Job losses. Bankruptcies. Foreclosures. These are tough times for everyone, but when homeowners fall on hard times, they are often late paying condo, townhome or co-op fees. Some can’t even afford to pay them at all.
Add in to the equation contractors who have gone out of business or boards that are reluctant to spend money on repair and other capital expense projects, and it can be a rough time to be in the property management industry.
James Cervelli, vice president of real estate operations with Cervelli Management in North Bergen, says that owners who are behind with their monthly maintenance fees have created serious problems at some of his properties. “Basically it's a big circle. People don't pay their maintenance fee, and we don't take in as much money as we budgeted for, and we have expenses that happen … then you have the busted pipe that’s $1,500 and everything is a struggle because we’re not taking in as much maintenance [fees] as we usually do,” says Cervelli, whose firm manages properties in New Jersey, New York and Delaware.
Cervelli says that he makes sure that necessities—like a broken pipe—are taken care of promptly, but notes that less pressing problems are being pushed to the side by some cash-strapped condo or co-op boards. “We're having trouble doing things that we would like to have done, for example, painting the lobbies or cleaning the carpets. These are things that should get done, and normally would be on a preventative maintenance schedule, but have to be pushed back or changed, or put on the back burner.”
The lack of preventative maintenance, Cervelli states, has affected property values at some HOAs. “You could have someone [a potential buyer] who comes into a condo building that hasn't had its carpets washed in a year and a half because the board is afraid to spend the money. The lobby looks junky and the pool of buyers may be limited because the property is not presenting itself as nicely as it would have been if everybody had been paying their maintenance fees.”