Rent Real EstateAsk The Homeowner Association Expert
Question: I live in a 60-unit condominium association, in one of the four units which have loft space. Recently, the board decided to increase the assessments for the lofts because of "volume" considerations. Can they do that?
Answer: The assessment allocation is described in your governing documents and cannot be changed without (usually) 100% of all owners agreeing. Some attorneys speculate that even the mortgagees (lenders) may have the right to vote since re-allocating assessments impacts their collateral. Bottom line: The Board is not authorized to make changes in the allocation on its own.
Another mistake that is commonly made is splitting special assessments equally when regular monthly assessments are not equal. The same formula should be applied to special assessments as with the regular assessments.
Question: As a real estate agent, I"m unsure how to compare similar homeowner association units that have very different monthly assessments. When I show one property with $135/month fees then another at $250/month, the buyers get confused. Me too. What should I advise them?
Answer: One critical element of evaluating monthly assessments is reserve funding. All homeowner associations should have a 30-year reserve study done to identify future association repairs and replacements and a regular monthly savings plan to pay for those events. A properly done reserve study will eliminate the need for special assessments for reasonably predictable events (earthquakes are an exception).
As a real estate counselor, you need to know what is included in the monthly assessment. If the higher one includes reserve funding and the other doesn"t, it may actually be a better deal. That is where you"ll often uncover the difference. I"d recommend that the buyer only consider homes in HOAs that have both a funded reserve plan to guarantee no special assessments. HOAs that are properly funding reserves usually handle other business responsibly as well.
Question: I own a condo and will be taking over the presidency of the association. What training information do you recommend?
Answer: Fortunately, there are numerous training options available in books, software, magazines, videos and newsletter. If one is available, join the local chapter of CAI --the Community Associations Institute. Membership offers many resources for Board Members and Property Managers.
For more information on this subject, see www.Regenesis.net.