If something untoward happens that affects the integrity of the construction or condominium community, all co-owners may bear additional expenses through a “special assessment". This can be an additional (potentially large) fee assessed over and above HOA dues to pay the cost of repairing or replacing a portion of the grounds or arrangement (s) which has sustained damage. A special assessment is often needed to cover a major repair which can't be dealt with by an underfunded reserve fund.
As the cost of living increases, and thus do HOA fees. The cost of repairs (scheduled and unscheduled), land maintenance, developments, and keeping that the mandated level of stock funds will fluctuate; some prices will stay stable for periods of time while others will sharply increase. Rarely will HOA fees be reduced to a previous level.
HOAs are required to carry insurance that covers the public areas (roof, common walls, stairways, lifts, etc.) of their condo community, however, you can also be asked to insure your own unit. Check the HOA documents and talk to your current insurance agent regarding a proper individual condo policy.
· Condo value may decrease if too many units of the construction or reliable financial district condos are available for sale or foreclosure.
· Condos may not appreciate in value as much as single-family homes in the exact same area.
Due diligence is the first step toward condominium ownership. Careful inspection of HOA documents and board meeting minutes (including financials) may give prospective condominium buyers an indication of how well handled and preserved an HOA is. Another part of due diligence could include speaking with a realtor educated concerning the HOA and its components, and with residents of the condo complex. Potential red flags could include:
· Underfunding the book fund
· Frequent insurance claims
· Frequent shifting of management groups
· Major and/or frequent repairs
· High percentage of residents behind in their own HOA Dues
Purchasing a condo in an HOA demands careful evaluation of your personal financial resources, an understanding of your short- and long-term homeowner goals, and due diligence in researching the “health" of their HOA prior to buy. Living in a well-managed, well maintained condominium community may be a happy homeowner experience at just about any stage of your homeowner lifetime.