This is a guest post by Rizzetta & Company in Tampa, Fl
For Tampa Bay area home and condo buyers, it’s important to know that many homeowners associations (called HOAs) are in trouble financially, which might affect your purchase.
Due to the real estate downturn, many HOAs are short on funds, often because a significant number of their homeowner’s aren’t paying their fees. To deal with this, HOAs are doing everything from reworking vendor contracts to working out payment plans for delinquent members, says Heather Russel, who heads Rizzetta & Company’s HOA management operations. (An interesting story on this ran in the St. Petersburg Times and Big Builder Online last month.
Rizzetta & Company estimates that about 30 percent of the state’s HOAs are “underwater” financially, meaning they don’t have enough funds to pay all of their bills. Usually, these are HOAs that were established in the past five years.
So what does this mean if you are buying a home or condo? In some cases, buyers are getting to the closing table, only to find out that the seller wants to have them pick up the cost of catching up on delinquent HOA fees.
This may be something you are willing to do, especially if you’re getting a great deal. But if you haven’t had advance notice, you have to make a quick decision.
What Are Your Options?
To avoid this scenario if the property you’re buying is part of an HOA, work with a Realtor to get information on the HOA early in the process. Find out if the seller is current on the fees owed on the property for sale, and find out if the HOA is in trouble. Many experienced agents are already aware of issues because lenders don’t want to finance properties with an unstable association, and are considered non-warrantable.
If it is, it’s possible there will be a need for increased fees or special assessments for the HOA to get back on track. Again, this may be fine if you are comfortable with how that would fit into your budget.
Obvious Signs To Look Out For:
Often, when you are touring a subdivision or condo, it’s obvious the HOA is in trouble. If the pool or landscaping isn’t kept up, or the roof is in disrepair, odds are the HOA is hurting financially.
This doesn’t necessarily mean you shouldn’t buy there, though. Many of the HOAs that use Rizzetta & Company for their management, for instance, are dramatically improving their situations. But you won’t know until you get the facts. So do your homework!
Tampa-based Rizzetta & Company (www.rizzetta.com) is one of the largest HOA managers in Florida, working with 120 around the state.
If you are looking to buy a home or condo in the Tampa Bay area and need real estate advice, contact me here.