What is in the condo purchase contract about special assessments?
As mentioned in an earlier post about special assessments, we see special assessments coming up in Calgary condos more and more often. Sometimes we talk to people who only want to buy new, to avoid any chances of an assessment. However, even newer buildings get hit with a notice of assessment, in this case often caused by poor quality of workmanship.
While a wax ring, for example, is a small and inexpensive necessity under a toilet, we came across a building where the builders ‘cheaped out’ with inferior wax rings, resulting in a special assessment, along with other issues. We also came across a condo owner having to pay about $20,000 for a default in the balconies. The owner sued the builder and was lucky enough to get back the funds. But suing and winning is not always the case.
What does the purchase contract state about special assessments?
Between buyer and seller the contract states the following about special assessments” Unless the Buyer and the Seller otherwise agree in writing, then regardless of when a special assessment states that it is due and payable: (a) the Seller is responsible for special assessments that are implemented by the passing of a resolution on or before 12 noon on the Completion Day; and (b) the Buyer is responsible for special assessments that are implemented by the passing of a resolution after 12 noon on the Completion Day.
Does condo insurance cover special assessments?
We are not insurance agents and do not regulate special assessments. Do your own research and talk to your insurance agent about your options. The following snippets are taken from a few websites:
“Basic condo insurance does not typically cover special assessments. However, in some policies, special assessment coverage is included for “named perils.” For example, if a fire damaged your condominium, including common areas, the unit owners in the association may receive a special assessment notice to cover some of the costs of the repairs. Depending on the specifics of your condo insurance policy, you may have some coverage that would help you cover your portion of the assessment.
You will have to separately purchase special assessment insurance, also known as “title insurance,” which covers special assessments not contained within your condo property documents”
“To protect yourself, you should make sure that your condominium insurance in Calgary includes special assessment coverage and that you understand the limits of your coverage. Some specific types of special assessments may not be included in your policy while others are. By and large, condominium insurance protects you from unanticipated expenses arising from the majority of special assessments, and these expenses can be very costly”
Again, do your own research and talk to your insurance agent about your options!
A list with all buildings undergoing special assessments if not available. The only way to find out is when you put in an offer and receive the condo documents. Or, if there are any assessments known, they should be disclosed by the seller.
How can you, as a buyer protect yourself again special assessments? Read about it in another post about special assessments.