How to Spot a Special Assessment Before You Buy a Los Feliz Condo

Read three things before you remove your contingencies: the association's statement of current and approved assessments, the budget report with its reserve summary, and the last 12 months of board minutes. California law requires the seller to provide the first two and to provide the minutes if you ask. Together they show assessments already approved and the ones the board sees coming.

A special assessment is a one-time charge to owners for a cost the budget and reserves do not cover. It rarely arrives without warning. At Rooster Homes™, we request the minutes for every condo purchase and read them with our buyers.

This guide shows where the signs show up and what to ask when you find one.

California Civil Code section 4525 lists what a condo seller provides to a buyer. For assessments, these items matter most:

• The current fees and assessments. A written statement from the association of the regular and special assessments now in place, plus anything unpaid on the unit.
• Approved changes not yet due. Any change to regular or special assessments the board has approved that has not started yet.
• The budget report. The association's most recent annual budget report, including the reserve summary.
• Board minutes, if you ask. Approved minutes of board meetings from the previous 12 months, not counting executive sessions.
• The balcony inspection. The report from the most recent inspection of balconies, decks and elevated walkways under section 5551.
• Construction defect notices. Where they apply, the initial list of defects and related settlement information.

Ask for the minutes in writing as soon as escrow opens. They are the one item on the list you have to request.

Under Civil Code section 5300, the annual budget report includes several statements worth reading slowly:

• Anticipated special assessments. Whether the board has decided, or expects, that one or more special assessments will be needed for a major component. If so, it states the estimated amount, the start date and how long it lasts.
• Deferred repairs. Whether the board has put off or decided not to do repairs on a major component, and why.
• Outstanding loans. Any loan with a term longer than a year, the amount owed and when it will be paid off.

The Assessment and Reserve Funding Disclosure Summary that comes with it adds two more checks. Line 2 lists assessments already scheduled. Lines 3 and 4 say whether the reserves are on track for the next 30 years, and if not, what more may be needed. Our guide on how to read an HOA reserve study walks through that form.

Minutes show what the board is talking about before it becomes a number in the budget. Read them for:

• Bids or proposals for a roof, elevator, plumbing, paint or paving project.
• Balcony or walkway repairs after an inspection.
• Water leaks, pipe failures or insurance claims.
• Insurance renewals with a higher premium or deductible.
• Talk of a loan, a reserve shortfall or a vote of the owners.
• Legal matters with a builder, a vendor or an owner.

One mention is a question, not a verdict. A pattern across several meetings is worth a direct question to the association before you commit.

Under Civil Code section 5605, special assessments that together exceed 5 percent of the association's budgeted gross expenses for the year generally need approval from the members. Section 5610 allows exceptions for emergencies, such as a court order or a threat to health or safety. A vote of the owners, or talk of one, is a clear sign in the minutes.

That is the short version. The rules have more detail, and a real estate attorney can explain how they apply to a specific building.

When the documents raise a question, ask it in writing. These are the questions we send most often on a Los Feliz condo purchase:

• Has the board approved, or discussed, a special assessment that is not yet listed?
• What projects are being bid now, and what do the bids come to?
• Did the most recent balcony and walkway inspection call for any repairs?
• Is the association considering a loan, and how would it be repaid?
• Are there any open insurance claims or legal matters?
• If an assessment is being paid in installments, how much is left and when does it end?

The association's answers become part of your file. They also give you and the seller something concrete to talk through if a cost is coming.

1. Read the listing. Note any assessment mentioned.
2. Open escrow and request the documents. Ask for the minutes in writing at the same time.
3. Read the statement of assessments. Look for current and approved special assessments.
4. Read the budget report. Check the anticipated assessments, deferred repairs and loans.
5. Read the disclosure summary. Lines 2, 3 and 4 first.
6. Read the minutes. Look for patterns, not single mentions.
7. Write down questions for the association. We send them and share the answers with you.
8. Decide before your contingency date. If an assessment is coming, the purchase contract and your agent's negotiation settle how it is handled.

• Not asking for the minutes. They are the one disclosure you have to request.
• Reading only current assessments. An approved change that has not started yet is listed separately.
• Treating a low fee as a sign of health. Check the reserves too. See what a Los Feliz HOA fee covers.
• Running out of time. Leave room before your contingency date for the association to answer questions.

Here is a hypothetical example. It does not describe a real building or a real client.

A buyer is in escrow on a Los Feliz condo. The statement of assessments shows nothing unusual. The minutes from the last year show the board collecting bids for balcony repairs after an inspection. The budget report says the board anticipates a special assessment and gives an estimated amount and start date.

Because the buyer found it before removing contingencies, there was time to ask questions and talk through options with the seller.

Rooster Homes™ is a Los Feliz, Los Angeles real estate brokerage owned by Brandon and Sarah Arlington (DRE #02051216) helping buyers and sellers of Los Feliz condos and townhomes. We request the minutes, read the disclosures with you and write down every question for the association before your contingency date.

See the full process on buying a condo in Los Feliz. Moving from a house? Read downsizing into a Los Feliz condo. When you are ready, send us a note and let us know what works best for you.

This guide explains how special assessments generally work. It is not legal advice. For questions about a specific building, talk with a real estate attorney.