Condominium Association Assessments – To Disclose or Not to Disclose?

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):

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.

www.berlinpatten.com 

SARASOTA

3700 South Tamiami Trail, Suite 200, Sarasota, FL 34239   P (941) 954-9991  F (941) 954-9992

VENICE

247 Tamiami Trail South, Suite 201, Venice, FL 34285  P (941) 955-9991  F (941) 484-9992

 LAKEWOOD RANCH

8130 Main Street, Suite 206, Lakewood Ranch, FL 34202   P (941) 907-9022  F (941) 907-9024

Did you find this real estate law content useful, but need actual legal council?

Speak to a real estate attorney!

, , , ,

Real Estate Firm

Your Condo Purchase-Treat It As An Investment

Condominium purchases by their nature involve property rights that are more complicated than typical single family lots or properties.  We have written several blog articles relating to investigations that buyers and their realtors should undertake prior to their purchase (links are included at the end of this blog). It is said that ownership of real…
Condo Association

Consequences of Condo Association Approval – NOT!

A condominium association acts by and through its Board of Directors. The Board of Directors acquires its authority to act and are bound by the terms and provisions of the Declaration of Condominium, Articles of Incorporation, By-laws, Rules and Regulations, and any Amendments to these documents (for purposes of this blog these documents shall be…

Understanding Adjustments and Prorations of Taxes for Closing

Since we are fast approaching the date beyond which real estate taxes become delinquent (after March 31 of every year), now seems an opportune time to attempt to decipher for the parties to real estate transactions how taxes are accounted for on a Settlement Statement. We are encountering increasing numbers of bewildered buyers and sellers…
Changes The Home owners

Changes to the Homeowner’s Association/Community Disclosure Rider

A new Home Owner’s Association Disclosure (the “Disclosure”) has been approved for use with the FAR/BAR AS IS Contract as well as Standard Contract for Residential Sale and Purchase. The updated Disclosure is now available as part of the CR-5 Rev. 9/17 and was approved for use beginning on September 26, 2017. Part A of…

Estoppel Certificates for Residential Property – House Bill 483/Senate Bill 398

As we all know, Condominium Association and Homeowner Association Estoppel Certificates are required for real estate closings when the subject property is part of one or more associations.  A well-prepared Estoppel Certificate should inform the parties of the following critical information: the amount of the current association assessments and when the assessments are due and…

The Estoppel Fee Monopoly

Over the last few years Associations (Condominium and Homeowners) have substantially increased the fees they charge to prepare estoppel letters.  Unfortunately, this has caused further undue hardship on sellers, buyers, title agents, realtors, etc., during tough economic times.  There are many sellers, buyers, realtors, title agencies, etc., that believe the unsubstantiated and exorbitant fees are…
Menu