On the contract, a seller can either be responsible for assessments due and owing at the time of the closing. Or, the buyer can be made responsible for any amounts due after closing.
The following is an explanation of Condominium Maintenance and Homeowners Associations dues and assessments:
Maintenance is payable monthly, a set amount, usually covering such things as:
- Common elements
- Insurance on common elements
- Pool
- Lawn
- Security, guard, gatehouse
Assessments are payable at once, when passed, and are usually big ticket items that cover an unexpected repair or cost, allocated among the owners based on percentage interest holder, for example:
- Window repair or replacement
- Roof repair or replacement
- Pool repair or replacement
- Insurance coverage for unexpected hazards
While maintenance is due every month, and payable usually on the 1st of the month, assessments are due in full at the time they are passed. For example, a $4,000 assessment passed on January 1, 2015, is due and payable on January 1, 2015 by the seller. If the homeowner elects to pay monthly, that is a payment plan they are provided as a courtesy by the association. However, the full amount due is $4,000.00
Accordingly, when the seller enters into a Contract for Sale and Purchase, it is important to know how homeowners assessments and dues are going to be handled. If the seller is responsible for the full assessment, then an estoppel will need to be ordered evidencing what amount of the $4,000.00 has been paid (as per our example above). The balance would then be collected at closing and remitted to the HOA or Condo association.
If the box marked “Buyer will be responsible for unpaid assessments”, then the balance owed from the closing forward, will be charged to the buyer, who may elect to pay monthly in addition to the monthly maintenance.
This is a confusing topic for many buyers and sellers and the services of an attorney, PRIOR to entering into the contract is vital, to make sure your interests are protected.
FLORIDA REAL ESTATE ATTORNEYS
At Jacqueline Salcines, PA we are accountants and lawyers and comprehensively negotiate on your behalf prior to signing a contract. Jacqueline Salcines, Esq. has spent over 14 years practicing law in the real estate and mortgage arena. Let our knowledge go to work for you.
Meet with our real estate attorney today.
TRUST | COMMITMENT | RESULTS
Jacqueline A. Salcines