I have a contract on my Virginia condo to close next week. After the contract was signed, a special assessment was voted on and passed. The first due date for the assessment is after the closing.
The contract says "Unless otherwise agreed to in writing, Seller will pay any special assessments and will comply with all orders or notices of violations of any county or local authority, condominium unit owners’ association, homeowners’ or property owners’ association or actions in any court on account thereof, against or affecting the Property on the Settlement Date."
The title agency is saying that because the special assessment was passed before the closing I must pay the whole assessment. Is this the correct interpretation of the above language from the contract? I will pay it if I have to, but as it is not even due until after the settlement date; I would like to confirm.
Assuming that there are no contrary provisions or agreements (which is a big Assumption), and construing just the language you have provided, our conclusion would be that you are liable for the assessment the moment it is passed regardless of the due date. It can be held in escrow until payment is due if you think the Association might rescind it and you may even wish to see if the Association will discount the amount if paid early. It is perfectly legal for an Association to give a discount for early payments if they choose. All things being equal, the above conclusion would be the same if there were nothing in the documents about who was responsible for assessments. The Condominium Act requires that any assessments which have been approved be disclosed to a buyer:
A statement of any expenditure of funds approved by the unit owners’ association or the executive organ which shall require an assessment in addition to the regular assessment during the current or the immediately succeeding fiscal year;
Virginia Code § 55-79.97
Since buyers may request updates up to the time of closing this is an issue which would need to be addressed. Unfortunately for you, they passed it prior to closing which is the operative date in our opinion.
It is extraordinarily unlikely to happen, but there are statutory mechanisms to allow members of an Association to rescind a special assessment within a certain time frame. The statute provides:
All unit owners shall be obligated to pay the additional assessment unless the unit owners by a majority of votes cast, in person or by proxy, at a meeting of the unit owners’ association convened in accordance with the provisions of the condominium instruments within 60 days of the delivery or mailing of the notice required by this subsection, rescind or reduce the additional assessment. No director or officer of the unit owners’ association shall be liable for failure to perform his fiduciary duty if an additional assessment for the funds necessary for the director or officer to perform his fiduciary duty is rescinded by the unit owners’ association in accordance with this subsection. The unit owners’ association shall indemnify such director or officer against any damage resulting from any claimed breach of fiduciary duty arising there from.
Virginia Code § 55-79.83
You will want to be certain that the Association recognizes that you are paying the assessment so that it can refund the monies to you if that happens. It will be best to have a written agreement at closing that you get any refund of this assessment coming to owner for any reason.