Asked and AnsweredWe are negotiating the contract and we just found out that there is a substantial assessment that will go into effect the month that we close on the purchase. Should the assessment be deducted from the purchase price at closing?
Possibly. Who pays a future assessment is a matter of negotiation between the parties. If the seller knew the assessment was coming and failed to disclose it, the purchaser has room to go back and ask for an adjustment of the price. On the other hand, if the impending assessment was unknown by the seller and involves future work, the seller could argue that the assessment should be the purchaser’s responsibility. If the assessment is financially significant in both amount or duration, some adjustment should be made between the parties. Sometimes an assessment can be paid in a lump sum or in installments. If the seller has elected to pay in installments in order to foist the cost on the purchaser, there is a good argument to be made that the amount of the assessment should be deducted from the purchase price. At the end of the day, who is responsible for an assessment will depend upon the relative negotiation positions between the parties and how hard the purchaser’s attorney pushes to get the adjustment.