My condo association sent a letter saying they are in financial distress; what to do?

[Chances]

I received a letter from my condo association saying that they are in a financial distress. Apparently, a lot of people in the community have not been paying their homeowners fees, and currently, they have a receivable balance of $50,000. They said it is this much for several reasons:

- Main reason: owners who have fallen significantly behind on Association Fees
- Legal fees incurred in attempts to collect the funds
- Owners who have let properties go into foreclosure and or filed bankruptcy, where the amount owed has to be written off by the association.

I pay my homeowner's fees and are current, but wanted to know what to expect if something doesn't happen soon? I can't IMAGINE that people will magically start paying their homeowner's fees and the association would recover from it now. What typically happens in these situations? I know fees will go up, but what else could happen? What if the association goes bankrupt?

Just wanted to get an idea of what would end up happening in this situation. Just a little worried because I don't know WHAT to expect.

 

[Mimi]

You are right to be worried. This is a rampant problem right now and will probably get worse before it gets better. That is one reason I'm hesitant to buy a condo, even though I want another income property. I wanted to buy a condo in Hawaii, but the HOA dues had skyrocketed to $800 a month due to these types of issues.

I'm sorry that I don't know the answer, but I can say for sure that the trend will not magically correct itself (as you stated) I would definitely suggest that you seriously question how much you are willing to pay to a failing association and I would also not pay increases or supplements without detailed explanations from the association. You could try to sell your unit, but you will have to disclose what you know about the HOA to a buyer if you decide to get out of there.