Robust demand for condominiums in Honolulu fueled sales and pushed prices to record highs last year.

There were 5,824 existing condos on Oahu sold in 2017, the most since 6,380 units were sold in 2006. Sales were up about 7 percent from the previous year, according to Honolulu Board of Realtors statistics.

Prices, meanwhile, increased 3.8 percent in 2017 to a median $405,000, which follows year-over-year gains of 8.3, 2.9, 5.4, 4.6 and 5.8 percent, respectively, since 2011.

Because most buildings in Honolulu were built several decades ago and are needing major maintenance or upgrades, it’s important for condo buyers to watch out for special assessments, which can be a potential financial pitfall.

Special assessments can be a huge consideration in considering the value of a property and could have implications on affordability. These are fees that homeowners associations levy on its owners to cover building repairs, improvements or maintenance projects that were not adequately budgeted for or covered by reserves. These are in addition to the standard monthly HOA fees.

Assessments can go toward major cost items such as elevator modernization, remodeling of common areas, resurfacing the parking lot, upgrading plumbing, replacing windows, upgrading AC system, re-decking the pool, repairing spalling, replacing gym equipment, repainting the building, installing LED lights, sprinkler retrofitting, etc. Assessments also can be used to build inadequate reserve funds.

These assessments can range from a few thousand dollars to more than $100,000 per unit, depending on what’s needed. The assessments can be paid in a lump sum or installments, depending on what the HOA board chooses.

And if an assessment hasn’t been paid off entirely by the seller, the buyer might end up with it.

Special assessments are becoming more commonplace in Honolulu as our buildings are aging and are up for costly maintenance or upgrades. Many boards are grappling with making the tough decision on how to best maintain their building while at the same time trying to avoid creating a financial hardship on its owners.

In some situations, special assessments also can affect the value of condos, especially when the amount is considerable. Even when an upcoming special assessment isn’t finalized or the amount isn’t known, it also can depress values in a building and generate concern on both sides. This can cause an owner to sell before being hit with the assessment. It also can cause potential buyers to avoid a building.

Condo buyers should do as much research on assessments as possible. Seller’s agents might have the information readily available. Information on special assessments also would be contained in the condo document package provided by the seller for the buyer’s review and approval. If an assessment is known by the seller, it also should be included in their real property disclosure statement.

But special assessments don’t necessarily have to be deal breakers in a real estate transaction. The assessments can be negotiated, just like anything else.

Special assessments might be factored into the sales price, or the seller could offer a credit to cover some of it. Or the seller might simply just pay it off at closing. Or the buyer, who might enjoy the benefits of the assessed improvements in the future, could assume the assessment.

It’s important for buyers to do their homework to find out as much as possible about any current or future special assessments so they understand what they are getting themselves into and make a good decision.

Jaymes Song is a top-producing agent with Better Homes and Gardens Real Estate Advantage Realty in Kahala. He can be reached at 228-3332 or JaymesS@BetterHawaii.com.