Home Buying in Northampton>Question Details

charitygirl, Home Buyer in Northampton, MA

Advice about a special assessment

Asked by charitygirl, Northampton, MA Wed Jun 3, 2009

I put an offer on a condo and it was accepted, but I have not yet signed the purchase and sale agreement. I found out today that the HOA intends to levy a special assessment to replace the roof and sidewalks. The estimate runs from $100,000 on the low end to many hundreds of thousands on the high end. What are my options at this point? This would effectively add tens of thousands to the purchase price and I cannot afford to spend any more than what I offered. My boyfriend says I should just walk away unless I can get the seller to reduce the sale price by the amount of the assessment. But the HOA hasn't yet imposed the assessment and they can't even say what it will be exactly just a rough estimate (which even they admit might be many times higher--how much higher they can't say). Should I walk away from this? Can I? I really like this condo and there are NO others on the market that suit my needs. I don't know what to do!

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Foggy’s answer
Don't walk away. Run. We were in your situation 2 years ago, took a gamble and bought. Now the special assessment is up for a vote and, if it passes, we will likely end up paying about $60-$70K in special assessment for our unit - of which 40% needs to be paid within the first 90 days after the assessment is levied. The only bank who will work with us expects a repayment schedule of 6 yrs - which means our monthly payments in special assessments alone could be between $700-$800. Since our property value has decreased in the past two years since we bought we do not have the option to pull on an equity liine. In fact, we are already just at the cusp of being "under water" and the Special Assessment would just push us deeper in.
Given what we know now (i.e. that home values do NOT always go up as in recent years) we would not have bought our condo - as much as we love it - had we known these would have been the consequences/circumstances.
0 votes Thank Flag Link Thu Jun 18, 2009
BEST ANSWER
Hello Charity and thanks for your question.

Most likely, the reason that no one has an exact amount of the special assessment is because it has not yet been presented or approved by the Association Membership. As homeowners associations, we are obligated to disclose both to the buyer as well as to the mortgage company any pending possible special assessments--even if those assessments have yet to be approved by the membership. Especially special assessments that may materially affect the buyer's ability to maintain payments on the home.

At this time, since the project is in the beginning planning stages, and there is no true amount yet determined for the special assessment, it's difficult to ask the seller to pay for the fees or to lower the price to compensate for an unknown amount of assessment. Further, you haven't any idea how this repair is likely to be scheduled--all at once or one building per year--and this definitely affects the amount of the special assessment and the funding. In this case, if the prospect of $100,000 to $500,000 of repairs is more than you can afford to pay based on your apportionate share, then I would tend to agree with your boyfriend that you should walk away. It makes little sense to buy the home or condo of your dreams, only to find that the special assessments price you out of house and home.

While I understand that you have come to love this home, you must--first and foremost--buy a home that you can afford to maintain. Perhaps there are not any other homes on the market that you like so much right now, but the list of available homes changes constantly, and I would not be surprised if another, equally nice home were to become available sometime this year.

Give your decision some thought, and make certain that you can afford to pay the special assessment without jeopardizing your ability to pay for the mortgage!

Good luck!

Sincerely,
Grace Morioka, SRES, e-Pro
CID Specialist
Area Pro Realty
San Jose, CA
0 votes Thank Flag Link Wed Jun 3, 2009
Thanks for the responses! I am thinking that it would probably be best to let this one go, but my realtor says that he will go back to the seller and ask them if they would be willing to pay the assessment. I don't know how that would work. My lawyer suggests that I could ask for a credit at the time of closing, but that would mean getting an estimate of what the assessment could be and the estimate could be off by a factor of..well who knows. I can't imagine how else I could get them to pay an unknown amount, to be charged in an unknown number of installments, beginning at an unknown time in the future. Would it be even possible to write a contract with this kind of clause?
0 votes Thank Flag Link Thu Jun 4, 2009
I would walk away from this at least for the moment or if possible ask for an extension until actual asssessment numbers are available. If the seller refuses an extension tah walk. The reality is that any other potential buyer will also have the same issue especially if it is an moderately priced condo. Yu should not commit to buying if you have a limit as to what you can afford. Sometimes something better may even be around the corner.
0 votes Thank Flag Link Thu Jun 4, 2009
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