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Old 10-06-2016, 06:27 PM
Status: "Not quite my tempo" (set 20 days ago)
 
Location: Bran's tree
10,951 posts, read 4,813,460 times
Reputation: 12341

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If condo owners are randomly hit with $30,000 fees at the management's whim, how is that sustainable? Is it a nerve-wracking way to live?

I understand houses need repairs too, but at least you have the choice whether to have them done or not. You won't have a lien put against you.
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Old 10-06-2016, 07:00 PM
 
Location: Columbus, OH
915 posts, read 669,312 times
Reputation: 1347
Wow. Someone picked the wrong condo to live in. I have written about this topic before.

No, a $30k assessment is not sustainable. It's insane.

Older, poorly run condos often resort to this. Bad management by a condo board, usually caused by the lack of raising the monthly fees. They don't want to upset the owners with yearly increases. So when it comes time for $1M in roof replacement, or $300k in street refurbishment, the bank is dry.

This is why a proper reserve study must be done every 5 years. It lists the major expenses by year, going out 30 years. Any properly run board would follow this study and increase the dues to insure proper funding of big-ticket items. A 3% increase every year in costs is figured in usually.


Unfortunately, special assessments, if used, must be paid. You can get sued if you don't pay. I don't know about other states, but here in Ohio, special assessments are pretty much outlawed now. Our condo attorney who represents us informed us of this. Legally, we are required to have the yearly amount put in the bank, according to the reserve study.

Condo living is not for everyone. It's like a private little city, all self-funded by the condo owners. After 13 years in a house, I didn't want the hassle of yard work and the ugliness of the neighbors who refused to mow their lawns. The extra costs are worth it to keep out the rif-raf.
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Old 10-06-2016, 07:08 PM
Status: "Not quite my tempo" (set 20 days ago)
 
Location: Bran's tree
10,951 posts, read 4,813,460 times
Reputation: 12341
Quote:
Originally Posted by Jbeechuk View Post
Wow. Someone picked the wrong condo to live in. I have written about this topic before.

No, a $30k assessment is not sustainable. It's insane.

Older, poorly run condos often resort to this. Bad management by a condo board, usually caused by the lack of raising the monthly fees. They don't want to upset the owners with yearly increases. So when it comes time for $1M in roof replacement, or $300k in street refurbishment, the bank is dry.

This is why a proper reserve study must be done every 5 years. It lists the major expenses by year, going out 30 years. Any properly run board would follow this study and increase the dues to insure proper funding of big-ticket items. A 3% increase every year in costs is figured in usually.


Unfortunately, special assessments, if used, must be paid. You can get sued if you don't pay. I don't know about other states, but here in Ohio, special assessments are pretty much outlawed now. Our condo attorney who represents us informed us of this. Legally, we are required to have the yearly amount put in the bank, according to the reserve study.

Condo living is not for everyone. It's like a private little city, all self-funded by the condo owners. After 13 years in a house, I didn't want the hassle of yard work and the ugliness of the neighbors who refused to mow their lawns. The extra costs are worth it to keep out the rif-raf.
Oh, we don't have a condo yet. My husband just said that it's common to be regularly hit with huge special assessment fees in condos.

I guess a newer, well-reviewed condo would be the safest bet. The states we're considering are Oregon or Washington.
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Old 10-06-2016, 07:23 PM
 
Location: Columbus, OH
915 posts, read 669,312 times
Reputation: 1347
Quote:
Originally Posted by ohhwanderlust View Post
Oh, we don't have a condo yet. My husband just said that it's common to be regularly hit with huge special assessment fees in condos.

I guess a newer, well-reviewed condo would be the safest bet. The states we're considering are Oregon or Washington.
It is NOT common to get hit with huge special assessments. As I said, properly run condo boards ensure the monthly fees are sufficient enough to fund the reserves, plus the weekly and monthly expenses.

Yes, you hear bad stories about older condos with idiot board members. This is why you must do your homework. Try and ask some people who live in the condo you may be interested in. Ask about reserve studies and the monthly fee history.

I joined one of our condo boards, we have three, just to make sure I understand how it all works and have a say in decisions. I have learned a lot.
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Old 10-06-2016, 07:28 PM
 
Location: Myrtle Beach
1,493 posts, read 1,179,871 times
Reputation: 3787
Make sure you review the financial information before you buy. Have it written into your offer contact with a clause that you must receive it within x number of days.
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Old 10-06-2016, 07:35 PM
 
4,541 posts, read 8,374,838 times
Reputation: 6521
Things cost what they cost. Its not random, its not managements whim.

Its pretty simple, if a repair, etc needs to be made and there is no money in the bank, you get a special assessment. Too many condo/hoa have kept dues artificially low for way too long and now things need to be replaced. This problem is becoming more and more common.
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Old 10-07-2016, 08:02 AM
 
2,645 posts, read 1,526,409 times
Reputation: 3164
My inlaws live in a condo and have assessments every couple of years. But not to the tune of 30k...I think the largest was close to 10.
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Old 10-07-2016, 08:38 AM
 
Location: WA
5,383 posts, read 21,325,397 times
Reputation: 5824
It will vary with dozens of variables, and an important factor is how the facility is managed.

I owned a condo for a number of years and had my fill of shared ownership and management. Saw a number of assessments, some that equaled over 5% of my purchase price, but my big complaint was on what and how the funds were spent.

Managing the maintenance on a single family home is sometimes difficult but I would rather have the control.
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Old 10-07-2016, 09:04 AM
 
Location: Wisconsin
16,882 posts, read 17,190,006 times
Reputation: 40756
I lived in condos for 35 years.

During that time we had three assessments, one for $4,000 or $5,000 because the condo association was only a few years old (new construction) and we had not built up a big reserve fund. Normally the builder would have fixed the problem but he went bankrupt.

The other two assessments were for $2,000 each and we had two years advance notice on each of them.

Our association had a one year budget, a two and three year tentative budget and five and ten year rough financial plan. At our last annual meeting we briefly discussed that the roofs that were replaced in 2016 probably would need replacing 25 years from now so we needed to be aware of that in future planning.
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Old 10-07-2016, 09:48 AM
 
Location: Columbus, OH
915 posts, read 669,312 times
Reputation: 1347
I can't imagine living in a condo where these massive assessments happen. It's nothing but poor management by the board. It's inexcusable to not be collecting enough money to put in the bank. I understand unexpected things can happen, but that is what contingency funds are for. I guess buyer beware is the name of the game here.
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