simply repairs the existing design without significant change and uses similar materials (vinyl siding instead of cement board siding, for example), then the Board of Directors can vote and approve the Special Assessment. If significant design changes and improvements are included in the remodel, then it is necessary to have a homeowner vote. The Special Assessment attaches to each unit upon enactment, as a lien, and must be paid off in full if the condo unit sells. If the Special Assessment isn't paid within the terms prescribed (usually 3 years or less), then the condo Board is obliged to foreclose upon the unit, to protect the association finances and other homeowners. A Special Assessment is a formal process and legal requirement before any project takes place. There will be a special assessment regardless of whether homeowners arrange their own financing, or whether the association obtains a Master Loan.
Do you have to do a special assessment in order to obtain a master loan?
Yes, a condo association is required to do a special assessment to offer as collateral for a master loan, just as an individual homeowner would offer their property as collateral.
What would the course of the loan be?
Based on the limited research the Board has conducted, the course of the loan could be 3 - 15 years.
Would homeowners have to be part of the loan?
No. Each homeowner would have the option of paying a lump sum.
What does a master loan mean?
The Association would obtain/manage the loan and then owners would pay their installments to the Association under the terms of the loan.
How will the master loan amount be determined?
The Board will work with the architect to develop project package/bid proposal options with cost estimates (e.g. repair only required or do more than required). Once the owners approve which package to pursue, the Board will approach banks to obtain a master loan for the required amount.
What will the special assessment be for each unit?
Based on the Reserve Study, the average special assessment would be $20,000.00/unit, with smaller units paying less and larger units more.
