Few letters worry condo owners more than a notice of special assessment. It usually means a large bill, on short notice, on top of regular fees. Understanding why special assessments happen, and how a well-run corporation avoids them, helps owners plan and helps boards make better decisions.

What a special assessment is

A special assessment is a one-time charge to every owner, on top of the regular monthly common expenses. It forms part of the common expenses, so each unit's share is normally set by the proportions in the corporation's declaration, the same way regular fees are shared. It may be billed as a single payment or in instalments.

Why corporations levy them

· A reserve fund shortfall: a major repair or replacement costs more than the reserve fund holds, often because contributions were kept too low for too long.
· An unexpected repair: storm damage, a failed system or a problem found during a project.
· Insurance deductibles after a claim.
· Legal costs or a judgment against the corporation.

Who decides

The board of directors decides on and declares a special assessment, and owners must be told. The declaration and by-laws may set out how and when owners are notified, so boards should check their governing documents before sending a notice. The main alternative, borrowing, requires a by-law that owners approve, plus interest. Some boards combine options, for example a smaller assessment paired with a higher reserve contribution in the next budget.

What happens if an owner does not pay

A special assessment is a common expense, so the same rules apply as for unpaid condo fees. Under Ontario's Condominium Act, when an owner defaults, the corporation has a lien against the unit. To protect it, the corporation must give the owner at least 10 days' written notice and then register a certificate of lien within three months of the default. The lien can include interest and the reasonable legal costs of collecting the debt, so an unpaid assessment quickly becomes more expensive.

If you are worried about paying, talk to your property manager early. Boards generally can't excuse one owner from a common expense, but early contact gives everyone more options than a lien notice does.

Buying a unit? Check the status certificate

A status certificate shows any special assessment that has been levied, along with the reserve fund balance and the latest reserve fund study. Our guide to reading a condo status certificate covers what else to check before you buy.

How good boards avoid special assessments

· Keep the reserve fund study current and fund the plan it recommends.
· Raise contributions in small, regular steps instead of holding fees flat.
· Inspect common elements regularly so problems are caught while they are still small repairs.
· Get competitive quotes for every major contract.
· Review insurance coverage and deductibles each year.

How Enfield helps

The Enfield Group helps boards plan ahead so special assessments are the exception. We advise on budgets, capital planning and reserve fund requirements, help obtain reserve fund studies every three years, arrange competitive quotes for contracted services and inspect common areas with written reports. When an assessment is unavoidable, we handle the billing and collection and follow up on overdue accounts as the board directs.

Learn more about our condo property management services or what shapes condo management fees in Ontario. To talk about your corporation, call 905-689-7341 or request a proposal.

This article is general information about Ontario condominiums, not legal advice. Speak with a lawyer about your situation.