Condo Media - September 2016 - 18

Asked & Answered

Buyer Beware

Navigating Special Assessments During a Condominium Sale

Q
A

18

CONDOMEDIA

In a condominium sale, who is responsible for
assessments that accrue between the signing of the
purchase agreement and the closing?

The rule-of-thumb holds that any assessments imposed
before the deed is transferred are the obligation of the
seller, Sandy Moskowitz, a shareholder in the Boston
law firm Davis, Malm & D'Agostine, P.C., responds.
Confusion-and potential disputes-can arise in two
circumstances, he says: When a fee is assessed before
the closing but payment isn't due until after; and when
the seller is aware that an assessment is coming after
the closing (and may even be selling because of it) but
doesn't disclose that information to the buyer.
On the second point (disclosure), Moskowitz points
out, while real estate brokers are required to disclose
material information to buyers, sellers have no such
professional or legal obligation. "If buyers ask, sellers
have to respond honestly," he notes, but they aren't required to volunteer information if buyers don't request
it. That means "buyers should ask a lot of questions,"
he says. "They should insist on the same information
about the association's finances and governance that
mortgage lenders request in the questionnaires they ask
condominium associations to complete."
The standard language in a condominium purchase
and sale agreement specifies that the seller "has not
received notice of any special assessment [and] has
no actual knowledge of matters which are likely to
increase the common expenses for the unit or result
in a special assessment." The attorneys representing
condominium buyers often strengthen that provision
by adding language stating that the seller is unaware
of special assessments "due now or in the future" and
has no knowledge of planned or pending repairs or
improvements that would result in a special assessment
or an increase in common fees. Some also specify that
the seller must pay "in full" any assessments due as of
the closing date, making it clear that the buyer is responsible for payments due after the closing date. This
would include assessments approved before the closing,
on which payments are due after that. It would also

include phased payments-some due before the closing
(for which the seller would be responsible) and some
due after, which would be the buyer's obligation. As a
practical matter, Moskowitz says, assessments rarely
derail a condominium purchase. The amounts involved
are usually small, he notes, and even when assessments
are sizable, buyers and sellers typically negotiate their
payment well before the closing, incorporating the
terms on which they agree in the purchase contract.
The seller might argue that it is the buyer who will
benefit from an assessment to finance a new roof,
while the buyer may contend that the seller is paying
to replace a roof he's used for the past 10 years. Market
conditions will determine who wins that debate,
Moskowitz says. In a hot market, the seller might hold
firm, knowing there are other buyers in line if this one
walks away; in a slower market, he says, if the buyer
balks at paying a pending assessment, the seller may
not push back.
Condo Media - September 2016

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