Condos are all the proof to me that you cannot count on your neighbour to be more than a slug and should do all you can to detach your life from theirs.
> How much more financial responsibility can a lot of these owners bear?
All of it? They let their buildings fall down over 30 years...
That actually happened in a condo building I lived in. A buyer's mortgage company refused to go through with the loan a couple days before closing because, by their calculation, the reserve percentage was not high enough.
Now, it was a couple thousand dollars and the building had a reserve of around $2 million at that time, and the association's response was "we hired consultants to figure out the correct reserve amount. You mischaracterized X, Y and Z; if you do it properly the numbers are all fine". But it was all too late, the sale fell through.
A few weeks later we discovered that the association hadn't been paying the water bill ("not our fault, they didn't send us the bill"), put the condo on the market and sold immediately. That bank was apparently ok lending 95% LTV; happy to be done with it and living in a detached house.
Literally: https://en.wikipedia.org/wiki/Surfside_condominium_collapse
Example: Each unit is paying $200 a month in HOA fees. $100-$150 covers the normal stuff - garbage, electricy, etc. A little bit gets saved each month.
Every 20 years like.. the entire roof needs replaced, or maybe the elevator. This could be a 20-100k hit that there is no way you have saved up for. So you need a special assessment. And a special assessment needs a vote.
There are many members that plan to move/die in the next 1-5 years. They think if they can just say "we dont need a new roof YET, lets just slap some more patch up there", they can delay the assessment until after they are gone.
The only way this condo things work, is a high assessment where you bank a lot of money. But with a high assessment, home values are down, so no one will vote for a high assessment.
It is all kind of a mess, and IMO a good reason to avoid condos.
Source: was on the board of a very small condo for a few years.
Special assessments should be for things that are unpredictable - improper construction of something (with the construction firm being impossible to sue for whatever reason), unexpected settling of a foundation, a bad storm causes unexpected damage, etc.
Roofs have predictable lifespans and should be getting inspected regularly. Most of the time, you can glance at it from the street and tell if it will need replacement shortly - missing tiles/shingles/shakes, any peeling/curling, missing/faded 'grit' on asphalt shingles, rot in an eave, etc.
A unexpected and large roof bill is almost always a sign of negligent or incompetent maintenance and bad administration.
What causes these problems is the thinking that it isn't inevitable, and no one wanting to pay/set aside the extra $125/mo over the prior 20-50 years to be prepared when it happens. Which is often exactly the folks you are talking about who plan on leaving before it happens, and the associations which let it happen, even though it's negligent for the condo association managers and board.
Even easier if inflation lets them just not raise HOA fees ever, and the same thing happens.
ALWAYS check reserves before buying a condo. ALWAYS check bylaws. ALWAYS check projected lifespans and expected maintenance projects of the condo association. ALWAYS get your own inspections.
Here in CA they are required by law to disclose them, though they often make it a bit of an expensive hassle to get them if you aren't already an owner. Still better than getting stuck with a huge $100k+ special assessment.
The harder they make it, the more you should walk away from a place. It's rare someone will make it hard if it's all sunshine, rainbows, and good management.
Though I guess if it’s 20+ years out, it doesn’t count as a expected expense until it’s less?
$200 would be great. I pay just under $700 a month, and it does not cover electricity or water/sewage.
In addition to that, the HOA levies special assessments for things like roof replacement (~$5.5k/unit 2 years ago) and is getting ready to sell off some property in order to cover another $2 million repair cost ($20k per unit, in a 100 unit community full of mostly retirees).
In our yearly budget, they do set aside money to cover this stuff, they just regularly and dramatically undershoot their estimates.
> It is all kind of a mess, and IMO a good reason to avoid condos.
Here, here.
Now I’m voting for Darth Vader.