Condo Association Has No $$$ – What Can We Do?

Here is a question all too commonly asked today:

“My daughter just bought a condo on ______________ Avenue in ________________ California. The HOA told her that there is no money to fix the outside of the condos as promised due to forclosures.  Is there anything she can do?”

This is a real problem. In order to maintain the properties the Board has to have money. Many HOA and condo associations are having money problems because owners’ have gone into foreclosure with the bank and stopped paying their HOA fees.  Banks are delaying foreclosures for months and even in some cases more than a year and thus, associations are left to pursue whatever remedies they have, which include the right to foreclose on the property (which is not especially fruitful for loans that are upside down) or pursue the owners individually for the unpaid debt. This takes fortitude and time.

About all owners can do is support the board in its efforts to try and collect, and pay the assessments required to cover shortfalls. Owners can run for and if elected serve on the board if they do not think the board is doing enough, but truth be told, it’s “hard to squeeze blood out of a turnip” and so many HOAs and Condos are experiencing shortfalls.

It would be wise in looking at condo associations and HOAs these days to get your hands on the latest budget and financial statements. But that may not even be enough to paint the real picture. The seller has a right to a considerable amount of information and the buyer should ask for it right up front before the deal closes. See Civil Code Section 1365.2 and you can get a Primer on records inspection rights in the webstore at my website (www.californiacondoguru.com) if you want more information on this.

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