Interest on Special Assessment

Started by CathyH1 • 4 replies • 1428 views

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CathyH1 (Indiana)
Posts: 20

Posted:

Does anyone know if in the State of IN the BOD can assess interest on a Special Assessment (in this particular instance iao $10K per condo unit). The Association does not have any financing in place requiring it to pay interest for the project that is the subject of the assessment.

This is a ten year project and for those who are paying monthly rather than all at once, the interest adds up substantially (about $4,000.00 additional will be due at the end of the 10 yr period) I believe the rate they are using is about 7.5%...don't have the documents with me at the moment.

Any thoughts appreciated.

JoeS4 (Kentucky)
Posts: 77

Posted:

Not sure about your state, however if the board is asking for a specific amount should they break down the total with interest included between all the units/owners and then break this down monthly? This sounds like a poor planning or break down in the budget issue also, someone needs to make sure that history doesn't repeat itself.

CathyH1 (Indiana)
Posts: 20

Posted:

We have all received amortization tables etc so we do have a breakdown of interest and principal. They even advised people in a written communication yesterday they could deduct the interest on their income taxes....does not sound correct to me but I would consult and accountant first. And believe me, many of us are all over the BOD to monitor this assessment (it is being litigated in Court at this time...LOOOOOONNNNNG story). Did I mention the assessment money is being mingled with the Reserve money (or what SHOULD be in the reserve monies - technically the Reserve Account has a 0.00 or near 0.00 balance).

Thanks

JoeS4 (Kentucky)
Posts: 77

Posted:

Ouch.....sounds like too many details to give advice, have your board call a special meeting or two, to explain to everyone what is going on and have an attorney and CPA both there to help explain and make sure things are explained properly. The CPA can advise on the interest, the lawyer can relieve the members that the board is doing their job, and everyone else can ask questions and try to get answers.

Lots of luck to everyone involved

CathyH1 (Indiana)
Posts: 20

Posted:

Thanks for the input Joe, but as I stated this is in litigation now...the assessment was overturned by the members of the association but the BOD decided to go ahead and collect while it was being litigated. The Special Meeting idea is long gone...we did not even have our annual meeting as required in the By-Laws (that too is part of the litigation).

All I am really interested in now is if anyone knows whether or not interest can be collected on a Special Assessment in IN when the association is not paying interest on a loan associated with that assessment. Basically, the association is acting as a bank. The technicalities of this entire mess are far too complicated for this forum but I thought maybe someone would have some knowledge on this specific topic.

Thanks again. I appreciate the interest and support!

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