Dear Monica:  I own a condo in a small complex of six units.  At our recent Homeowner Association (HOA) meeting we discussed our low reserve account and some felt we should raise HOA dues to build up greater reserves.  What do you advise?  Howard G.


Dear Howard:  This is a question that comes up often especially when prospective buyers are considering a unit governed by an HOA.  Many HOAs would rather keep required monthly dues low and when large expenditures are needed,  have a special assessment paid by each owner.  This works well for many complexes but the risk is that an owner won’t pay the assessment when it’s due and the HOA must record a lien on the delinquent owner’s property.  To avoid this, many HOAs maintain reasonable reserves. Other complexes, especially large ones, build substantial reserve accounts that are used to pay all or most of the repairs and replacements needed, such as a new roof, painting, termite repairs, etc.

If a buyer is considering a condo or townhouse, he/she should look carefully at the reserve account to be prepared for future assessments if the reserves are low.  This should be a negotiating point with the seller and factored into the price and terms.