In a nutshell, when you invest in a condo, you and your fellow owners are jointly responsible for common area maintenance and repairs throughout the project. To cover theses costs, all owners pay a Homeowners Association fee, usually billed quarterly. These assessments are calculated based on an annual budget approved in advance by the Board.
Check that the Association is strong and don't focus so much on searching for the lowest possible monthly fee. Assessing too little or having a high number of owners not paying their share can lead to cash flow problems. When cash flow is poor, Associations might not adequately fund the reserves which are needed to cover major expenses that might arise. If there is no money readily available, the only choices are to levy a special assessment on each condo owner or defer the maintenance which can lead to the property being in disrepair.
The Association should have a reserve study that covers the overall structural condition, when major repairs might be needed, how much they’ll cost and whether the Association will be able to afford it. We want to see that the Association has enough reserves to pay for 70% or more of these projected expenses.
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