Condo Association Management Blog

Several questions come to mind: did the condo take title through a foreclosure proceeding? And is there a mortgage on the unit? If both these are yes, then, the condo does not actually "own" the property, the bank still has first claim to the title (at least in FL they do). But through foreclosure, since the bank didn't step in, the condo has the right to rent the unit out to make up for back assessments. The association does not pay the mortgage. On the financial statements bad debt is reduced as rents are pulled in. The unit is not an asset, unless the condo association outright bought it from the bank and assumed the mortgage. As you can see, there are more angles and questions to this depending on the circumstances of taking over the unit.

This is far from the 1st time an HOA has bought a unit. You may need to find a new CPA. It does not decrease the # of units in the HOA and the unit becomes an asset of the HOA. Consequently, the liabilities become the HOA's responsibility also - taxes, HOA fees, etc. The point of an HOA buying a unit would normally be to produce a positive return on their invested dollars. Hopefully this is the result of your HOA's purchase.