How to Avoid Condos With Problems?
1. Detailed Investigation: Attend a HOA meeting in order to understand the management of the community and to be mindful of any ongoing concerns.
2. Consider the Bylaws and Minutes: A detailed review of the HOA’s bylaws will help you to understand the association’s duties and the extent of HOA dues. So as to get details about ongoing or past concerns, request the minutes of recent board and member meetings.
3. Examine Legal History: Conduct an investigation into the legal history of the condo association, covering matters related to taxes and general concerns. A history of legal disputes or pending lawsuits may indicate financial instability or management issues that you should avoid.
4. Evaluate Financial Well-being: Take an in-depth review of financial records to identify any instances of defaults and reserve funds. A financially healthy association should to maintain sufficient funds for unexpected costs and repair, generally amounting to 25% of its total revenue. Poor reserves may result in the need for special assessments or postponed maintenance concerns.
5. Assess the Condo Association for Bankruptcy Risk: Conduct an inquiry into the condo association’s previous experience with bankruptcy or financial challenges. Insolvency resulting from unpaid HOA dues or financial mismanagement may have adverse effects on property values and resale prospects.
6. Assess the Availability of Financing: Determine whether financing is provided by lenders for units located in the condominium complex. Limited availability of options for financing could limit the ability to resell properties and impact their values.
7. Property Taxes: Evaluate the property tax liabilities that may incure to ensure they are in line with the value of the property. Very high tax liabilities may have effects on affordability and overall financial stability.