If you’re buying or selling a condo in St. Petersburg or Pinellas County, there’s a good chance you’ll hear the words “special assessment.” This is often a red flag for buyers raising concerns about the financial health of the community, especially as an assessment could be any amount from under $1,000 to $20,000 and upwards. Any unexpected bill certainly deserves attention, but the existence of a special assessment doesn’t automatically mean there’s something wrong with the condo community.
The important questions to ask are:
- What is the money paying for?
- Why is the assessment needed?
- How well has the association planned for future major expenses?
- Could more assessments be coming?
Here’s what Florida condo buyers and owners should understand.
What Is a Condo Special Assessment?
Regular condo fees typically pay for the association’s ongoing operating expenses such as insurance and grounds maintenance, and contributions to reserves for future repairs.
A special assessment is an additional amount charged to condo owners on top of their normal monthly or quarterly condo fees. It is generally used when the association needs additional money for a particular expense or project that cannot be adequately covered by its existing operating funds or reserves. For example, if a condo needs a roof replacement costing $1 million and the association only has $800,000 in the appropriate reserves, the special assessment shared by the owners will be $200,000. This may be relatively manageable if there are 100 units in the building. The story may be different if the association only has $100,000 in its roof reserve and has to push the burden of $900,000 to owners.
What Causes a Special Assessment?
There are many possible reasons for Special Assessments:
Common examples include:
- Roof replacement
- Concrete restoration
- Elevator replacement or modernization
- Plumbing projects
- Exterior painting or waterproofing
- Parking garage repairs
- Hurricane or storm damage
- Increased insurance costs
- Pool or amenity renovation
- Reserve shortfalls as associations become compliant with SIRS
Sometimes an assessment results from an unexpected event. Other times the expense was entirely foreseeable, but the association hadn’t accumulated enough reserves to pay for it. That distinction matters.
If a well managed association suffers unexpected storm damage and levies an assessment, I may view that very differently from an association that has repeatedly deferred maintenance and underfunded its reserves.
Special Assessments and Condo Reserves
This is why I spend so much time looking at condo reserves when helping buyers evaluate a building. Reserve funds are essentially money accumulated by the association for major repair and replacement expenses. An engineer or architect estimates the remaining life on structural components such as roofs, elevators and walkways and the estimated future replacement cost. When those components eventually need replacing or a major overhaul, the reserves should be sufficient to cover the cost and no additional funding is needed.
Historically, some Florida condo associations chose to reduce or waive certain reserve contributions to keep monthly condo fees lower. That made a building appear inexpensive to own in the short term – low monthly fees – while potentially pushing substantial expenses into the future.
Florida’s reserve requirements have changed significantly in recent years. For condo associations subject to Florida’s Structural Integrity Reserve Study requirements, certain structural reserve items can no longer be underfunded in the way they once could be.
Read more: What Are Condo Reserves and Why Do They Matter? →
What Does SIRS Have to Do With Special Assessments?
A Structural Integrity Reserve Study, usually shortened to SIRS, looks at major components of condominium buildings and establishes how much money should be reserved for their future repair or replacement.
Under current Florida law, residential condo associations generally must obtain a SIRS at least every 10 years for condominium buildings that are three stories or higher, subject to the details and exceptions in the statute. The first SIRS was required by the end of 2025 so all condos requiring SIRS theoretically should have it in place now and be funding the required reserves. The study identifies covered components, estimated remaining useful life, estimated replacement cost and a recommended reserve funding schedule.
If a study identified substantial future expenses and the association doesn’t already have sufficient money available, owners may face increased regular assessments or a special assessment or both. In some cases the one off payment of a special assessment may be preferable to substantially elevated month assessments – think of the impact on sales and condo unit values.
So when I see a special assessment, I don’t just ask “How much is it?”. I also want to know “What created the need for it?” and “What does the association’s reserve position look like after this special assessment is paid?”
Those are much more useful questions.
Read more: What Is a Structural Integrity Reserve Study (SIRS)? →
Does a Florida Condo Association Have to Notify Owners?
For a nonemergency special assessment, Florida law generally requires written notice of the meeting at which the assessment will be considered to be provided to owners and posted on the condominium property at least 14 days before the meeting. The notice must state that an assessment will be considered and include the estimated cost and purpose of the proposed assessment. Exactly how an assessment is approved can depend on the type of expense, Florida law and the condominium’s governing documents. It’s a mistake to assume that owners always get to vote directly on every special assessment.
How Much Can a Condo Special Assessment Be?
There isn’t a “normal” amount. I see buyers make this mistake fairly often. A $5,000 assessment isn’t necessarily minor, and a $25,000 assessment isn’t necessarily a reason to walk away.
Consider two hypothetical buildings.
Building A
The association assesses each owner $20,000 to complete a major concrete restoration project. The work is well defined, engineering reports are available, the project is underway, and the association otherwise has healthy finances and properly funded reserves.
Building B
Owners receive a $5,000 assessment because the association doesn’t have enough cash for a maintenance expense, such as walkway railing replacement. Meeting minutes suggest several other major projects have been postponed.
