Assessment Contract
Definition
Assessments are the fees that condominium owners pay to the condominium owners’ association (COA) to cover the costs of common property. These costs include costs of management, normal upkeep and regular maintenance of the common property of the association. Each condominium owner is required to pay assessments regularly to the condominium owners’ association.
Assessments are calculated on the basis of the annual budget for the association for the given fiscal year.
The assessment contract is used to record the condominium owner’s obligation to pay assessments.
Use
The assessment contract has the following characteristics:
It reflects the ownership structure.
It relates to one or more condominiums.
The condominium owner is entered as a contracting partner with a customer account
The assessments are posted using this contract.
The contract is the basis for the COA settlement .
An assessment contract must be in effect for each rental object of a COA mandate at all times beginning from the start date of the mandate.
Structure
An assessment consists of two parts:
Advance payments to cover ongoing costs incurred by the condominium owners’ association
Non-refundable contribution toward reserves for future maintenance and repairs
These two parts of the assessment can be represented in the contract in different ways:
Both parts can be posted using one condition.
Each part can be posted using a separate condition.
In
Flexible Real Estate Management,
the assessment contract is a contract with the contract type
Assessment Contract
.
Example
Similar to the procedure in Example: Third-Party Management , you would create assessment contracts in the COA company code for the following rental units:
