Few decisions create more anxiety for condo boards than figuring out how to pay for major expenses.

The situation is familiar.

The reserve fund study has been updated. A major repair project is approaching. Costs are higher than anticipated. Or perhaps years of underfunding have finally caught up with the corporation.

The board suddenly finds itself facing a difficult question:

Should we increase condo fees or issue a special assessment?

Neither option is popular.

Owners don’t like fee increases.

They like special assessments even less.

Yet one of these decisions often needs to be made to protect the long-term financial health of the corporation.

Understanding the difference between a special assessment and a condo fee increase—and when each option makes sense—is one of the most important financial responsibilities a condo board faces.

What Is a Special Assessment?

A special assessment is a one-time charge levied against unit owners to cover an expense that cannot be adequately funded through existing reserves or operating budgets.

In simple terms, it’s a financial shortfall that must be made up quickly.

Special assessments are commonly used for:

• Major building repairs
• Unexpected infrastructure failures
• Emergency restoration projects
• Reserve fund deficiencies
• Large capital projects that were not adequately funded

Unlike monthly condo fees, special assessments are typically due within a relatively short period of time and can represent a significant financial burden for owners.

In some cases, owners may receive bills ranging from several thousand dollars to tens of thousands of dollars per unit.

What Is a Condo Fee Increase?

A condo fee increase is exactly what it sounds like.

The corporation increases monthly common expenses to generate additional revenue over time.

Those additional funds may be used to:

• Cover rising operating costs
• Increase reserve fund contributions
• Fund future capital projects
• Offset inflationary pressures

Unlike a special assessment, a condo fee increase spreads costs over months or years rather than collecting them immediately.

For many owners, this approach feels more manageable because the impact is gradual.

Why This Decision Matters More Than Ever

Across Ontario, condo corporations are facing increasing financial pressure.

Many boards are dealing with:

• Higher insurance premiums
• Rising utility costs
• Increased contractor pricing
• Aging infrastructure
• More conservative reserve fund study projections

As a result, many corporations are discovering that past funding levels may no longer be sufficient.

Boards that delay difficult financial decisions often find themselves forced into more expensive solutions later.

The Benefits of Condo Fee Increases

While fee increases are rarely popular, they often provide several long-term advantages.

Better Long-Term Financial Stability

Regular increases help ensure the corporation keeps pace with inflation and future obligations.

Rather than waiting for a financial crisis, boards can gradually strengthen the corporation’s financial position.

Improved Reserve Fund Health

One of the most common reasons special assessments occur is inadequate reserve fund funding.

Increasing condo fees can help address funding gaps before they become major problems.

Lower Financial Shock for Owners

A 5% or 10% fee increase is rarely welcomed.

However, most owners would prefer a gradual increase over receiving a sudden $10,000 special assessment.

Predictability matters.

Stronger Market Perception

Prospective buyers often review reserve fund studies and financial statements.

A well-funded corporation typically appears more attractive than one with a history of special assessments.

The Benefits of Special Assessments

Despite their negative reputation, special assessments are not always the wrong choice.

In some situations, they may actually be the most responsible option.

Addressing Immediate Needs

Certain projects cannot wait.

For example:

• Structural repairs
• Emergency garage restoration
• Building envelope failures
• Significant water damage

When immediate funding is required, a special assessment may be unavoidable.

Fairer Allocation of Certain Costs

In some situations, a special assessment may ensure current owners bear the cost of work that benefits them directly.

Otherwise, future owners may end up paying for expenses that should have been funded earlier.

Avoiding Excessive Fee Increases

Sometimes the required funding level would result in unusually large fee increases.

In these cases, a targeted special assessment may be more practical than permanently increasing monthly fees.

When Condo Fee Increases Are Usually the Better Option

In most situations, proactive fee increases are the healthier long-term strategy.

Boards should strongly consider fee increases when:

• Reserve fund contributions are lagging
• Inflation is driving costs upward
• Future projects are known and predictable
• Financial planning gaps can still be corrected gradually

A modest increase today often prevents a much larger financial problem tomorrow.

When a Special Assessment May Be Necessary

Special assessments are often appropriate when:

• An emergency repair cannot be delayed
• The reserve fund is insufficient
• Significant unforeseen costs arise
• The corporation has inherited years of underfunding

The key distinction is urgency.

If the expense cannot reasonably be funded over time, a special assessment may be the only realistic solution.

The Real Goal: Avoiding Both Surprises and Shortfalls

The discussion shouldn’t simply be about special assessments versus condo fee increases.

The bigger objective is financial planning.

Well-run condo corporations focus on:

• Accurate reserve fund forecasting
• Regular budget reviews
• Proactive maintenance
• Long-term capital planning
• Appropriate annual fee adjustments

When these elements are in place, boards are less likely to face unpleasant financial surprises.

What Condo Boards Should Be Asking

When evaluating a major expense, boards should ask:

• Is this expense planned or unexpected?
• What does our reserve fund study recommend?
• What are the long-term implications of each option?
• How will owners be affected?
• Are we solving a temporary problem or addressing an underlying funding issue?

The answers often reveal which path makes the most sense.

The Best Financial Decisions Are Made Before They’re Urgent

One of the biggest lessons experienced condo boards learn is that financial challenges rarely appear overnight.

Most develop gradually through years of underfunding, deferred maintenance, or inadequate planning.

The earlier boards address funding gaps, the more options they typically have available.

And more options almost always lead to better outcomes.

Need Help Evaluating Your Corporation’s Financial Strategy?

At CPO Management, we help condo boards across Ontario navigate complex financial decisions with clarity and confidence.

Whether you’re evaluating reserve fund funding levels, planning major capital projects, or deciding between a special assessment and a condo fee increase, our team can help you understand the options and their long-term implications.

If your board is facing difficult financial decisions, we’d be happy to start the conversation.