Evaluating the Process for Setting Contributions and Special Levies
What Are Condominium Contributions?
Condominium contributions (condo fees or special levies) are mandatory payments made by unit owners to cover the corporation’s operating expenses and reserve fund allocations. Contributions must be:
Based on unit factors assigned in the condominium plan, or another method allowed in the corporation's bylaws.
Used to cover operating costs, reserve fund allocations, and insurance premiums.
Fair and reasonable as per the condominium bylaws and CPA.
What is a Special Levy (Special Assessment)?
A special levy is a one-time charge imposed on unit owners for specific, unexpected expenses that cannot be covered by the reserve fund or operating budget. Special levies are:
Separate from regular contributions and must be properly justified.
Typically used for emergency repairs, major capital projects, or legal expenses.
Subject to legal and procedural requirements outlined in the CPA.
Setting Regular Contribution Requirements vs. Special Levies
Regular Contributions | Special Levies (Special Assessments) |
Calculated annually as part of the operating budget. | Levied for one-time or unexpected expenses. |
Allocated for day-to-day operations, maintenance, and reserve fund contributions. | Used for specific projects, such as major repairs or legal settlements. |
Based on unit factors unless otherwise stated in bylaws. | May be equally divided or unit-factor-based, depending on bylaws. |
Paid on a monthly or annual basis. | Must have a defined due date for payment. |
Does not require owner approval unless the bylaws state otherwise. | Owner approval may be required depending on the corporation's bylaws. |
Key Steps in Setting Contributions and Levies
Calculate annual contribution requirements based on projected operating expenses and reserve fund allocations.
Ensure contributions comply with CPA and bylaws regarding unit factors.
Pass a board resolution for special levies, detailing the amount, purpose, and payment schedule.
Provide owners with notice of any contribution increase or levy.
When Is a Special Levy Needed?
Legal and Financial Justifications for a Special Levy
A special levy may be imposed when:
The reserve fund does not have enough money for a necessary repair or replacement.
There is an unexpected legal expense (e.g., lawsuits, dispute resolutions).
The operating budget is insufficient due to unexpected shortfalls.
Major capital projects require funding beyond the existing financial reserves.
Legal Considerations for Imposing Special Levies
The CPA requires that special levies must be:
Approved by the condominium board through a resolution.
Properly allocated to owners based on unit factors or another approved method.
Clearly communicated to unit owners with specific details about the purpose and payment schedule.
Under the Condominium Property Regulation, condominium corporations may levy special assessments if the existing financial resources are insufficient for necessary expenditures.
Consequences of Improperly Issued Special Levies
🚩 Imposing a levy without proper board approval can lead to legal disputes.
🚩 Failing to properly notify owners may result in payment refusals.
🚩 Using a levy for unauthorized expenses can violate CPA financial regulations.
Financial Compliance Checklist for Condominium Managers
Ensuring Compliance with Contribution and Levy Regulations
A condominium manager must verify that:
Annual contributions align with the CPA and condominium bylaws.
Special levies are properly documented and board-approved.
Owner notifications comply with CPA timing requirements.
Financial records are updated and clearly show how funds are allocated.
Sample Financial Compliance Checklist
✔ Step 1: Review the Operating Budget
Confirm that annual contributions cover expected expenses.
Ensure proper reserve fund allocations are made.
✔ Step 2: Assess Special Levy Requirements
Determine if the expense qualifies for a special levy.
Confirm that the reserve fund and operating budget cannot cover the cost.
✔ Step 3: Obtain Board Approval
Prepare a detailed resolution outlining the amount and purpose of the levy.
Ensure the resolution meets CPA and bylaw requirements.
✔ Step 4: Notify Owners
Provide proper written notice to unit owners.
Include the levy amount, payment deadline, and legal justification.
✔ Step 5: Monitor Compliance and Payments
Track contribution and levy payments.
Address delinquent payments according to CPA rules.
