How to Protect Your Client from Special Assessments

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Key Takeaway
When representing a buyer in a condo purchase, include a clause that covers any special assessments charged between the date the APS is signed and the closing date.

When it comes to Condominium deals, there's usually more drafting involved for your Schedule A.

Most deals include a condition for a status certificate review (unless this was done ahead of time).

But there are also situations where a special assessment is announced after the Agreement of Purchase and Sale is signed, but before closing.

Who's responsible to pay?

The standard APS doesn't provide Buyers with any protection if a special assessment is issued between execution of the APS and closing.

This leads to arguments, delayed closings, etc.

So what's the solution?

Deal with it ahead of time, in the contract.

You want to insert language that requires the vendor to:

  • notify the Buyer of any new special assessments, and
  • provide a credit in favour of the Buyer of an amount equal to the then outstanding special assessment.

This gives the Buyer a clear remedy if an unexpected special assessment is levied.

Here's a sample clause:

The Seller agrees to be responsible for any actual or contemplated special assessment, or other charges relating to the Property that are not disclosed in the Status Certificate obtained by the Buyer that may be announced or disclosed by the Condominium Corporation prior to the Completion Date. This amount, if any, shall be adjusted, in favour of the Buyer, on closing.

This allows for the credit to be made in the statement of adjustment on closing, rather than an amendment in the purchase price.

Written by
Zachary Soccio-Marandola
Real Estate Lawyer

Direct: (647) 797-6881

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