If you are thinking about buying a condo, you’ll have a few things to consider. First, you have HOA dues to pay. Second, you’ll need to understand the importance of a condo association. Fortunately, we have you covered. Read on to learn about these groups and why they matter to you.
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What Is a Condo Association?
A Condo Association is a consortium of condo unit owners who live in the same building. A board of directors is chosen to maintain and repair faults found in common areas. They’re also responsible for resolving owner disputes and setting condo rules, fees and regulations.
Since you’ll be sharing a unit in a development with other people, an association makes sense; their goal is to clarify the do’s and don’ts of the shared premises.
The association also helps ensure that expenses are shared evenly and gives everyone equal responsibility in maintenance costs. Their goal is to remove the potential fuss and drama that can come from group decisions.
These are the areas of the building that are commonly owned and shared by the residents, and split into two categories:
- General Common Elements include Hallways, roofs, sidewalks, lobbies and community facilities such as pools and parking lots. Essentially they’re areas available for use by all unit owners.
- Limited Common Elements are for exclusive use, being part of an individual condo unit, such as a balcony or patio.
Condo Association Conditions
Upon finalizing your condo purchase, you’ll be given a list of covenants, conditions and restrictions, or CC&R’s. The selling agent for your unit must disclose the rules and regulations of the condo prior to signing the contract.
There could be certain restrictions that the buyer may find unfavorable, and which can dampen their interest, so it’s advisable for the agent to relay this information for legal reasons.
If these CC&R’s aren’t met by the new owner, the homeowners association can intervene. As a legal organization, they have the authority to enforce rules and collects fees or debts. Should an owner not pay their fees, they have the power to initiate a foreclosure.
If a resident wants to alter their unit in a way that’s not in line with the CC&R’s, they’d have to ask for the HOA’s permission. Further punishments that can be imposed by the HOA include monetary fines, privilege suspensions and even lawsuits.
Taking care of all the condominiums in the building requires a lot of work. Since the association board members often have their own jobs, outside help is usually needed.
So it’s common for a condominium association to employ a property-management company to preserve the building. Their duties can include landscaping, pool cleaning and maintaining the exterior of the building.
Communication between the management company and board of directors is vital. The management company sends representatives to board meetings and updates them with management reports.
Creating Reserve Accounts
As with any property, unexpected occurrences can happen, requiring the association to seek a resolution. These can include storms, lawsuits or accidents that could damage a unit or part of the building. Fixing these problems costs money, so as a preemptive move many condo associations have reserve accounts to pay for this.
Thirty states have a minimum requirement that condominiums must set aside for their reserve accounts. These costs are placed on top of the monthly fees, until that quota has been reached. It may not be a welcome expense, but it can prove to be even more costly without it.
If you’re looking to purchase a condo, it’s wise to factor in these responsibilities and expenses, since you’d have to take them on as well. The benefit, though, is that if unexpected issues arise, you have a community to aid you financially in dealing with it. Condo associations are the successful result of years of trial and error, which can work to your benefit in the long run.[ratings]