One other disturbing thing about condos that “may” occur. Given a large complex that will undergo severe depreciation and may see substantial foreclosures that will have a potentially severe effect on HOA reserves. Remaining homeowners “may” indeed face assessments or reserve requirements payments due to the fact of shortfalls from higher vacancies….I doubt that a lender pays HOA dues for an empty condo, perhaps I am wrong. It is speculative to mention this but it certainly is not out of the realm of possibility.
SD Realtor
This was the first thing I thought of when I read they were looking at a condo. Although the bank is liable for HOA dues from the day they take title in foreclosure, they often don’t pay till they unload the property (The HOA would be smart to file liens against the property so it can’t be sold until those back dues are paid in full).
Before buying in a complex I would really do my homework, reviewing their reserve funding levels and looking to see if the dues are realistic for the building and what you’re getting in amenities and services. When times get tough and the foreclosures start hitting your neighbors you may find yourself in a building that’s having a severe cash flow problem because a) they left dues too low for too long b) foreclosures are imminent and your neighbors feel no need to pay their dues.
If major projects like roofing or painting need to be done and there’s insufficient funds in the reserve accounts, the only way to do it is special assessments. If your neighbors can’t pay their HOA dues, you’ll never get special assessments out of them. That means the building gets neglected and starts looking run down.
The other factor is who is buying up your neighbor’s foreclosed units and what are they doing with them? If they’re renting the units out to undesirables, your building can go from chic to “ghetto fabulous” in no time at all. That of course will draw down prices even more, meaning you suffer for even longer.
If you do move into a condo building, consider getting on the board – to look out for your investment if nothing else.
