A.C. from outside of Connecticut writes:
Dear Mister Condo,
I live in an 85-unit condo complex that was built in 1970. Many of our residents have lived here since the 80s. Unfortunately for us, the Reserve Study we reviewed before buying listed the HOA health as good and properly funded. The Reserve Study issued a month after our purchase brought to light a number of upcoming expenses to maintain the buildings due to age. What many of the new owners are discovering now is that for years the association kept unit dues very low and avoided large repairs until needing emergency repairs. Now they are increasing dues rapidly to help pay for aged repairs- such as replumbing of the buildings. Our dues have increased by over 50% in a few years. Dues increases and assessments are incurred based on % of ownership, but is there a legal option (perhaps through a change to by-laws) that would allow for a special assessment based on years of ownership to place some of the financial burden on those that enjoyed years of rock-bottom dues at the expense planning ahead?
Mister Condo replies:
A.C., I am sorry that you and your fellow units are left paying the bill for previous unit owners. The sweetness of low monthly fees is often replaced with the vial reality of special assessments and higher common fees for future owners. There is currently no laws that allow for associations to go back and recoup additional common fees or assessments from previous unit owners. All that you can do as an association is to buckle down, address the reality of the situation and base future common fees on a properly funded Reserve Fund for when these common elements will need replacing next time. Otherwise, you will very likely find the next generation of unit owners feeling the same way you do now when there is no money available to them to make the repairs and replacements for the common elements you are about to replace and use for decades ahead. It is a vicious cycle but, with planning and proper budgeting, it can be managed. Good luck!
2 thoughts on “Paying the Price for Years of Low Condo Common Fees”
The ongoing cost of deterioration is as real as any other bill the association faces. When it is ignored, that obligation doesn’t go away, that “deficit” just accumulates, waiting to be resolved in time for a major project. No net funds are saved. The $ to perform a project comes from a special assessment instead of ongoing, fairly distributed assessments.
I have seen way to many associations with low fees. At the same time not providing necessary maintenance. It’s going to get worse. Cost of labor materials are increasing. Only saving grace is the banks are willing to work with associations so associations can get all cost associated with capitol improvements and get a loan. But at the same time that money being paid back. Associations will still have to build up reserves . By the time the loan is paid off they will have established a nice reserve of funds. Maintenance is a constant not just when something goes wrong