Special Assessment Fees in Condominiums — Legal Requirements (Philippines)

Philippine legal/practical guide for unit owners, boards, and property managers General information only — not legal advice. Always read your Master Deed, By-Laws, house rules, and the Condominium Act (R.A. 4726), and consult counsel for specific cases.

1) What is a “special assessment”?

A special assessment is a one-time or time-bounded charge imposed on unit owners in addition to regular association dues to fund extraordinary or unbudgeted common expenses (e.g., structural repairs, façade rehabilitation, elevator modernization, fire-life-safety upgrades, legal compliance works, major equipment replacement, disaster recovery, deficits).

It is not a penalty and must be tied to legitimate common area costs that benefit the condominium as a whole (or a clearly defined part of it).

2) Legal bases and hierarchy

R.A. 4726 (Condominium Act) — recognizes the condominium corporation/association, common areas, common expenses, and pro-rata sharing by unit owners based on their condominium/percentage interest.
Master Deed with Declaration of Restrictions — creates the project, defines common areas and percentage interests, and authorizes assessments.
By-Laws — allocates corporate powers between board and unit owners, sets voting thresholds, notice, quorum, board resolution requirements, and collection/sanctions.
House Rules / Policies — operational details (cannot contradict higher documents or law).
Revised Corporation Code (R.A. 11232) — on meetings, board actions, corporate records, and member rights; applies suppletorily to condominium corporations.

If there’s a conflict, law → Master Deed → By-Laws → House Rules is your order of precedence.

3) When a special assessment is lawful

A special assessment is generally valid if:

Purpose is lawful, necessary, and common-area related. (E.g., mandated fire code compliance, structural retrofitting, replacement of end-of-life chillers.)
Authority exists in the Master Deed/By-Laws (either explicit power of the board, or power subject to unit-owner approval).
Process is observed (proper board action, required owner vote if applicable, notice, and documentation).
Allocation to owners follows each unit’s percentage interest (unless the governing documents lawfully provide a different formula for a particular limited-common element).
Transparency (budget, scope, vendor process) and account segregation (funds used only for the stated purpose) are maintained.

4) Typical procedural requirements (check your By-Laws)

Engineering & compliance groundwork
- Obtain technical report (e.g., structural/electromechanical assessment) and/or regulatory directive (fire/building authorities).
- Prepare scope, cost estimate, and timeline; indicate why reserves or regular dues are insufficient.
Board action
- Pass a Board Resolution stating: project purpose & legal basis, total project cost, amount/timing of the special assessment, computation method, and restrictions on fund use.
- If the By-Laws require owner approval, call a members’ meeting (annual or special).
Owner approval (if required)
- Voting threshold is whatever your By-Laws set (commonly majority or 2/3 of all members for capital improvements outside the annual budget).
- Ensure quorum, proxy rules, and roll of members in good standing are followed.
Notice
- Serve written notice to all owners within the period and manner required (e.g., days before meeting; registered mail, courier, email if allowed).
- Notice should include plain-language rationale, budget, computation examples, due dates, and consequences of non-payment.
Documentation
- Keep minutes of the meeting, attendance, proxies, the board resolution, ballot/results, and the project file (plans, bids, contracts).
- Circulate a Post-Approval Advisory summarizing the decision and next steps.
Implementation & accounting
- Open a separate ledger/sub-account for the special assessment.
- Disburse only for the authorized project; maintain receipts, progress reports, and turn-over certificates.

Good practice: Align the special assessment with a capital plan and reserve study so owners understand long-term needs.

5) Computation & allocation

Default rule: Each unit pays in proportion to its percentage interest stated in the Master Deed (often tied to floor area).
Limited common elements: If the expense exclusively serves a subset (e.g., townhouse roofs, podium-parking systems), the By-Laws may allocate costs only to the benefited units.
Installments: The board may spread payments over phases (e.g., quarterly over 12–24 months) to reduce burden, unless immediacy is required (life-safety).
Interest & penalties: Charge only if authorized (rate and basis) in the By-Laws/house rules and clearly disclosed. Rates must be reasonable; avoid punitive charges that courts may strike down.

6) Collection, liens, and remedies

Statements & demand: Issue individual statements, then final demand after due date. Provide options (installments, post-dated checks, online channels).
Suspension of non-essential privileges: If authorized, the association may suspend amenity access (e.g., clubhouse, pool). Do not bar ingress/egress to the unit or cut individually-contracted utilities (water/electricity) that would violate other laws/rights.
Lien/annotation (if provided in your documents): Unpaid assessments can become a charge or lien against the unit if and as stated in the Master Deed/By-Laws, typically enforceable upon registration/annotation and after notice.
Suit for collection / foreclosure: The corporation may file civil action to collect (and, where a valid lien exists and procedures are met, pursue foreclosure/execution). Always observe due process, proper authorization, and board resolutions before litigation.
Developer liability: The developer usually pays assessments (including specials) for unsold or retained units per the governing documents and turnover agreements.

