HOA struggles, condo crisis worse than headlines suggest, lender warns
“Almost the overwhelming majority of HOAs are enormously underfunded in their reserves for elevators, roofs, and everything else,” he said. “And how they got away with it before is they wouldn’t do replacement costs. They’d do these half policies basically saying, ‘Well, it’s probably not likely the whole complex will go down.’ Now Fannie and Freddie are saying you’ve got to have increased reserves. All of these costs are hitting at the same time.”
He said the buildings themselves are compounding the problem. In Crested Butte, Colorado, he walked through condo complexes untouched since the ’80s and early ’90s, the same facades, aging roofs, and elevators still in place. The deferred maintenance bill is arriving now as special assessments on units that cannot support them.
“You’ve got a property assessed at $50,000 for roofs and all of that, but units in there are only worth $200,000,” he said. “How do the numbers work?”
The collection problem
In states like Colorado, the HOA’s ability to recover unpaid dues is severely limited, and Weinberg said those limits are what take a cash flow problem and make it unfixable.
Getting a judgment against a non-paying owner in Colorado takes 180 days by law, and the legal cost of pursuing that judgment often exceeds what the HOA can recover.
