A week ago one of my buyers said he wanted to take a second look at a townhouse in Aurora. The showing instructions said to call the seller to schedule showings, so when speaking with the seller, I took the opportunity to ask him a few questions about his home. One of my questions was whether the home was in a Special Service Area (SSA).
According to S. B. Friedman & Company, a real estate and development advisory firm based in Chicago, a Special Service Area “allows local governments to tax for and deliver services to limited geographic areas within their jurisdictions.” Special Service Areas can be used for a variety of support, infrastructure and land & building improvements. For more details on SSAs read S. B. Friedman & Company’s paper, “Special Service Area Implementation Steps & Requirements“.
I asked the seller whether his home was in an SSA for 2 reasons. First, the Multi-Board Residential Real Estate Contract 4.0 used overwhelmingly for the sale of homes in Chicago’s suburbs requires the seller to specify whether the home is in a SSA. Second, the listing for another townhouse I had shown my buyer in a neighboring subdivision mentioned that it was in a Special Service Area, so I thought there was a good chance this townhouse might be as well.
The seller didn’t know what a Special Service Area was. After I explained it to him, he didn’t think that his home was in a SSA. Just to be on the safe side, I called the City of Aurora and asked them. Sylvia in the Finance Department informed me that the home was in not one, but 2 Special Service Areas! One of them was active. The other was dormant meaning that no tax was currently being imposed, but the City of Aurora could start taxing for the SSA in the future, if certain conditions arose.
It is especially important to ask about SSAs when buying in a new development! Builders typically require buyers to use their contract instead of the Multi-Board Residential Real Estate Contract 4.0. Thus, whether the development is in a Special Service Area might not be disclosed. This happened to one of my clients who bought new construction in Montgomery, just southwest of Aurora. He didn’t learn that his home was in a dormant SSA until he sold it!
ABOUT THE AUTHOR
Fran Bailey shows, previews and tracks downtown Chicago homes for sale giving her the insights needed to help her clients negotiate the best price and terms. Fran has been quoted in numerous Chicago and national publications. To schedule showings of listings regardless of broker or to contact Fran email her at fran.bailey@bairdwarner.com or call 773.793.4516. Learn More
Fran Bailey, Realtor
{ 3 comments… read them below or add one }
Yeah I saw a dormant SSA on title on an Aurora condo development right downtown on the Fox River. Also see them a lot in Bolingbrook. Sometimes they’re BIG $$.
To me SSAs are another one of those hidden dangers/costs most buyers would never think to investigate and another reason why hiring an experienced and thourough real estate agent, a home inspector, and an attorney is essential. Why location may be the most important factor, a host of factors can and do effect the value of a property. Many are not obvious and require knowing what to look for and what to ask about.
I have a client buying a home in the northwest suburbs, and we just figured out there is an SSA for almost $1,000 a year on the property. The seller had stated that there wasn’t one on the contract (Multi-Board 4.0), but sellers often don’t realize what they’re actually paying, since the SSA is billed with the tax bill.