Money Saved for Future Work
Almost all the larger condo associations in the Warehouse District put away a portion of the monthly condo fees inot a reserve account. The is done for future projects and for emergency fixes. This way they will not have to assess owners to pay for quick fixes on the building.
Many time associations will save more for a specific project that they want to build or create. Often the association knows something is wearing out like a roof and they begin to save for the future bill.
I suggest all my buyers review the budget to see how much money is in the reserve accounts. A few smaller associations collect less in monthly fees as the owners will pay up when something is needed. This is not the norm however.
Lenders for conventional loans want condos to have 10% of the budget in reserves. Most condos will have this amount for more.
An assessment is voted on by the condo association to build reserves or collect money for repairs and up grades. If your condo needs a new roof,it is a major repair that needs more money or the association does not want to use all the reserves to repair an issue.
Some associations charge a montly assessment to build up reserves for future costs. It may be added to your monthly fee or collected from all owners at once. The assessments are based on your ownership per centage which is based on the size of your unit. A 1000 sq. ft. unit is going to pay twice as much as a 500 sq. ft. unit.
Some association have in their bylaws that the new owners contribute several months of condo fees to be put in reserves. Generally it is a charge of two months for the new buyer.This does not count towards condo fees. This is something the selling agent needs to check into with the association manager.
Assessments for major repairs are few and far between. Most of the large one time assessments I have known about generally have to do with roof repair or replacement.