So, Who Pays For That Post-Closing Special Assessment — the Buyer or Seller?

Home Sale “Bones of Contention” — and How to Avoid Them

Sellers don’t want to pay special assessments that are payable after closing . . . because they’re not going to be the owner then.

It makes sense for the Buyer to pay it, they reason, because it’s the Buyer who’s going to enjoy the future benefit of whatever the special assessment is paying for (examples: new water/sewer pipes, sidewalks, curbs, etc.).

That’s especially true if the item is arguably an improvement (vs. a repair).

Meanwhile, Buyers have equally compelling logic for why the Seller, not them, should be on the hook:  the special assessment may be due post-closing, but the problem it’s addressing occurred on the Seller’s watch.

That stalemate can also trip up condo and townhome sales, with similar arguments applying.

Think of it this way: in the sale of single-family home, if the Buyer’s inspector documents that the roof is failing, it’s the Seller, not the Buyer, who’s obliged to take the hit — either by paying for the repair/replacement, or by reducing the sales price.

Why should there be a different result when the worn-out roof happens to be on a condo building, and is being paid for by a special assessment on the owners? (Note: the more conservative practice is to assess a monthly capital charge on all owners, to build up reserves for such items).

“The Chandelier Parallel”

What’s the best way to avoid a potential stalemate over special assessments?

Like most things in real estate sales . . . by proactively avoiding it in the first place.

So, my usual counsel to Sellers is to think of a special assessment like an especially valuable, vintage Dining Room chandelier they want to keep.

They could always exclude the chandelier from the sale.

But, that can actually serve to put a spotlight on the item — and make it more likely the Buyer will want it.

Much better to simply remove the chandelier, and replace it with a more modest substitute — before the Buyer ever lays eyes on it.

Analogously, when there’s a special assessment due, post-closing, I recommend that the Seller: a) pays it (typically out of their sales proceeds); but also b) adds that amount to their asking price.

Call it, the “grossing up” solution . . .

See also, “Pending” vs. “Assessed” vs. “Payable” vs. “Levied” . . . Huh?!?

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