@oldfort Thank you for detailed info. What did you look for in the financial statements? It looks to me pretty ordinary. Wages for the super, contractors for maintenance, utilities and a few minor items. How can you tell if there’s a red flag? The statements were audited.
I was wrong about the reserve. They do have a reserve and the deficit was covered by the reserve according to the lawyer.
I look for if they are consistent and if they have enough income (condo fees) to cover those expenses. If you se a lot of spikes and valleys then I would question them.
They both seem to check, enough income and pretty consistent. Feels better.
So…did they actually have a deficit….or not?
They did as far as I can tell. They used the reserve to cover it. I am guessing it’s ok.
There are limits to what the reserve can be used for. It can only be used for capital improvements and not for ongoing maintenance. What was the project that caused the deficit and pulled from the reserve fund?
We had a similar situation where the neighborhood pool needed $150000+ in work and it required an increase in HOA fees because the bylaws restricted the use of reserve funds to specific items which did not include a pool renovation.
Scary.
But what do you do? Living in unsafe condo’s is not an answer. I feel for the senior condo owners, but the fact is their buildings should have had regular inspections and maintenance in the past, so rather than smaller increases over time, it is hitting them at once. Should the money come from taxpayers who have nothing to do with these condo’s? Maybe there is a way to subsidize/guarantee a loan so that it will be at a lower interest rate so that payments can be over a longer period of time – might be cheaper vs dealing with a bunch of suddenly homeless seniors?
We have a lot of condos and coops in NYC. We pay taxes so there are building inspectors who regularly inspect building to take care of issues. My coop building is required to fix the facade to prevent fallen bricks. We are assessed $500/month for next 3 years to do the work. It’s not coming out of other tax payers.
My daughter’s brownstone building was also required to do the facade work recently. All owners were responsible for the cost.
Buildings in NYC are heavily regulated. I don’t think Florida residents are as willing to have the government butt into their business
Agree with the suggestion of reviewing the minutes.
That’s when the “culture” of the building is revealed. Are people complaining about packages being stolen out of the common lobby month after month and the management company never does anything about it? or is it nuisance complaints- someone left their door wreath up until MLK day instead of taking it down on January 8th like it says in the by-laws. Are new rules seemingly rational and common sense- wash out your plastic containers before putting them in the recycling area to cut down on ants-- or seemingly arbitrary and dumb, like giving your cleaning person a key so they can come and go is a violation, but giving a tradesperson like a plumber or painter a key is ok???
I don’t think you need an accountant. You’ve already uncovered the big financial issue of the reserve. Unless the accountant has X-ray vision and can see that the parking overhang was made with substandard concrete, you’ve probably covered off the financial issue for now.
GO TO THE MONTHLY MEETINGS once you close on the unit. Yes, they are painful. But otherwise, you’re letting the loudmouths run the place without any oversight…
Some regulation makes sense. These seniors are the ones left holding the bag for others being allowed to keep passing on what should have been taken care of along the way. It’s sad. Buyers were made suddenly and dramatically aware that they should look at the financial and maintenance situation of these types of buildings, the law changed under public pressure, and the unlucky owners of the places in bad shape and/or without reserves get stuck with a terrible situation.
Better that than ending up under a pile of rubble.
In Ca they have a newer law where all balconies and walkways need to be inspected and deemed safe. This law was passed due to a collapsed balcony full of college students in Berkeley. Apartment owners, some mom and pop owners have to come up with the money to inspect. For most it will cost more money than they make in a year or two. Unfortunate and for some it is the money they live on. Should the state help? Same happened with earthquake retrofits. In many areas the owners can’t pass any costs along to the tenant. With home, condo or investment properties there can be unexpected costs.
I agree. Better than a building collapse, and someone has to fund it.
My kid is a structural engineer. She inspects balconies in CA all the time.