If you're thinking about buying a condo, there's one topic that doesn't get nearly enough attention:

Special assessments.

In my opinion, every condo buyer should receive a warning sheet explaining exactly how assessments work before they ever make an offer.

If you'd rather watch or listen to the full breakdown, here's the video.

Most buyers understand mortgage payments, property taxes, and HOA dues. What many don't realize is that condo ownership can come with large, unexpected expenses that can dramatically impact their finances. After nearly two decades in lending, I've seen too many buyers focus on the monthly payment without understanding the financial risks that can be hiding behind the scenes.

Why Condo HOAs Are Different

Let me start by saying this:

I don't hate condos.

There are plenty of situations where buying a condo makes sense.

Many buyers choose condos because:

• They're more affordable than single-family homes in the same area.
• They require less maintenance.
• Amenities like pools, landscaping, and exterior maintenance are handled for you.
• They can be located in highly desirable areas that would otherwise be unaffordable.

The challenge is that many buyers focus entirely on the monthly HOA payment and never consider what happens when the building needs major repairs.

That's where assessments come in.

The HOA Problem: Fees Rarely Stay the Same

One of the biggest misconceptions condo buyers have is that their HOA dues will remain relatively stable.

They won't.

HOA fees almost always increase over time.

If the building needs additional maintenance, insurance costs rise, or reserve funds fall short, the association generally has two options:

1. Increase monthly HOA dues.
2. Issue a special assessment.

Neither option is particularly fun for homeowners.

But special assessments can be especially painful because they often require large amounts of money in a very short period of time.

I've seen buyers purchase condos because the monthly payment fit comfortably into their budget, only to find themselves struggling a year or two later when HOA fees increased dramatically.

What Is a Special Assessment?

A special assessment is an additional charge imposed by the condo association when major repairs or improvements are needed, and reserve funds aren't sufficient to cover the cost.

Think about everything that can go wrong with a large building:

• Roof replacements
• Structural repairs
• Plumbing failures
• Elevator repairs
• Concrete restoration
• Exterior maintenance
• Storm damage

If the association doesn't have enough money saved, those costs get passed directly to the owners.

And unlike a modest HOA increase, assessments can be enormous.

We're not talking about a few hundred dollars.

We're talking about tens of thousands of dollars, or more.

A Real-Life Example: The $100,000 Assessment

Recently, I was researching a condo development near the beach.

The location was incredible.

Two-bedroom, two-bath units were selling for around $300,000.

For that particular market, the pricing seemed surprisingly low. Based on location alone, I expected those units to be significantly more expensive.

Whenever I see something that appears underpriced, I assume there's a reason.

So I started digging.

What I discovered was a pending assessment that could cost owners approximately $100,000 per unit.

The building had millions of dollars in deferred maintenance and repairs that needed immediate attention.

Suddenly, those bargain-priced condos didn't seem like such a bargain anymore.

Why Financing Can Become a Problem

The situation became even more concerning because the building had become ineligible for many traditional financing programs.

When a condo project has significant deferred maintenance or major structural issues, agencies like Fannie Mae and Freddie Mac may determine that it no longer qualifies for conventional financing.

That creates a serious problem.

If traditional financing isn't available:

• Buyers often need larger down payments.
• Financing options become limited.
• Interest rates are usually higher.
• Fewer buyers can qualify.
• Future resale opportunities become more difficult.

This particular development had reached the point where traditional financing was no longer an option for many buyers.

The Risk Doesn't End With One Assessment

One of the biggest mistakes buyers make is assuming the first assessment is the final number.

Often, it's not.

In this example, contractors hadn't even completed all of the exploratory work.

Once construction begins and crews start opening walls, removing siding, or exposing structural components, additional problems are often discovered.

That can lead to:

• Additional repair costs
• Additional assessments
• Additional HOA increases

A $100,000 assessment today can become something much larger tomorrow if more issues are uncovered.

What Happens If Owners Can't Pay?

This is where things become particularly difficult.

When a special assessment is approved, owners generally have to pay it.

