The foundation of any properly run condo association or co-op building rests on residents paying their monthly maintenance fees on time and in full, with no delays or delinquencies. However, thanks to the lingering effects of the ebbing recession, many buildings and associations are feeling the pinch of late and/or missing maintenance payments. Many owners are also unable to cover the cost of special assessments to fund much-needed capital repair and improvement projects.
Hard Times vs. Hardball
Most real estate industry pros have seen the effect that non-payment and arrears have on buildings and HOAs, and say that it’s a problem that has surged in some buildings in recent years, for an array of reasons. According to one property manager, the reasons for non-payment vary. “It can be because of financial hardship,” he says. “They've lost their job, or have other expenses that have come up—but it’s mostly employment.”
Residents who have a beef with their board for one reason or another may also deliberately withhold fees or assessment payments in protest, though the pros agree that such situations are uncommon.
So, just one resident not paying their monthly fees couldn't possibly have that big an impact on the whole community, right? Wrong, says Denise Lindsey, CMCA, AMS, PCAM, the vice president of business development at Signature Property Group, a management company located in North Brunswick. Whether because of hardship or to 'send a message' to the board, non-payment of fees has a deleterious effect on the entire community by drying up the cash flow necessary for day-to-day repairs and maintenance operations.
"Until it's explained, a lot of homeowners don't understand that they are part of an association,” says Lindsey, “and that the only way the association gets its funding is from their homeowners' maintenance fees."