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The few townhouses I have seen (from the outside) that are not part of a condo (in NJ and elsewhere) -- the condition was not that nice, and I decided if I were to buy a townhouse, it would be part of an association!
Atleast you get structure maintenance, yard/snow, and swim/tennis etc for the fee you pay. Plus it looks nice usually.
I can't think of a situation where an association should be going into debt for anything.
Associations sometimes have to borrow money for unanticipated expenses. The loans are then repaid by special assessments on the owners. If the association already had the cash on hand, they wouldn't need to issue the assessment.
The board of the Surfside condo that collapsed in Florida had just secured a $15 million line of credit to start work on the structural repairs.
one of the concepts related to condo association debt was that it leads to smoother payments over time, instead of special assessments which can lead to sudden spikes paid by owners at the time of the assessment.
I think you've misinterpreted something. The association should have a reserve study calculating how much money will be needed for future maintenance and repairs. The association should collect enough in monthly dues to cover current operating expenses and the future repair work defined in the reserve study. If this is done correctly, there should be no need for the association to take on debt and hold special assessments, meaning that there won't be any sudden spikes.
Associations sometimes have to borrow money for unanticipated expenses. The loans are then repaid by special assessments on the owners. If the association already had the cash on hand, they wouldn't need to issue the assessment.
The board of the Surfside condo that collapsed in Florida had just secured a $15 million line of credit to start work on the structural repairs.
OK, that does make sense. In the 11 years I have been at my townhouse, we had one special assessment of $150 because we overran our snow removal budget.
However, a property I looked at had a $700-a-month special assessment going on because they had a major drainage issue to fix. That likely could have caused debt.
The association should have a reserve study calculating how much money will be needed for future maintenance and repairs. The association should collect enough in monthly dues to cover current operating expenses and the future repair work defined in the reserve study. If this is done correctly, there should be no need for the association to take on debt and hold special assessments, meaning that there won't be any sudden spikes.
Back in the late '80s, the old apartment house in which I lived "went condo", and I was given the opportunity to buy my apartment for the "insider" price. Aside from the fact that I believed the insider price to be vastly inflated, the stated monthly association fees were over $350--i.e. bizarrely high. A careful reading of the offering statement revealed that the consulting engineer found that the huge furnace, the multiple water heaters, the flat roof, and every bit of the plumbing in this big old building would have to be replaced w/in the next 3-5 years.
I wound-up buying a brand-new centrally air-conditioned townhouse in Rahway for ~$40,000 less than what my old apartment would have cost me, and the monthly maintenance fee on the townhouse was ~$100 per month. And, my belief that the units in my old apartment house were overpriced was verified when my former apartment stayed unsold and vacant for close to two years.
Last edited by Retriever; 10-17-2021 at 06:59 AM..
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