The Letter Nobody Wants to Write

It was February when the board of Lakeview Terrace Condominium Corporation held the meeting that nobody had been looking forward to. The roof had failed. Not gradually — catastrophically. A section of the membrane over the parking garage had collapsed during a January ice storm, and the repair estimate came in at $1.2 million.

The reserve fund had $340,000 in it.

The board president, a retired teacher named Margaret, looked around the table at her fellow directors. "So," she said, "we need to talk about a special assessment."

The room went quiet.

What Is a Special Assessment?

A special assessment is a charge levied against unit owners — in addition to their regular common expenses — to cover costs that the corporation's reserve fund cannot absorb. Under the Condominium Act, 1998, the board has the authority to levy a special assessment when the corporation's funds are insufficient to meet its obligations.

Special assessments are not a sign of failure. They are a sign that something expensive happened — or that the reserve fund was not adequately funded over time. Both situations occur in well-run buildings. The difference between a well-managed corporation and a poorly managed one is not whether a special assessment ever happens. It is how the board handles it when it does.

When Is a Special Assessment Necessary?

The most common triggers:

Reserve fund shortfall. The reserve fund study projected that a major repair would cost $800,000. The actual cost is $1.4 million. The fund covers the projected amount. The gap needs to come from somewhere.

Emergency repairs. A water main breaks. A fire damages a common area. An elevator fails catastrophically. Insurance covers some of it. The deductible and uninsured portions do not cover themselves.

Underfunded reserve. Years of artificially low common expense increases — often driven by boards trying to keep fees down to attract buyers or avoid owner complaints — have left the reserve fund chronically short. A reserve fund study finally forces the reckoning.

Legal costs. A lawsuit against the corporation results in a judgment or settlement that exceeds the corporation's insurance coverage and available funds.

The Legal Framework

The Condominium Act does not use the phrase "special assessment" — it refers to the board's authority to levy additional contributions from owners when the corporation's funds are insufficient. The mechanics are set out in Section 84 of the Act.

Key points:

  • The board can levy a special assessment by resolution — no owner vote is required
  • The assessment must be allocated among units in accordance with the corporation's declaration (typically by unit factor or percentage interest)
  • Owners who do not pay are subject to the same enforcement mechanisms as common expense arrears — including a lien on the unit
  • The corporation must provide reasonable notice of the assessment and the reasons for it

How to Levy a Special Assessment Correctly

Step 1: Confirm the Shortfall

Before levying an assessment, the board should have a clear picture of the financial gap. This means a current reserve fund study (or an updated projection from the existing study), a detailed cost estimate for the work to be funded, and a review of all available funding sources — including the possibility of a loan.

Step 2: Consider Alternatives

A special assessment is not always the only option. Depending on the amount and the timeline, the board might consider:

  • A reserve fund loan (some financial institutions offer these specifically for condo corporations)
  • A phased repair approach that spreads costs over multiple budget years
  • An increase in common expenses to fund the shortfall over time

Each of these alternatives has trade-offs. A loan adds interest costs. A phased approach may not be feasible if the repair is urgent. A common expense increase may not generate funds quickly enough. But the board should be able to demonstrate that it considered alternatives before levying an assessment.

Step 3: Pass a Board Resolution

The assessment must be authorized by a formal board resolution, recorded in the minutes. The resolution should specify the total amount of the assessment, the per-unit allocation, the payment schedule, and the purpose of the funds.

Step 4: Communicate With Owners

This is the step that boards most often underestimate. A special assessment letter that arrives without context — just a number and a due date — will generate panic, anger, and a flood of calls to the management office.

A well-crafted communication should:

  • Explain what happened and why the assessment is necessary
  • Describe what alternatives were considered and why they were not sufficient
  • Provide a clear breakdown of the per-unit amount and payment schedule
  • Explain what the funds will be used for
  • Offer an opportunity for owners to ask questions — typically at a town hall or special owners' meeting

The goal is not to make owners happy about the assessment. That is not possible. The goal is to make them understand that the board acted responsibly, considered the alternatives, and is being transparent about the situation.

Step 5: Enforce Consistently

Once the assessment is levied, the corporation must enforce it consistently. Owners who cannot pay should be directed to the management office to discuss payment arrangements — but the corporation cannot simply waive the assessment for some owners and not others. Inconsistent enforcement creates legal exposure and erodes trust.

The Story of Lakeview Terrace

Back to Margaret and her board. They did everything right. They commissioned an emergency engineering assessment to confirm the scope of the damage. They got three repair quotes. They explored a reserve fund loan — but the interest cost over five years was significant, and the board felt that a clean assessment was more transparent.

They held a town hall meeting before sending the assessment letters. Margaret stood up in front of 140 unit owners and explained, in plain language, what had happened, what it would cost, and why the reserve fund was short. She acknowledged that the fund had been underfunded for years — a decision made by previous boards — and she committed to a reserve fund study and a realistic funding plan going forward.

The assessment was $8,400 per unit, payable in two instalments. Seventeen owners requested payment arrangements. Three owners were ultimately liened for non-payment. But the building got its roof repaired, the reserve fund study was completed, and the common expenses were increased to a sustainable level.

Two years later, Margaret ran for re-election. She won by acclamation.

What Good Management Looks Like

The best way to handle a special assessment is to never need one. That means:

  • Reserve fund studies completed on schedule
  • Common expense increases that reflect actual reserve fund requirements — not just what owners want to hear
  • A board that is willing to have difficult conversations about funding before a crisis forces them

When a special assessment does become necessary, good management means a clear process, transparent communication, and consistent enforcement. It means treating owners as adults who can handle difficult news when it is delivered honestly.

The Bottom Line

Special assessments are not the end of the world. They are a financial tool — an imperfect one, but sometimes the right one. The boards that handle them well are the ones that prepare thoroughly, communicate honestly, and enforce consistently.

The boards that handle them badly are the ones that send a letter with a number and a due date and then wonder why their phones are ringing off the hook.

MVP Condos helps Ontario condo boards navigate reserve fund planning, special assessments, and owner communications. If your board is facing a funding shortfall, our team can help you build a plan.