This is a very good idea. Should that new owner ever become deliquent in paying monthly dues or other special assessments these funds are available to the association.
I think it's a great idea, especially since so many condos have large delinquent payers on their books, it would help to stablize the budget . Since we have to pay it out anyway doing it before hand I think is fine.
Since this will require an ammendment, by a certain percentage of ownership, this will be up to owners to vote for or not. You might want to get together with owners to see if this will be in your best interests.
A lot will depend also on how responsible management has been in the past with finances. You say this is a new management, you will want to find out if they have insurance to cover loss of your finances. Seems to me I would want to wait a while to see what caliber of service from them. I think this is too big of a step to take for a new to you, and therefore untried management.
Soumds like a very good idea until you consider today's market and the difficulty connected with financing condos. That is just one more hurdle you put in place to discourage the buyer. Personally, I pay my assessments 6 months in advance -- I don't like monthly bills. Our treasurer stays right on top of things so we do not have delinquent accounts.
Our WA State condo's Declaration states the following:
12.11.1 An Apartment Owner may be required by the Board or the Manager, from time to time, to make and maintain a deposit not less than two (2) months nor in excess of three (3) months estimated monthly assessment and charges, which may be collected as are other assessments and charges. Such deposit shall be held in a separate fund, be credited to the Apartment owned by such Owner, and be for the purpose of establishing a working capital fund for initial project operations and a reserve for delinquent assessments. Resort may be had thereto at any time when such Owner is ten (10) days or more delinquent in paying his monthly or other assessments and charges or to meet unforseen expenditures, or to acquire additional equipment or services deemed necessary or desirable by the Board. Said deposits shall not be considered as advance payments of regular assessments.
12.11.2 In the event the Board should draw upon said deposit as a result of an Apartment Owner's delinquency in payment of any assessments, said Owner shall continue to be responsible for the immediate and full payment of said delinquent assessment (and all penalties and costs thereon) and thus the full restoration of said deposit, and the Board shall continue to have all of the rights and remedies for enforcing such assessment payment and deposit restoration as provided by this Declaration and by law.
This is something that warrants a legal opinion. Unless all owners are going to be required to pay one year's worth of assessments, I don't think the association can demand that of a new owner. All members are to be treated equally. The association cannot have one set of rules for some of the members and another set of rules for others.
The owners of any condo need to have facts in considering an amendment with the consequences that this amendment would have.
1. Just recently, the standards for loan approval were increased to include the mandatory assessments for a property located in a condo or HOA. This is a new and beneficial consideration that mortgage companies must undertake in evaluating a loan applicant.
2. Owners who have a mortgage on their property usually are required to submit any amendment of this significance to their mortgage company for consent to approve it.
3. Retaining a year's assessments is a significant burden to any owner and may force property into the "cash only" investor purchaser. This is not good for the strength of the condo community.
4. Approval of the sale of an individual unit may be a violation of the rights of property ownership.
5. Does the State of Florida authorize condo boards to adopt such an amendment? Some language found in condo documents nationwide may not be legally authorized by the State where the property is located. This can void enforcement.
6. The condo must determine if mortgage underwriting will approve loans with the proposed amendments.
The association's legal counsel hopefully has been involved in drafting the amendments proposed and should be available at a meeting to provide answers to unit owners. The amendment must be given full consideration as to the impact it will have on the condo including sales. Comparable units without this burden will attract buyers away from your property.
What's fair for the goose, is fair for the gander. How about all uknit owners put up 12 month reserves! Better yet, why not crreate the legal reserve accounts and collect that amound equaly over a 12 onth period to offset major assessments. All condos should have a statuary reserve on their books.
You say the units are under new management. Since when does the management company call the shots. Management is at the behest of the HOA Board, not the other way around. Check you state laws in regard to this, as well as your governing documents. Is it your HOA that is doing this? I would think this would deter owner/occupants and increase investors, which is in itself a big problem.
I think anyone who thinks this a good idea is nuts.
All Condo owners must be treated equally. What you are proposing it illegal. Good luck with that.
What is the back story on this proposed amendment change? Something the management company inititated or the board of administrators or both?
The original poster has the option to communicate with the other unit owners to vote no, for the reasons mentioned by others. It sounds illegal to force new owners to pay up front, while other unit owners do not.
Is there a new law? Highly, highly doubtful.
If there was a law you would not have to vote for it for one thing. Act to block this bad idea.