7) Transparency & owner rights

Owners are entitled to:

Clear breakdown of the project budget (materials, labor, permits, contingencies, professional fees).
Access to corporate records (financials, minutes, resolutions) within reasonable business hours and procedures set in the By-Laws/Corporation Code.
Competitive procurement practices for large spends (bids or at least multiple quotations), unless emergency work is documented.
Progress reporting (milestones, variances, final as-built and warranties).
Fair grievance/appeal process through the Board, and if needed, mediation or administrative/judicial remedies.

Privacy note: When posting delinquency lists, limit to necessary information (unit identifier, amount/status). Avoid “public shaming.”

8) Taxes, receipts, and regulatory compliance (high level)

Association receipts: Special assessments are generally earmarked for common expenses. Maintain separate books/ledgers and issue official receipts.
Tax treatment: Coordinate with your tax adviser on income tax/VAT implications, withholding, and expanded withholding on contractor payments. Treatment can depend on the association’s status and prevailing revenue rules; keep BIR registrations, COR, and ATP current.
Government compliance: Secure building permits, occupancy clearances, and fire safety permits for works; follow procurement/contractor accreditation requirements (e.g., PCAB for major construction).

9) Frequent pitfalls (and how to avoid them)

Vague purpose / scope creep → Define scope in the resolution; require change-order approvals.
Skipping owner vote where required → Check By-Laws; lack of proper approval can void the assessment.
Flat equal charges when the Master Deed requires pro-rata → Follow percentage interests unless a valid exception applies.
Commingling funds → Use a separate bank account or, at minimum, a distinct ledger.
Punitive disconnections / lockouts → May be unlawful; stick to authorized remedies.
No paper trail → Keep minutes, notices, proof of service, ballots, and audit files.
Over-reliance on emergency powers → Document the emergency; sunset the authority; later regularize via proper vote.

10) Model board resolution (short form)

Resolution No. 2025-__ Approving Special Assessment for Fire-Life-Safety Upgrades WHEREAS, the Building’s fire alarm system has been certified non-compliant by the City Fire Marshal and replacement is required; WHEREAS, the Master Deed and By-Laws authorize assessments for common-area capital works and require members’ approval for expenditures beyond the annual budget; RESOLVED, to levy a Special Assessment of ₱____ total, apportioned pro-rata by percentage interest, payable in __ monthly installments starting [date], to fund the scope in Annex “A” (cap ₱____ incl. contingency); RESOLVED FURTHER, to call a Special Members’ Meeting on [date] for approval pursuant to Section __ of the By-Laws; RESOLVED FURTHER, that funds shall be ring-fenced and used exclusively for the project, with quarterly reports to members; RESOLVED FINALLY, to authorize the President and Treasurer to sign contracts, open a project account, and implement collection and remedies as provided in the By-Laws.

11) Owner checklist (before you contest or pay)

Request the board resolution, budget, and computation sheet for your unit.
Verify the legal basis (By-Laws section; whether owner vote was required and obtained).
Confirm percentage interest used matches the Master Deed and your TCT/CCT entry.
Check payment schedule, interest/penalties, and available installment options.
Ask for project timeline, vendor selection method, and warranty terms.
Keep all receipts and written communications.

12) Board/manager checklist (to bullet-proof the assessment)

Written technical justification and costing
Board resolution and, if needed, members’ approval with proper notice/quorum
Clear computation per unit and sample illustrations
Ring-fenced accounting and signatories
Collection policy (installments, hardship accommodations)
Contracting & compliance (permits, insurance, bonds, PCAB where applicable)
Communications plan (FAQs, timelines, progress bulletins)
Audit trail (minutes, bids, contracts, as-built, turnover)

13) FAQs

Q: Can the board impose a special assessment without owner approval? A: Only if the By-Laws expressly allow it for that category/amount of expenditure. Many By-Laws require a membership vote for capital projects above a threshold.

Q: Can a unit owner refuse to pay because they won’t use the improvement? A: Generally no. If it’s a common area obligation authorized under governing documents, all units share the cost pro-rata, even if individual usage varies.

Q: Can the association charge a uniform amount per unit? A: The default is pro-rata by percentage interest. A flat charge is risky unless your Master Deed/By-Laws specifically permit it for the particular expense.

Q: What if the developer still controls the board? A: The developer (as holder of unsold units) typically pays assessments for those units and must comply with the By-Laws. Owners can demand transparency and proper votes per turnover covenants.

Q: Are special assessments refundable if the final cost is lower? A: Excess collections should be returned or credited to owners according to your By-Laws or the approving resolution’s terms.

Bottom line

A special assessment is valid when it (1) serves a lawful common-area purpose, (2) is authorized by your Master Deed/By-Laws, (3) follows due process (board resolution + owner vote if required + proper notice), and (4) is allocated pro-rata with transparent accounting. Get the paperwork right, segregate the funds, and report progress — that’s how you stay compliant and maintain owner trust.