Sometimes a board of directors has no choice but to levy a special assessment in order to proceed with necessary work, maintenance or repairs. Such a decision is rarely well-received by owners, who will most likely question the rationale of the decision and the board’s management of the condominium’s affairs. Even if owners agree that the contemplated work is necessary, many may believe that there are more affordable options.
Once the decision to levy a special assessment has been made, the next question is often to determine how much time to give owners to pay.
Recently, the board of one of our clients struggled with this difficult decision. They turned their minds to the possibility of spreading the payments over a period of time rather than demanding a lump-sum payment from all owners. They were of the view that this would be financially easier for most of the owners. Some owners felt that spreading the payments over a long period of time would stigmatize the condominium. They felt that having the special assessment appear on the status certificate for such a lengthy period would negatively affect the resale value of the units. These owners preferred to pay the entire special assessment in a lump sum payment and get it over with.
The reality is that any decision dealing with a special assessment will not be a popular one. The board of directors is not required to obtain consent from the owners before imposing a special assessment, nor does it have to submit the question to an owners’ vote. Boards have the statutory authority (and obligation when required) to levy a special assessment to ensure that the corporation’s financial commitments are met. In doing so, the boards will have the discretion to impose the terms of payment. This means that a board can collect monies as it sees fit, either by way of a lump-sum payment, through installments, or by increasing the monthly fees. As long as the board’s decision is reasonable, the court will not interfere with a board’s decision to spread the special assessment over a period of time. This is usually perceived as a question of internal management and the courts will usually grant a fair deal of deference to such decisions.
(This article was first published by the author on February 20, 2013)