What is a special assessment? A special assessment is an assessment that is not contemplated in an association’s budget for the fiscal year and is therefore over and above the regular assessments imposed in accordance with an association’s budget.
One reason for imposition of special assessments is to pay for unexpected repairs and replacements occasioned by unforeseen, and often catastrophic, events, such as roof replacement after a wind/hail storm where insurance proceeds are insufficient to cover the costs or to pay for an elevator replacement when a condominium building’s only elevator unexpectedly fails.
When deciding whether a special assessment is the best option for your community, the first step is to confirm your association’s authority to impose special assessments and to ensure the purpose for which you seek to impose the special assessment is authorized by the declaration.
For example, some governing documents only authorize special assessments for capital improvements or major repair projects to common elements (as opposed to residential structures). Additionally, some declarations do not allow associations to utilize a special assessment to replenish reserves. Thus, it is important to fully review the governing documents to ensure your association has authority to levy the special assessment for its intended purpose.
Once you determine the association has authority to levy the special assessment, the next step is to determine the actual process for passing and imposing the special assessment. Oftentimes, special assessments are subject to the CCIOA budget ratification process; other times, owner approval is required.
In the event owner approval is required to levy a special assessment, make sure you are aware of any “special” procedures that must be followed for doing so. For example, some governing documents contain different quorum requirements for voting on special assessments, while others require a supermajority approval as opposed to a simple majority. If you are unsure whether your documents contain any such special requirements, make sure to consult with the association’s attorney.
After the special assessment is ratified/approved, the final step is to provide notice to owners advising them of the special assessment, along with the amount(s) due, the date the assessment is due and payable, and how to make the payment(s). Please note that your governing documents may include specific requirements when it comes to payment of special assessments, so it is important to review them during this last step for compliance.
All of the above being said, involving the association’s legal counsel in this process is the safest option to ensure compliance with its governing documents and Colorado law.
If you have any questions about imposition of special assessments, please contact an Altitude attorney at 303.432.9999 or at [email protected].