WHAT HAPPENS IF A RI CONDO ASSOCIATION GOES UNDER?
There has been alot of talk lately regarding the health of RI condo associations especially in other states. I would like to share Lenn Harley's informative post about condo associations that are not financially sound. What do you need to know prior to buying into a condo complex? If you work with a knowledgeable and investigative Realtor who protects your interests, they will 'root' this information out early. Be aware, be knowing and always ask the right questions.
"WHAT HAPPENS IF THE CONDO ASSOCIATION GOES UNDER?"
That was a question from a home buyer yesterday. This is a cash buyer in the market for a condo in Prince William County to use as rental property for a few years and then live in when he sells his present home.
THE QUESTIONS WERE PROMPTED BY THE LISTING REPORT. There are three properties offered for sale in that community, two short sales and one regular home owner sale. One of the short sale listings wants "Cash Only, too many distressed sales for financing. Condo assn. in trouble"
HOW CAN THE CONDO ASSN. PAY THEIR BILLS? The buyer's question is well founded since, under normal circumstances, when there is a high percentage of delinquent owners, the condo fee will be raised for remaining owners to cover condo expenses. Maintenance of condo buildings, trash removal, grounds maintenance, snow removal, insurance, etc. are critical to protect the value of the property.
WHAT DOES "Condo assn. in trouble" mean? Condo associations are required by law to maintain certain
"reserves" to protect the owners under special circumstances or a dramatic increase in expenses OR a high degree of delinquencies. As delinquencies increase, the remaining owners will have to pay higher fees or assessments to cover necessary expenses. If there are insufficient funds to operate, condo associations may not be able to make payments for contracted services and loans. Condo owners who refuse to approve increased fees to compensate for delinquencies are merely putting the entire community at risk if the condo association is forced into bankruptcy or receivership.
IT GETS WORSE. As delinquencies increase, the condominium project may also lose FHA and VA financing approval. In all but super luxury projects, that's usually deadly for property values and purchase financing.
OWNERS STOP PAYING FEES. This is a trend in many condo and HOA associations. Sadly, it simply makes matters worse, puts the home owners' credit at risk and further limits the ability of the condo associations to perform critical maintenance.
WE DON'T GIVE LEGAL ADVICE. Since the buyer's question involved a legal matter, my suggestion to my broker partner was to speak with a real estate attorney with whom we do settlements, This questions is clearly "above our pay grade". That said, I suggested that they search a bit farther for a condo to buy in a building that is not "at risk".
CAN YOU GET A "PEEK" AT THE DOCS? I also suggested that the listing agent or owner may already have a copy of the condo docs and would permit a "peek" prior to writing an offer. The association docs must disclose the financial condition, any liens against, etc. the association. It's worth a phone call.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.
Homefinders.com offers home buyers help throughout Prince William County in:
- Bristow * Dumfries * Gainesville * Manassas * Triangle * Woodbridge * Haymarket
Woodbridge Homes and real estate.
HOMES FOR SALE IN PRINCE WILLIAM COUNTY.
MORE ABOUT PRINCE WILLIAM COUNTY REAL ESTATE
ABOUT DALE CITY REAL ESTATESEARCH Homes for sale in Prince William County in Catharpin, Dumfries, Haymarket, Gainesville, Manassas, Manassas Park, Bristow, Nokesville, Dale City, Woodbridge, Quantico, Triangle. If you have questions about real estate in Prince William County, just call Lenn at 800-711-7988. Ask about our Home Buyers REBATE.
Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.
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Ginny Lacey Gorman knows North Kingstown RI and the geographic area, schools, local happenings, important tidbits of information and businesses well. If you are looking for someone to guide you through the home buying or selling process, Ginny is a licensed Realtor® and would be happy to assist you. Waterfront, oceanfront and coastal RI homes for sale are her specialty but all of RI is her backyard. So feel free to search for RI homes for sale. When you are in need of more information from an internet savvy Realtor® who sells RI houses in this real estate market, call Ginny at 401.529.7849.
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