I recently received an uncomfortable phone call from a condo owner. He was contacting me about a special assessment that had been announced by his HOA. The property needed some long overdue repairs and updating and the HOA voted to assess each unit owner to cover those expenses.
The condo owner who called me was in a panic. He had lost his job and luckily found another making less money, but could not afford the assessment. When he had purchased his condo two years ago he had been told by his REALTOR® that if he paid his monthly HOA charges that it would cover "all the upkeep and maintenance on the property". Now here is the HOA charging him thousands of dollars he does not have.
I wish I could say that this is the first time I have heard this story, but it seems to find its way to my phone every so often and unfortunately there is nothing that the homeowner can do about it. The HOA, according to the community documents and charters does have the right to make periodic "special" assessments.
This particular condo owner said he chose the condo over a single family home because it alleviated any need for exterior maintenance beyond his monthly payment. When I asked him if he had checked the HOA's finances before he bought there he told me no. When I asked if he had bothered to read the HOA/Condo documents he said no.
Had he done these two simple things, his situation (and decision) might have been different. I explained to him how condo/HOA finances work. He e-mailed me the financials and looking at them there was no way that there had been enough in their reserve accounts to cover the roof replacement that was now needed. The roof had been, in effect, a ticking time bomb.
The bottom line is that practically all HOA's can and do periodically assess their members for high dollar and unexpected items. If you buy a condo, plan on your own reserve account to cover these possible charges.
Remember, when you live in a Condominium or HOA community, the collective community's interests will always come before that of any one individual owner, and the timing of monetary assessments is just one potential conflict. Also, read the condo documents and request a copy of the HOA's current year budget to review. Your agent can help explain these documents to you and reviewing them may prevent you from making a decision that you might regret later.
Be an informed buyer!
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