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Condo fees and homeowner association fees

Most buyers ask the amount of monthly condo fees or homeowner association fees, but they don’t always ask how many people are behind in their payments. Fortunately lenders do ask, and may reject loans in a building or development if there are too many unpaid fees.

Yes, the association may have recourse against the owners for unpaid fees, and may sue for them – and if they successfully sue, then it’s a matter of whether the owner has the ability to pay the judgment. In the meantime, bills have to be paid. The guards need their salaries, the electric company needs to be paid, the landscaper, the elevator repair contract, etc. When these costs can’t be met from current income or from available reserves, the association will generally have to charge an assessment to the owners to make up for these unpaid fees. That in itself may cause more owners to be in arrears.

So – when you’re checking into a condo, and looking at their budget, be sure to check their reserves and be sure to ask how many people are behind in their fees, what is the total amount of overdue fees, and whether there is any pending litigation.

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