Surviving Tough Financial Times Back from the Brink

Almost everyone, whether they're financially successful or not, knows what it's like to feel the pinch of financial insecurity at one time or another—those moments when an unexpected expense looms on the horizon like a storm, or the realization that all those saved-up pennies just aren't going to be enough to get by. It's a realization that elicits panic, regret and a sudden desire to hide under the sofa. All we can do is work hard to set ourselves free and start planning ahead for a better and hopefully more prosperous future.

Those moments of financial panic can happen the same way with condos and homeowner's associations. While it is a rarity, sometimes co-ops, condos or HOA boards can find themselves—and by extension, the communities they serve—in dire financial straits. All of a sudden, there's no money in the reserve fund or they can't borrow the money they need to make vital repairs. There are any number of scenarios that can put board members, managers and ultimately residents on edge, fearing for the worst.

The good news is that condos and HOAs almost always make their way back through rough financial waters. It takes patience, planning and a lot of thought and effort, but it can be done.

How Does it Happen?

It helps to take a look at some of the underlying causes for financial distress. Perhaps the biggest reason is improper budgeting, says Harold Blinder, a senior vice president with Popular Association Banking, a division of Banco Popular North America. "The inability to reserve for future capital needs," is one of the most common underlying causes of problems. Improper budgeting can be the result of a number of issues, says Blinder. "It may be that the directors are apprehensive about unpopular decisions like increasing maintenance fees. Financial decisions should be pragmatic."

Greg Spewak, a certified public accountant and a partner in the Mt. Laurel-based Ruotolo, Spewak and Co. adds, "Board members can be reluctant to do special assessments because it's a sure way to get thrown off the board."

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