As president of my association, I did this just a few months ago. However I went after the owners (filed a lien at the DC deeds office). If the owners hadn’t paid up, we would have been within our rights to auction off the property at best offer and collect the back dues from the proceeds. I wouldn’t have “gone after” the tenants, but I might have offered them the opportunity of paying up the back dues or facing eviction due to the property going to auction (and being bought by somebody else).
I recommend a small one. It’s easier to get elected to the board where you can have some say in the operation and budget. In fact, because most officers aren’t allowed to be paid for their positions, people often don’t want to serve. I’ve held the presidency for almost 14 years mainly because nobody else wants it.
Smaller buildings will have lower fees because you won’t be maintaining things like pools, multiple elevators, a security desk, grounds keeping staff, etc. Also, reserve accounts don’t need to be as large.
On the question of how large a reserve fund should be in the bank, the association should be doing a reserve study every 5 or 10 years to get a professional know-it-all to come in and analyze the health of the major building structures and other common elements. These studies will tell you things such as how many years the roof has before it needs to be replaced. Having high monthly condo fees “just in case” is almost as bad as having them be too low. That money should stay in the pockets of the owners unless it’s budgeted for a known thing (as opposed to an unknown thing).
In my experience, the bigger a condo gets, the more it behaves like a run-away freight train with hundreds of bickering passengers inside asking for their money back.
Make sure these volunteers are figuring out a reasonable amount to be put aside in the reserves, and are budgeting part of the monthly fees for this purpose. (In other words, they are doing the proper reserve studies mentioned by** Patty O’Furniture**.) I mentioned above that our fees were low because we weren’t funding our reserve adequately. Part of the reason was that, like you, we used volunteers to run the association, and they didn’t have the financial background. Now we use a professional management company to make sure we don’t make that mistake again.
I didn’t mean to imply that there should be NO reserve, of course there should be some money in the bank. A reserve study can’t predict things like a drunk driver taking out your historic iron fence. I’m saying that it’s crazy to let the reserves climb up to more than about two or three thousand dollars per unit. Again, the reserve study should tell the association how much money it should have on hand.
Very slight hijack (since we have a thread full of condo owners): can a condo owner insure against a special assessment? I would imagine they can get fairly high (I think I read something about a $2 million or so place in Chicago having a special assessment of almost $300,000.)
It was stories like this that turned us away from buying a townhouse.
But the reality is that every house will have unexpected costs, just like a condo unit. Furnaces break down, roofs leak, pipes collapse.
My perception of condos has always been that the process tends to be out of your control, which bothers me. A friend recently had an issue with his townhouse where the front windows were leaking. That fell under the condo insurance, so the board planned to replace everyone’s windows. Sounds great in theory, except that it meant months went buy before it could get repaired. He could have had it down over the weekend, instead he had a leaking window that damaged the interior wall, which was then his responsibility to fix.
Right, and in theory it all balances out. Unfortunately it seems few residents are consciously putting away a few hundred a month for potential assessments. So when it happens they aren’t ready.
That’s not particular to condos. Whether you own a house or a condo, you need to be prepared for the unknown.
I assume that was the size of the entire assessment, and not each owner’s share. I don’t know of any insurance company that will insure against a generic costly incident. Our policy is very specific in what it will and won’t cover.
Every once in a while (say, after a big snowfall, or when I think my lawn is looking kinda crappy compared to my neighbor’s) I’ll think of moving into a condo or co-op, but reading this thread reminds me why I’m not too excited about that prospect–condo fees and associations just make me nervous. I like being the master of my domain, so to speak.
Yes, if the assessement is for something that the homeowners insurance covers normally. My own condo insurance covers me for up to $10,000 in special assessments in these circumstances. Since my insurance covers me for fire, it also covers me for a special assessement if there was a fire.
(For those who are unfamiliar with it, condo insurance covers your belongings plus the interior structure of the condo. The exterior structure is normally covered by insurance purchased by the HOA as a whole.)
It depends what kind of work might need to be done in the near future. As I mentioned, when we had our roof replaced a few years ago, it cost almost $20,000 per unit.
Different strokes and all. I’ve lived in condos/townhouses practically my whole life, so I’m used to it. The last time I lived in a single family house I was ten years old. I like not having to do exterior maintainance.
Here’s one example: My condo insurance covers me for water damage in case a pipe bursts. If the damage extends to the exterior, or to another unit, I would be assessed by the association, and that would be covered.
This actually happened to me five years ago. My upstairs neighbor’s water heater burst and I had ceiling damage and a ruined carpet. But in my condo the second owner would simply file a claim against the first owner’s insurance company. The association wouldn’t get involved unless there was damage to the common elements. Our bylaws don’t give us the authority over individual unit issues.
If some condos are really micro-managing to that extreme, it’s no wonder some fees are so high.
Our roof assessment cost $2400 per unit, I think, which was even more fun when one owner refused to pay up - because the roof still needed to be repaired. And an extra $2400 spread over the remaining 3 units is a chunk of change.
The rest of us basically handled it by padding the special assessment and using what little reserves we had to cover the delinquent owner’s share, which meant we basically had about enough to cover regular monthly expenses (water, insurance, etc.) until he finally paid up. Personally, I’d rather not cut things quite that close. I mean I can plan to have cash in the bank for a special assessment, but I’d rather not have to plan for the circumstance that nobody else does. Better to have more in reserves.
I live in a condo townhouse complex. Our fees are about 250 a month. It covers everything from the walls out (to include doors, windows, roof, siding, lawn maintenance, snow removal, gutter cleaning, leaf removal, pool). We have a professional management team and a great set of directors.
The thing that I love most is that the reserve fund is almost enough to rebuild every building. Is it too high? Probably but since we are only (at this point) paying about 2% of our fees into it, it seems reasonable to keep it there. It’s just been slowly building up over 40 years.
And really, 250 a month to not have to deal with any of that sounds great to me!