• How Homeowner Associations Work Part (3)

    Date: 2011.12.12 | Category: Company | Tags: ,

    No one likes to incur the wrath of their neighbors by increasing fees, so the pressure is intense to keep them low. As a result, a weak board will often not implement good financial policies in order to keep fees as low as possible in the short term. Additionally, HOAs can foreclose on your condo if you don’t pay your monthly fees. How many months you can go in arrears before the association initiates a legal foreclosure process depends on the bylaws and the HOA’s resolve.

    The association does have strong legal standing to enforce its bylaws, however. Not surprisingly, one of the biggest areas of contention among homeowner association members is finances. If the board is responsible and runs the association professionally, it will accumulate a reserve to maintain buildings and grounds.

    However, this doesn’t always happen, so it’s important for you to find out before you buy how much money the development has in reserve. Otherwise, you may find yourself getting regular assessments (one-time fees to cover specific necessities, such as an increase in the price of heating oil) or hefty increases in your monthly maintenance fee.

    A couple buying a condo in Seattle found this out the hard way two months after they moved in. The exterior on the fourteen-year-old property had weathered and deteriorated to the point that it needed replacement.

    Unfortunately, current and past association officers had failed to create a reserve, and each member got an assessment notice for $7,000. Owners who didn’t happen to have the funds in their checking account had to pay the assessment off at $600 a month. The new owners had no choice but to pay the assessment.

    When they bought the condo, they assumed the liabilities, and refusal to pay such assessments means the association can put a lien on the unit and sell it, if necessary, to collect that money. What can you do if you don’t like the way your fees are spent?

    You can exercise one of the basics of American democracy and get enough concerned neighbors together to vote in a new board or have a recall election.

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