I could potentially be more comfortable with Building A. The dollar amount alone doesn’t tell us the whole story. We have to look further into the financials.
How Is a Special Assessment Divided Among Owners?
It depends on the condominium declaration and the way common expenses are allocated among the units. It isn’t always simply total project cost ÷ number of condos.
The most common method I see is that units have different percentage interests in the common elements, allocated on square footage of the unit. A bigger unit has a larger interest of the common areas allocated to it and a correspondingly larger proportion of the special assessment. When I’m reviewing a condo for a buyer, I want to see the actual assessment documentation for that particular unit, rather than relying on what another owner says they paid.
What Happens If You’re Buying a Condo With a Special Assessment?
This is where proper due diligence becomes particularly important. When I’m a helping a buyer consider a condo with a special assessment, I want to understand:
- What is the total assessment?
- What is this unit’s share?
- Has the assessment already been approved?
- How much has already been paid?
- Is it payable immediately or in installments?
- What project is it funding and has work started?
- What is the expected project cost, could costs increase?
- What do the association’s reserves look like – are they fully covering future replacement?
- What do recent board meeting minutes say about other major projects past and future?
- Is there SIRS or milestone inspection documentation for review?
- Are there association loans?
Florida law gives purchasers of resale condominium units important rights to receive association documents, including the current budget and financial statements and, when applicable, milestone inspection information and the association’s most recent SIRS. I worked with a buyer last year where the seller declined to share the Milestone report, and SIRS was not completed at the time. My advice was not to proceed. He went ahead with the purchase anyway, saying the building looked well maintained. Almost immediately he was hit with a special assessment of over $20,000. Had we seen the Milestone report we would have seen major work required that was not accounted for in the financials.
Diligence is required when purchasing a condo, look beyond the monthly fee and special assessments into the financial health of the complex. You’re buying into the association as well as buying the condo.
Who Pays a Special Assessment When a Condo Is Sold?
This is a question I get from both buyers and sellers. The answer isn’t simply “the seller always pays” or “the buyer always assumes it.” The As Is contract, most used for Pinellas County purchases, defaults to the Seller will pay in full at close, but there are options for the buyer to pay in full and for installments to be taken over by the buyer at close. The details of the assessment approval status, the timing of the assessment, installments vs pay in full and the purchase contract matter.
If an assessment has already been levied, we need to establish exactly what has been paid, what remains due and in the contract allocate responsibility between buyer and seller. This needs to be dealt with clearly at time of signing the sale/purchase contract. The contract, association estoppel and closing documentation should show the agreed on numbers and responsibilities.
Does a Seller have to Disclose a Special Assessment?
There is ample opportunity for a seller to disclose special assessments that are in place or being considered, and the law requires disclosure. That said, buyers need to get access to condo financials, Milestone reports, SIRS reports and meeting minutes and do their own diligence. Don’t rely on the law or the word of a seller to protect your financial interests!
Can You Negotiate a Special Assessment When Buying or Selling a Condo?
Potentially. If you are considering a condo with a special assessment in place, there are several ways the economics of the transaction could be structured depending on the circumstances and contract terms.
A buyer might negotiate around:
- Purchase price
- Seller paying the outstanding assessment
- Seller credit
- Other closing concessions
But don’t miss the major issue here. Negotiating who pays the assessment does not necessarily make the underlying problem disappear. Even if the seller pays the entire amount at closing, I still want to understand why the association needed the money in the first place, whether the project solves the underlying issue and how healthy are the condo financials going forward.
Should You Avoid a Condo With a Special Assessment?
This is the biggest takeaway from this article. A special assessment is a reason to investigate, not automatically a reason to reject the property.
I’d want to distinguish between a financially healthy association responsibly funding a major project and an association repeatedly reacting to expenses because of poor planning, inadequate reserves or deferred maintenance.
After work is complete, the building may actually be in a stronger position than it was beforehand. But remember that a special assessment can sometimes be the first indication of larger financial or maintenance problems. The assessment is the starting point for questions, not the conclusion.
Key Takeaways on Condo Special Assessments
When I’m helping a buyer evaluate a condo in St. Petersburg, or a seller assessing how to navigate a sale with a special assessment, I don’t look at any one number in isolation.
- Monthly condo fee + reserves + special assessments + major projects + association finances + SIRS + Milestone Report
- A low monthly condo fee isn’t necessarily a bargain.
- A building with a recent special assessment isn’t necessarily poorly managed.
- A beautiful condo in a great location isn’t necessarily a smart purchase if the association’s finances don’t make sense.
The goal whether you are buying or selling is to understand the overall financial health of the community – past, present, and future.
Considering a Condo in St. Petersburg, Pinellas County or the greater Tampa Bay area?
If you’re looking at a condo with a special assessment, or trying to compare the financial health of different buildings, I can help you work through the association information and identify the questions to be answered before you make an offer.
If you are already a condo owner wondering if you can sell your condo with a Special Assessment, I can help you assess the financial health of the community, how best to present this to a buyer, and develop a negotiating strategy before you go to market.
Talk to Tim About Your Condo Search or Sale →
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