In my experience, an emerging trend with association failures is that a handful of people own multiple units. When one or two of these individuals fall on hard times, the rest of the association tends to suffer.
So the question is what can you do to protect yourself from buying into an almost certain nightmare?
You may want to start by asking these questions to a potential seller or developer:
1. Are there multiple owners in this association?
2. How many of the units that have been sold are owner occupied? Or plan to be owner occupied?
3. How many rentals are there in this association?
4. Are there any foreclosures? How many foreclosures have been filed naming the association as a defendant in the past six years?
5. How much is in reserves?
6. May I see a copy of the monthly expenditures and income? Is it possible to see the financial statements for the past 3 years?
7. May I have a copy of the Declarations & By-laws?
8. Has the association been cited for any city code violations? Are there any currently open?
9. Does the association have a certificate of occupancy?
10. Has this association been named in any lawsuit?
To ensure accuracy, put those questions in writing and require a written response. That way you have a paper trail in case the answers you receive and the reality of your situation don't match up.
Don't forget to give the same level of scrutiny to your developer or the company developing the building.
This is especially important if you're buying new construction. This blog was started because of what I didn't know about my developer and the condition of the building where I live.
Also see if you can unearth any information about other condo buildings in the neighborhood where you'd like to purchase. Just because your future association is on terra firma doesn't mean other associations are in the same financial boat.
Unfortunately, the fiscal stability of a neighborhood can be undone by one shaky association.
Asking the correct questions may save you from something as annoying as an unforeseen special assessment to being the sole person keeping the utilities on in your building.