What is a special levy?

A special levy (previously known as “special assessment”) is a type of financial contribution that the condominium board can impose (by resolution) on condominium unit owners. It may be levied as a one-time lump sum or as an extra payment, in addition to condominium contributions (fees).

When can a condo board impose a special levy?

A condo board can impose a special levy in certain situations, for example to:

  • Pay for unexpected and urgent maintenance, repair or replacement of the corporation’s real and personal property, common property or managed property
  • Cover unexpected shortfalls in the operating account
  • Increase the balance of the reserve fund to meet the requirements in a reserve fund plan
  • Pay for capital improvements (a special resolution is needed)
  • Satisfy a judgment against the corporation or
  • For any other purpose under the Condominium Property Regulation

What is the process of approving a special levy?

To approve a special levy, the condominium board passes a resolution, which must set out the following information:

  • the purpose of the levy
  • the total amount to be levied
  • the method for calculating the special levy
  • the date by which the levy or installments are to be paid

As soon as possible after passing the resolution, the board must inform owners of the following information:

  • the purpose of the levy
  • the total amount of the levy
  • the method for calculating each unit’s share of the levy
  • the amount of the owner’s unit’s share of the levy
  • the date by which the levy or installments are to be paid

 If the amount collected exceeds the amount required or is not fully used for the purpose in the resolution, then the corporation must pay the money into the reserve fund.

How is a special levy calculated?

Each owner’s portion of a special levy is calculated based on unit factor unless the Condominium Property Regulation or bylaws say otherwise. The unit factor is also used to assign condominium contributions (fees). If you’re unsure of how unit factors are assigned in your condominium, check the schedule attached to your condominium plan.

Before You Buy: What you need to know

Sellers must disclose if there is a pending special levy that is not included in the condominium documentation. The requirement to pay the special levy remains with the unit and becomes the responsibility of the new owner. Carefully consider whether you want to purchase a condominium unit with a pending special levy, as it will increase your costs significantly.

You should also consider why a special levy was levied. For example, was it levied to repair a leaky roof? Are there ongoing issues with the structural integrity of the building? Review the condo’s reserve fund documents and ask questions of the condo board, property manager, and other unit owners.

It is also important to consider if the condominium has a history of imposing special levies. Ask your lawyer and document review company to help you review the condo corporation’s documents to determine if there will be ongoing issues due to financial mismanagement.

Why did I get a special levy notice when the reserve fund seems adequate?

A condominium corporation’s operating budget and reserve fund are separate and distinct accounts with their own rules. For example, money from a reserve fund can only be used to cover the cost of repairing and replacing the corporation’s real/personal property, common property and managed property; it cannot be used to cover operating expenses. However, a special levy may be levied against condo owners to cover operating expenses.

Do I have to pay a special levy? What if I disagree with the special levy?

As an owner, it is your responsibility to pay your portion of the special levy when it is due, even if you disagree with it. If you don’t pay the special levy, the condo board could take any of the following actions:

  • charge interest on the unpaid amount (up to 18% per year)
  • sue you for the unpaid amount, plus any interest and legal costs
  • if you have a mortgage, ask your mortgage company to pay the outstanding amount
  • if you have a tenant in your unit, require the rent to be paid to the condominium corporation to cover the unpaid amount
  • file a caveat against your property title
  • foreclose on the title to your unit

If you want more information about why the special levy was imposed, talk to your condo board and ask questions. It is your responsibility as an owner to keep yourself informed about the finances of the corporation. Consider becoming a member of the condo board if you want to have greater input on the financial direction of the condominium corporation.

Information from Condo Law for Albertans, downloaded April 25, 2023. This does not constitute legal advice, and is applicable to Alberta only. Read full artcile HERE.

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