Story by Robyn A. Friedman For The Wall Street Journal

That beautiful Miami Beach penthouse with the fabulous ocean views comes with more than a high price tag. It also comes with the risk that the condominium association may levy a special assessment against your unit that can run into the thousands, or even hundreds of thousands, of dollars, a factor that is having a chilling effect on sales of older condominiums not only in Florida, but nationwide.

According to the Community Associations Institute, an industry group, special assessments are charges levied by a condominium or other community association to pay for expenses that cannot be covered by the existing budget or cash reserves. These expenses can result from a fire or other disaster, unplanned maintenance or repairs.

Nowhere is the issue of special assessments more pressing than in Florida, where new legislation was enacted after the June 2021 collapse of Champlain Towers South, a 12-story condominium in Surfside, that left 98 dead. That legislation requires so-called “milestone inspections” of certain condo and cooperative buildings to ensure they are structurally sound, and to verify the adequate funding of association reserve accounts. In response, condo and coop boards have been levying special assessments against unit owners to cover necessary repairs so their buildings will pass the inspections and to cover reserves.

Janet Stone bought a two-bedroom condominium in Ormond Beach, Fla., in November 2021 for $379,000. The retired special-education teacher finished up her last class in Las Vegas and then drove to Florida to begin her retirement. Less than a year later, in the fall of 2022, she was hit with a $102,000 special assessment, payable in seven payments over two years, in amounts varying from $3,529.60 to $23,310.58.

Stone went back to work, and every cent she earned went toward paying her assessment. She made her last payment in January 2025. “I hope that the building is now structurally and fiscally sound,” she said.

Stone had reviewed the governing documents of the condo association, but not the minutes of board of directors meetings, where there was talk of the coming assessment. That is why prospective condo buyers should review all relevant documentation before they buy, including the association budget and reserve schedule, and talk with residents of the building.

According to Mark F. Grant, a partner at Greenspoon Marder in Fort Lauderdale, Fla., and a certified specialist in condominium and planned-development law, condo-unit buyers routinely obtain an estoppel letter from the association before closing. In Florida, that document details any outstanding fees due by the condo-unit seller, as well as any actual or pending special assessments, to give buyers notice of their potential liabilities. Stone said she received an estoppel letter that referred to the possibility of concrete-restoration work but that there was no dollar amount included.

If you’re hit with a special assessment, here are some things you can do.

Contest it.

Every state has strict legal requirements that a condo’s board of directors must follow to levy a proper special assessment. If they fail to follow either the statutes or any requirements set forth in the condominium’s governing documents, that may present the chance for an owner to contest the assessment because it wasn’t adopted correctly, according to Grant. Florida law, for example, requires that unit owners be provided with at least a 14-day notice before a board meeting at which a special assessment will be considered. Some condo documents require even more notice. After the meeting, the board is required to send out a resolution confirming the amount of the special assessment, how much each owner owes and when the payments are due, Grant said.

Explore financing options.

Borrow the funds to pay the special assessment from friends or family, or consider asking the board for a payment plan. If you have sufficient equity, you could also get a home equity line of credit. Chantel Bonneau Stewart, a certified financial planner at Northwestern Mutual in San Diego, recommends establishing a Heloc even before you need it. “It can be a way to finance a very large expense, such as an assessment, over a number of years, rather than having to deliver a very significant amount of cash sooner,” she said. Stewart said that condo owners might also be able to borrow from their 401(k) plan. While distributions from a 401(k) can trigger taxes or penalties, a loan paid back with interest isn’t considered a taxable distribution, she said. The plan dictates the term and other provisions, so read the fine print.

Check your insurance policy.

Condo owners typically carry a homeowners insurance policy called an HO6. Check to see if it has loss-assessment coverage—most do. That coverage can protect condo owners from paying out of pocket for a special assessment when the costs exceed the association’s master insurance policy limits, said Loretta L. Worters, a vice president at the Insurance Information Institute. But there are limitations: The assessment must be from a loss that would have been covered by your individual policy, such as a fire or hurricane, so it won’t help cover the cost of assessments done solely for repairs needed to satisfy inspection requirements.