Rules for Condo Owners and Board Members

Condominiums can provide convenience and a rewarding lifestyle but they can also turn into nightmares when the association or your fellow owners run into trouble. Before buying a condo or volunteering to serve on the board do some homework and review these key areas.

Review board minutes
Notes of board meetings will contain information about issues owners are bringing up over and over. If there seems to be a recurring theme it could point to problems with the management company or aging building infrastructure. If possible you want to be aware of these issues before you buy.

Who’s Not Paying Up?
The timely payment of monthly association dues is a good indicator of how happy or unhappy owners are with the present situation. If delinquency rates are high you should find out if owners are holding out for improvements or repairs that have been put off. Delinquency rates and the board’s success at collection also speak volumes about the general attitude in the community you are becoming a part of.

What is the Reserve Balance?
The fund used for capital improvements and replacement of big ticket items should be a primary concern for all owners. We have heard plenty of horror stories where residents were slapped with a large assessment because the reserve fund had been ignored for too long. Also inquire about the history of special assessments to get a feel for how well the board budgets future needs and accounts for them in setting the amount of dues.

Does the Board Have a Reserve Budget?
Just as important as the amount currently in the reserve fund are the board’s plans for that money. If they don’t know what they are going to do with it then the balance is usually inadequate to do anything but high dollar routine repairs.

Is the Insurance Adequate?
If you are going to serve on the board it is important that you understand the current coverages and whether they are adequate. Do not be afraid to bring in an expert to advise you on this important area. When a major claim or personal injury suite lands on your doorstep you will be glad you didn’t cut corners.

What are the Rental Restrictions?
Understand the local ordinances as well as your association’s policies for renting the property when you are not there. Just because the by-laws are silent doesn’t mean your community will allow you to rent the property as you see fit.

Who is the Property Manager?
Property managers can make all the difference in the world. Before buying a condo you should find out who the management company is and ask them for references from other complexes they manage.

What is the Legal Budget?
Find out who the board’s attorney is and review the budget line items for legal fees. For buyers, high legal fees may point to a board that is especially litigious. Prospective board members should make sure their colleagues are not afraid to pay for good legal advice when it is needed. And always be leery of the board member or resident who volunteers their legal services on a pro-bono basis. Advice is almost always worth what you pay for it.

Hire an Attorney.
Before buying a condo have your attorney review not only the purchase contract but also the association’s by-laws and rules for residents. It is not often that you will find a deal breaker in the by-laws but differences between associations can certainly make one property more attractive than another.

Are There any Pending Legal Matters?
Is the association embroiled in a suite with an owner who happens to be your neighbor? Has a contractor entered a lien for non-payment? Has the fire marshal cited repeat violations? You won’t get answers to any of these questions unless you ask.

Don’t Overlook Your Realtor.
Real estate professionals often know the undercurrents and political movings of the bigger condo associations and can steer you clear of problems.

A lot of these same rules apply for homeowners associations. As deed restricted communities become more prevalent many owners find themselves at odds with their association over issues that were never contemplated at closing. A little homework can go a long way toward avoiding stressful and contentious situations.