Minnesota Multifamily Owners and Investors:
When most sellers of real estate think of special assessments, they think of those large 5-20 year assessment projects–new street sewer, new street surface, sidewalk repair, etc. If you own property in St. Paul, Minnesota, you know that there 2 specific annual “charges” or “assessments” during the calendar year: Storm Sewer System Charge and the Right of Way Maintenance Assessment.
Practically, St. Paul sends out annual invoices that apply to that calendar year: See an a sample Storm Sewer Charge invoice. and a sample Right of Way Maintenance Assessment invoice. St. Paul sends invoices in July, due by November 15th, of that calendar year. Thus in practice, a 2014 Storm Sewer invoice will go out in July of 2014 due by November 15th of 2014, or it will be certified to Pay 2015 taxes with a 4.5% service charge. Most owners don’t pay these invoices in the calendar year and simply pay it via their real estate tax statement the following year.
This all ties back to purchase agreements because if a Seller, blindly checks “Seller Pays” for pending, levied, certified assessments, it is possible that the Seller ends up paying for a portion of the Buyer’s charges that would otherwise be paid via Real Estate Taxes the following calendar year (they may appear as “pending” depending on calendar date). The Seller will only find out at closing via the HUD statement–any may miss it all together.
OK–big picture, this typically is not the priority in negotiations–typically Buyer and Seller are going back thousands of dollars. That said, we at InvestProp implement many similar instruments so our clients achieve the highest Net Proceeds at closing. It all adds up!
Not making any sense? Frustrated your agent never mentioned any of this info before? Wondering how this applies to your Property in a different City? Contact InvestProp Today!
Brad Schaeppi, founder and CEO of InvestProp.