Q. When a special assessment is collected for a specific purpose and then that purpose is no longer needed, what happens to the money? Our condo association passed a special assessment because our reserves were inadequate, and I believe there will be money left over after the projects are done.
A. The term “special assessment” is not the most popular term if you live in a community with an association. A special assessment may be necessary to pay for unbudgeted expenses, and a special assessment may also be approved by the membership for major capital improvements. The funds collected from a special assessment must be used for the purpose(s) set forth in the notice to the owners. Any excess funds are considered common surplus and may, at the discretion of the board of directors, either be returned to the unit owners or applied as a credit toward future assessments. We recommend in most cases that the common surplus be credited toward future assessments, which may allow the association to reduce quarterly maintenance fees.