If they don't have the cash available, they may need to:

• Sell the property
• Refinance
• Take out additional financing
• Use savings
• Borrow from other sources

And if they can't do any of those things, they may face collection actions or even foreclosure proceedings from the association.

That's why I often describe assessments as a risk that many buyers simply don't understand until it's too late.

What Buyers Should Review Before Making an Offer

If you're considering a condo purchase, don't stop at the listing photos and monthly HOA amount.

You should review several important documents before moving forward.

Association Budget

Start with the budget.

Look for:

• Reserve balances
• Operating deficits
• Recent increases in expenses
• Financial stability

A healthy reserve fund reduces the likelihood of future assessments.

Reserve Studies

Reserve studies estimate future maintenance needs and determine whether the association is saving enough money to cover upcoming repairs.

If the reserve study shows millions in future repairs but reserves are dramatically underfunded, that's a warning sign.

Contractor Bids

One of the biggest clues is whether bids have already been issued for major work.

In the condo development I researched, contractor estimates were already available.

The assessment wasn't formally finalized yet, but the groundwork was clearly being laid.

The Information May Not Be Official Yet

Here's where things get tricky.

Many buyers assume that if a major assessment is coming, it must be disclosed.

Not necessarily.

In many cases, discussions are happening long before anything becomes official.

There may be:

• Engineering reports
• Contractor proposals
• Preliminary cost estimates
• HOA discussions

But until the assessment is formally approved, disclosure requirements can be limited.

That means buyers need to do more than simply review the standard documents.

HOA Meeting Notes Are Gold

One of the most valuable resources available to condo buyers is HOA meeting minutes.

These documents often contain discussions about:

• Structural concerns
• Insurance issues
• Plumbing failures
• Reserve shortages
• Contractor bids
• Potential future assessments

I've seen situations where nothing alarming appeared in the official disclosures, but the HOA meeting notes told a completely different story.

In one case, a buyer discovered from meeting notes that an association was discussing replacing all of the building's plumbing due to recurring backups.

That kind of project can easily lead to a substantial assessment.

Thankfully, the buyer found the information before closing.

Ask Questions—and Ask Them in Writing

Don't assume someone will volunteer important information.

Ask directly.

Ask:

• Are there any pending assessments?
• Are any major repairs being discussed?
• Has the HOA received contractor bids?
• Are reserves considered adequate?
• Are there any known structural concerns?

Ask the seller.

Ask the HOA.

Ask your agent.

And if possible, talk to people who actually live in the building.

The neighbors often know what's coming long before it appears in official paperwork.

Can You Rely on Your Agent or Lender to Catch This?

Not completely.

Your lender has a specific role.

Your real estate agent has a specific role.

Neither one is responsible for conducting a full investigation into every future financial risk facing the building.

As lenders, there are limits to what we review and what we're permitted to evaluate.

Agents can help guide you through disclosures, but they're not performing forensic accounting on the association.

Ultimately, part of the due diligence falls on the buyer.

That's why understanding the risks yourself is so important.

My Condo Due Diligence Checklist

If I were evaluating a condo today, I would want answers to these questions:

✅ Does the association have adequate reserves?

✅ Have HOA fees increased significantly?

✅ Are there contractor bids for major repairs?

✅ Are future assessments being discussed?

✅ What do the HOA meeting minutes reveal?

✅ Are there insurance concerns?

✅ Does the project qualify for traditional financing?

✅ Have current owners heard rumors about upcoming work?

The more information you gather, the better protected you'll be.

Condos Can Still Be Great Investments—But Go In With Your Eyes Open

This article isn't meant to scare you away from condos.

There are plenty of well-managed condo associations with strong reserves, responsible boards, and healthy financials.

The goal is simply to understand that condo ownership comes with risks many buyers don't discover until after closing.

A beautiful unit.

A great location.

An affordable purchase price.

None of those things tell the whole story.

Before you buy, take the time to investigate what's happening behind the scenes.

Because nothing ruins a dream condo faster than discovering a six-figure assessment after you've already moved in.

If you're considering buying a condo and want help understanding financing options, evaluating project eligibility, or reviewing your homebuying strategy, my team and I are always happy to help.

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