Condo and Townhouse Buyers..BEWARE…Associations are raising costs to buy units.
These days I have found that associations are doing everything they can to build up their funds to run their community. With costs continuing to rise everyday to run condo associations these days (IE: Insurance, landscaping, roof replacements, heating systems, driveways repaving etc.) associations are finding it more and more challenging to meet their basic monthly and yearly monetary needs. Lately I have found that a majority of them are “passing the buck” to the buyers to cover costs.
A “Special Assessment” is typically one route to go where all current unit owners are assessed a specific amount, sometimes in a one lump sum payment or typically split up over the course of several years or months so it’s a little easier on the unit owners.
If the entire “Special Assessment” is not paid and the unit is sold, typically the new owner may get stuck with having to pay the balance of it. (By law, they have to notify you before signing a contract and closing)
Here are some examples: “Special Assessment” situation- In one local community, each member was recently assessed about $30,000 do redo the stucco on the exterior of the buildings that had deteriorated. They could either pay it up front or pay it over 10 years which was added to their monthly maintenance fee.
Read about a $49,790 Special Assessment charged to unit owners of a New Jersey Townhouse Community
More than not, if a community is having problems making ends meet, rather than make a “special assessment” upon current home owners they pass it on to new buyers to pay for extras up front at closing such as: 2-3 Months Maintenance fees, Membership Fee, Capital Reserve Contribution, Move in Fees, Administrative Fees or some other name. These fees are voted on by the current members of the Association, rather than them getting hit with a special assessment they of course typically vote to pass it on to the new owners.
One local community decided to charge NINE times the monthly maintenance fee at closing to the buyer. The monthly maintenance fee was about $300 per month, the new buyer has to pay $2,700 extra just to join.
So if you are thinking of buying in a condo community beware of these costs and go into it with eyes wide open. Find a good agent like me that knows the ins and outs.