Thinking about a condo in Downtown Denver? The skyline views and walkable lifestyle are hard to beat, but one phrase can cause heartburn: special assessments. If you have heard about surprise bills from an HOA, you are not alone. The good news is you can read the signs before you buy.
In this guide, you will learn what special assessments are, why they happen in Denver’s condo towers, how to spot risk in a specific building, and how assessments affect your budget and financing. You will also get a practical checklist you can use during your condo search. Let’s dive in.
What a special assessment is
A special assessment is a one-time charge that a condominium association collects in addition to regular HOA dues. It helps pay for costs that the operating budget and reserve funds cannot cover. Common reasons include major repairs like elevator replacements, emergency fixes after water damage, or legal costs.
The authority to levy a special assessment comes from the association’s governing documents and Colorado state law. In Colorado, the Colorado Common Interest Ownership Act (CCIOA) sets the framework for how associations operate. Your building’s Declaration, Bylaws, and Rules spell out who can approve an assessment, how owners are notified, and any voting requirements. Some boards can authorize emergency assessments. Larger capital projects often require an owner vote as defined in the CC&Rs.
Associations sometimes allow installment plans or take out a loan to spread costs over time. Ask how payments work and whether interest applies.
Why assessments happen in Downtown Denver
Downtown Denver buildings face a mix of age, climate, and urban wear. That can create big-ticket projects that exceed reserves.
- Deferred maintenance and underfunded reserves. If reserves were not built up over time, a major repair can force an assessment.
- Aging high-rise systems. Elevators, chillers and boilers, roof membranes, and curtain-wall windows reach the end of their useful life.
- Exterior and water-intrusion issues. Denver’s freeze–thaw cycles and hail can accelerate façade and window problems that are costly to fix at height.
- Emergencies. Burst pipes, fire, or structural issues can require immediate funds.
- Litigation and insurance gaps. Lawsuits or uninsured losses can create large one-time costs for owners.
- Amenity upgrades. Owners may vote to renovate a lobby, add security, or refresh common areas and choose to fund it through a special assessment.
- Delinquencies. High unpaid dues reduce cash flow and may lead to assessments to cover shortfalls.
- Regulatory or historic requirements. Some repairs cost more if a property sits in a historic context or must meet specific code requirements.
How to size up a building’s risk
You can learn a lot by reviewing the right documents and asking targeted questions. Here is where to focus.
Start with the reserve study
Ask for the most recent reserve study. The study estimates the remaining life and replacement cost of major components and recommends annual funding levels. The Community Associations Institute’s guidance on reserve studies explains why these reports matter.
Look for:
- The date of the study and whether a professional firm prepared it.
- The “fully funded” reserve target versus the current reserve balance.
- Remaining life on big items like elevators, roof, façade, windows, HVAC plants, and parking structures.
A meaningful reserve balance and a clear funding plan reduce assessment risk.
Review budgets and financial statements
Read the current budget and the last 2 to 3 years of financials. Note cash on hand, reserve transfers, and whether the association runs a deficit. Repeated transfers from reserves to cover operating shortfalls can signal trouble.
Check assessment and dues history
Ask for a 5 to 10 year history of special assessments and dues increases. Multiple or recent assessments may point to deferred maintenance or underfunding.
Read recent board minutes
Minutes from the last 12 to 24 months often reveal upcoming projects, vendor bids, cost estimates, or discussions about reserve use. You can spot patterns like postponed façade work or preliminary elevator quotes.
Confirm delinquency rates
Request current delinquency data in dollars and as a percentage of the budget. High delinquencies strain cash flow and can limit financing options.
Review insurance and claims
Obtain the association’s insurance declarations and recent claims history. Pay attention to coverage limits, exclusions, and deductibles. Large deductibles or uncovered losses can lead to owner assessments.
Ask about litigation and code issues
Pending lawsuits and municipal compliance orders can impact finances. You can also check permits and code actions through Denver Community Planning and Development’s building permits page to see if major work is underway.
Evaluate age and systems
Consider the building’s age and construction type. In high-rises, façade remediation and elevator replacements are frequent high-cost needs. Ask for any engineering or condition reports.
Confirm management and policies
Professional management and clear reserve policies are positives. Ask if the association follows a written reserve-funding plan and whether it updates studies on a regular schedule.
Red flags to watch
- Very low reserves compared to the study’s recommended target.
- Old or missing reserve study, especially older than five years.
- Multiple large assessments in recent years.
- Repeated transfers from reserves to cover operating shortfalls.
- High delinquency rates that affect the budget.
- Ongoing or recent litigation with potential material costs.
- Board minutes showing deferred action on known capital needs.
- Uninsured exposures or very high deductibles in the association’s policy.
Your due diligence checklist
Use this checklist to structure your review. Add an HOA-document review contingency to your contract and give yourself time to analyze.
Documents to request
- Reserve study and supporting schedules.
- Current budget and the last 2 to 3 years of financial statements.
- Board meeting minutes for the past 12 to 24 months.
- List of pending or planned capital projects with vendor bids or estimates.
- Governing documents: Declaration/CC&Rs, Bylaws, Rules and Regulations.
