What are pitfalls of Condominium Associations?

All condominium associations are led by boards of directors, because the association is a corporation.

Some board members -- and too many owners -- fail to read the governing documents established to guide the business of the association. As a result, the board may not act in leadership mode, which can be a pitfall.

When owners fail to read their governing documents, or for whatever other reason, fail to pay their monthly assessments, the association may not have enough money to pay its communal bills. These services might include, sewer, water and other utilities, master policy insurance premiums, landscape expenses, preventative maintenance items, and so forth.

As a result, the condominium association can find itself in a crisis, whether caused by poor management or by a natural disaster, and have no guidance for surviving the crisis.

When an owner considers buying into a condominium, due diligence includes reading the governing documents, and the last three years worth of board meeting minutes and association financial reports.

A condominium association in crisis or on its way to a crisis caused by poor management can be easy to spot, and therefore avoid. Such an association would also be one to avoid, because it might not be able to recover from a natural disaster.

Finally, depending on the location of the condominium, -- state laws apply -- a new development's association can be in danger, because the association is not well formed, or is formed by the developer and does not effectively represent new owners.

Another Perspective

In many cases the association isn't sustained and no one is in charge. Many have been abandoned by their developers before a strong until owners association was established. No entity collects the common fees, no one is in charge of maintenance and upkeep, no one enforces the rules and regulations and no one is in charge of repairs. This has happened with many condo projects that were not completed before the market crashed in many regions. Also, many associations attract people who like to be in charge as an ego booster but do not follow through on their responsibilities.