The “standard” language in typical sales contract Association Riders is one of the most frequent causes of disputes, failed transactions and bad-will. Generally, these clauses, whether in the forms we use or in those provided by other brokers attempt to assign responsibility for pending or new assessments or those that are passed during the transaction is pending based on what the purpose of the assessment is for or whether or not the work is substantially complete. This is a sure-fire recipe for disputes and arguments and serves neither Buyer nor Seller well. And, no matter what they are “told” by their agents, one or the other party may not anticipate that he/she will be responsible for some large sum of money not explicitly stated in the contract.
Therefore, in any condo sale transaction, you are must negotiate this point directly by inserting the following typed or handwritten language in the contract, either in the blank space provided for special clauses or, if that is impractical, in the form of an addendum:
Any special assessments made prior to closing will be paid by the Seller [Buyer].
Of course, you are expected to chose one of the parties to pay. This does not mean that the Buyer and Seller cannot bargain some other agreement, just that in starting out, there should be an unambiguous, simple, clearly understood expression of who is responsible for what.
Of course some other arrangement than the simple one above can be made. Such sums can be divided up, buyer can pay one and seller discharge another, there are endless possibilities and determining who ends up responsible for what is called negotiation and is what you are paid to handle. It is not helpful to your Buyer or Seller for you to take the attitude, “That’s what the other agent told me it ‘has’ to say,” about this; responsibility for these sums is a legitimate subject for negotiation and just because the “price” is agreed-upon does not mean that any other important provisions of an offer need to be accepted without modification.
What can be done varies from condo to condo. Some associations require that any assessment that is payable in installments must be paid off in full if the property is sold. Others will permit the new buyer to “take over the payments” on an existing Special Assessment. But whatever is intended by both parties should be explicitly written out in plain English and placed in the Special Clauses section of the sales contract or in an addendum. Any proposed arrangement that involves a Buyer “taking over” an existing Special Assessment payable in installments should be verified with the Condo Association (not the Seller) before putting such language in an offer or counteroffer.
The time to have your proposed language reviewed by Senior Management is before you submit it on an offer or counteroffer. Submit any complex clauses relating to Special Assessments to Ruth Carrington before you accept them or incorporate them in a proposed contract.