- Estoppel or resale certificate that shows dues, special assessments, fines, and liens.
- Insurance declarations and claims history.
- Current owner delinquency report.
- Any litigation documents or attorney correspondence.
- Engineering or building condition reports, if available.
For general state resources, the Colorado Division of Real Estate’s HOA Information and Resource Center is a helpful starting point.
Questions to ask the board or manager
- When was the last reserve study performed and by whom? Is there a written funding plan?
- What is the current reserve balance and how does it compare to the recommended target?
- Are any special assessments planned, contemplated, or approved? What are amounts, timelines, and payment options?
- Has the association borrowed before? Are there outstanding debts?
- What is the current delinquency rate and how are delinquencies handled?
- What major components are due in the next 5 to 10 years and what are the cost estimates?
- Have any capital projects been postponed? Why?
- Are there any municipal orders, code issues, or historic-preservation requirements affecting upcoming work?
- How are special assessments approved under the governing documents?
Practical steps to protect yourself
- Make the estoppel or resale certificate a must-have. It should disclose any assessments that are levied or pending.
- Review the reserve study and financials with your agent or a Colorado real estate attorney familiar with CCIOA.
- Use a condo-savvy inspector. For older or high-rise buildings, consider a building-envelope or structural engineer if concerns exist.
- Talk to residents. Ask about building conditions and board responsiveness.
- If an assessment is imminent, negotiate seller concessions or an escrow arrangement at closing.
How assessments affect your budget and loan
Special assessments can change both your upfront costs and your monthly numbers. Plan for both.
Your monthly and upfront costs
A special assessment can be a lump sum or paid over time. For example, a $12,000 assessment spread over 10 years equals about $100 per month, plus any interest. If there is no payment plan, you may need the full amount at closing.
Regular dues can also rise after an assessment cycle as the association rebuilds reserves. That affects your ongoing housing budget.
Underwriting and loan programs
Lenders count HOA dues in your monthly obligations, and they pay close attention to a building’s financial health. Projects with high delinquency rates, very low reserves, or significant pending assessments may face extra scrutiny.
If you are using an insured or government-backed loan, review the program’s condo standards early. FHA and VA projects have specific requirements. You can explore FHA’s condo program on the HUD condominium page. Conventional loans follow investor rules such as the Fannie Mae Selling Guide project standards. Ask your lender whether an identified or pending assessment affects the project’s eligibility.
Resale and future marketability
Buyers often ask about assessment history. Frequent assessments, litigation, or chronically low reserves can make a property less attractive. On the other hand, transparent planning and well-funded reserves are strong signals for resale.
Payment options and negotiation
Many associations offer installment plans or take out a loan that owners repay through monthly installments. Ask about interest rates and how the plan is administered. You can sometimes negotiate for the seller to pay an announced assessment or to escrow funds at closing to cover the unit’s share.
Denver-specific tips and where to look
- Expect aging-system projects downtown. Many towers built in the late twentieth century are approaching major elevator, HVAC plant, and window replacements.
- Watch for exterior work. Freeze–thaw cycles and hail can push façade and roofing repairs higher on the list.
- Check for historic or landmark considerations. Preservation requirements can increase cost and extend timelines.
- Verify permits and code actions. Use Denver’s building permits portal to see recent or active permits that may signal large projects.
- Know your rights. CCIOA and your building’s governing documents dictate procedures. If you want to read the statute, see the Colorado Common Interest Ownership Act within Title 38, and use the HOA Information and Resource Center for state-level guidance.
Next steps with local guidance
If you love a Downtown Denver condo, do not let the fear of special assessments hold you back. Use the documents, questions, and steps above to make a clear-eyed decision. When you want a second set of eyes on the reserve study, board minutes, and financing implications, connect with a local pro who knows how Denver associations operate and what lenders want to see.
Have questions about a specific building’s risk profile or want a due diligence game plan before you write an offer? Reach out to Jesse Dixon for one-on-one guidance and a clear path forward.
FAQs
What is a condo special assessment in Colorado and who approves it?
- A special assessment is a one-time charge above regular dues to fund costs not covered by the budget or reserves; approval rules are set by your condo’s CC&Rs and Bylaws within the framework of Colorado’s CCIOA statute.
How can I tell if a Downtown Denver building is at higher risk for assessments?
- Review the reserve study, current reserve balance, board minutes, delinquency rates, insurance details, and any pending litigation or code issues to spot underfunding or big projects on the horizon.
What is an estoppel or resale certificate and why does it matter?
- It is an official statement of your unit’s dues status, any special assessments, fines, and liens; reviewing it before closing helps you avoid surprise charges.
Can a special assessment affect FHA or VA financing on a Denver condo?
- Yes; significant pending assessments or weak building finances can impact project eligibility for insured loans, so confirm requirements using the HUD condominium program and your lender’s guidelines.
Should I avoid a building that recently had a special assessment?
- Not necessarily; a completed, well-managed project can reduce future risk, but review the reserve study and financials to confirm the association rebuilt reserves and addressed core issues.
Can I negotiate who pays a pending special assessment at closing?
- Often yes; you can request that the seller pays the assessment or escrow funds at closing, subject to what the HOA allows and what both parties agree to in the contract.
