Thursday, April 01, 2010

Foreclosures and Their Effects on Home Owner Associations (HOA)

As more and more people default on homes, HOA or Homeowner Association's continue to remain under funded as defaulted homeowners cannot pay their fees. Generally speaking people will stop paying their HOA fees before they stop paying their mortgage. As the foreclosure process proceeds, arreared HOA fees can add up for months. As more and more property owners are unable to pay their HOA fees, the association must dip into their reserve account to cover their costs.

Many associations are now facing fast depleting or already depleted reserves. This is a very large problem for existing homeowners and prospective purchasers. To cover their costs, HOA must increase their dues to cover this gap and rebuild their reserve. To further compound this problem, reserves are to be used to cover regular maintenance of lawns, pools, facilities, buildings, etc. But due to fiscal shortages, much needed renovation and maintenance is not being done, leading to mosquito infested pools, non functioning elevators and even power loss in common areas due to unpaid electric bills.

The moral of this article... Be sure to know that the HOA of your new property is in good fiscal health before purchasing.

Written by Default Research Inc.

Richard's Notes: If you're considering purchasing a condo or townhouse in the San Fernando Valley, it's important to work with a knowledgeable real estate agent who will inquire into the health of the association and assessments which may impact you as a buyer in the near future.

Richard Johnston
San Fernando Valley Condos and Townhouses

More Links: