In the “good old days,” when home prices seemed like they would continue increasing forever, many people bought condos in Orange County as that was all they could afford.
Fast forward a few years, and in today’s world of foreclosures and short sales, many of those same buyers are now losing their homes. And, worse yet for those who are in homeowner’s associations with them, they are not paying their homeowners’ dues. When facing foreclosure, many owners quit paying their homeowners’ dues, and whether the ultimate result is foreclosure, short sale or deed in lieu of foreclosure, the full dues are unlikely to be paid. Often, with a short sale, there is a settlement on the outstanding balance, with the association absorbing the loss.
How is this loss made up? Frequently, it must be made up by the other homeowners in the association whether by special assessment or by an increase in monthly fees.
Does this mean that you shouldn’t consider buying an Orange County condo? I don’t believe so. However, I do think it’s more important than ever that when buying an Orange County condo, you carefully review the budget and financials of the association. Further, if you’re obtaining a loan, your lender will likely get a condo cert to discover the number of delinquencies, if any, and other potential pitfalls of the association.
So, remember when buying an Orange County condo or a home in an association, that if your neighbors don’t pay their dues, you are likely to have to pay them, and it’s important to look at the financial security of the association.
Interested in a buying an Orange County condo? Please give me a call at 714-319-9751.