An increasingly common issue involves condominium association assessments and when they need to be disclosed. Section 3(c) of the Condominium Rider requires the seller of a condominium to make the following representation: “Seller represents that Seller is not aware of any special or other assessment that has been levied by the Association or that has been an item on the agenda, or reported in the minutes, of the Association within twelve (12) months prior to the Effective Date.”
While the rider defines “levied” to be the date upon which the assessment has been approved as required for enforcement pursuant to Florida law, the greater challenge involves any situation in which assessments have been discussed, or are otherwise contemplated, but which have not been levied. The question then becomes, does the seller need to disclose? The following are some examples and our recommendations (note that these are merely recommendations to keep your seller safe, we recognize that in some instances these recommendations may be challenging and could require more research):
- If an assessment is imposed prior to the effective date of the contract, then the seller must disclose. Otherwise, the seller is responsible for paying it at closing.
- If an improvement that could lead to a future assessment is in the minutes for that meeting, then the seller should disclose. We recommend that you research the meeting minutes for the prior 12 months.
- If an improvement that could lead to a future assessment is contained in any agenda item that was provided to the unit owners, then you should disclose. Again, we recommend that you research the agendas for the prior 12 months.
- If an improvement that could lead to a future assessment was included in any mailing to any unit owner (whether or not an agenda item), then the seller should disclose that fact.
- If an improvement that could lead to a future assessment was discussed by any board member and you are aware of the discussion, then the seller should disclose that fact.
As you can tell, we strongly recommend disclosure in all instances. By doing so, the seller eliminates any possibly that a buyer could seek legal recourse against a seller for an assessment, whenever imposed. For example, if the seller discloses the possibility of an assessment in the future, then the contract protects the seller if an assessment is eventually imposed post-closing. However, if the seller fails to disclose the possibility of an assessment in the future, then the seller could be legally liable for the assessment, even if it occurs after closing.
The obvious question then involves a situation where the seller truly had no knowledge of the possibility of an assessment and it was never discussed at a meeting or was never an agenda item. In that instance, the seller is likely protected from a post-closing assessment. But it is still worthwhile to conduct a review of the meeting minutes and/or agenda items for the preceding 12 months before completing the rider, particularly if your seller is not one to attend association meetings regularly. In many instances, you will find that the possibility of an assessment was indeed discussed and reported in the minutes of a prior meeting. In that instance, the seller could be deemed to have knowledge of the assessment, even if they were not at the meeting, did not review the minutes, or did not see the agenda.
As always, if you have any questions about a sellers obligation to disclose the possibility of a special assessment, we urge you to consult with your real estate attorney.
Sincerely,
Berlin Patten Ebling, PLLC
Article Authored by Evan Berlin, Esq. eberlin@berlinpatten.com
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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