3 Signs Your Condo Association May Be In Trouble

3 Signs Your Condo Association May Be In Trouble

Questions to ask condo associationCondominiums.  Easy living.  The lure of affordability and location usually make condos very appealing.

Here are 3 warning signs that a condo association may be in trouble:

1. HOA Fee -Too Low or Too High
Nobody likes to pay high HOA fees each month.  However well managed associations have funds to cover everyday maintenance as well as reserves to pay for ongoing upgrades-new roofs, exterior painting and roads.  Higher fees may reflect financially sound plan for the future or may indicate problems repairs or mismanagement of funds.  

The purchase contract provides time for buyers to review condo docs and financials- take time to thoroughly review profit/loss statements, bank statements, savings accounts to ensure adequate funds. 

Also, in new construction, developers sometime set up the condo association with very low fees to entice buyers. Those fees usually go up once the condo association starts running on its own. If  a new complex HOA fees are significantly lower than comparable complexes in the area- know that your fees will likely rise in the near future.

2. Inadequate Reserves
Reviewing the HOA doc and financials provides buyers with the opportunity to review and question the amount of money in the “reserves”. Think of it as the rainy day fund- too little in the reserves can lead to expensive assessments each time major repairs are needed.  Too much in the reserve fund may indicate lack of financial guidance or something else.  Is the complex currently involved in any lawsuits or been notified of future litigation- find out and plan accordingly.

Is the HOA managed by a professional company or self-managed? Self managed associations often save money but may have adequate reserves for meet future problems.  Professional companies may require higher reserves based on the track record of all the complexes they manage – and you’re paying more each month.  There isn’t any perfect answer- just something you need to understand and also a good reason why you want to become involved in the HOA association

3. Maintenance Items
Broken fences, garbage laying around, old hallway carpet and broken elevators are all signs that the complex or building needs some attention. Signs of neglect is an alert that something is wrong shouldn’t be ignored.  Is the problem lack of funds, poor management or too many rentals?  Whatever is causing the problem -you need to find out why and determine if the unit is the right one for you.

In the end, make sure to read through all of the documents provided to you and ask for the most recent condo association meeting minutes. You can find out a lot about the building by what happens at those meetings….or by the lack of minutes.  

Any questions or thoughts –Call/Txt