Association Balance Sheet

Tad8June 5, 2004

Hi,

I'm new to this message board, but very happy I found it. I recently moved into a condo, and it's a new construction. This summer, the developer is handing over the association to the residents. A management company has already been in place (LandArc), with the developer calling the shots.

The financial statements of the association have been posted, in preparation of the "transition" board meeting, where the residents will get elected to the board. However, I noticed on the Association's balance sheet, there is a $54K loan from the developer - thus a liability. Is it typical in these situations where the association is just getting started, for the developer to hand it over already in the hole? Currently the dues are $99 a month, but surely with that level of debt already, the dues will have to be raised instantly!

Also, are there any resources for someone new to associations to read? I'm thinking of trying to get elected on the board, but not sure as to what exactly would be expected of me, and how much time it would take.

Any suggetions?

Regards,

Tad

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talley_sue_nyc

actually, that's not uncommon at all. When buildings went co-op in NYC in the 80s, the sponsor really stiffed some of them w/ a HUGE loan that had a lousy term--balloon mortgages, etc.

Actually, $54K isn't that huge an amount, when you consider that homeowners can owe more than that on a single-family house. The TERMS of the loan are very important. You might not have to raise the dues right away, or very much. How long is the term?

At 30 years, a 5% loan, the total monthly payment is $290. Divide that by the number of units each month--if it's ten, that's $30 per month. Not that bad, actually. And it may be included in the $99 already.

and you're right, this issue needs immediate and careful attention from the board. They'll need to be sure the terms are advantageous, that the income will let them meet it, etc.

I don't know of any reading, unfortunately. You might check w/ your state's condo regulators (they exist somewhere), and see if you can find any other condos. In fact, ask the management company to give you contact info for board members from OTHER condos it manages, and ask them how their board works.

You can do as much or as little as you want; whether you'll be proud of the work you do or feel overwhelmed will vary.

You sound like a good candidate for the board, because you're already focusing on the big issues. The BIGGEST issue is money. The second-biggest is probably noise.

Good luck!

    Bookmark   June 8, 2004 at 12:51PM
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