October Q&A Series Q15: Buying a Portland Condo: How do I evaluate HOA Dues, Reserves, and Assessments?

Question 15: Buying a Portland Condo: How Do I Evaluate HOA Dues, Reserves, and Assessments?

Here’s a condo secret that surprises a lot of buyers: the building with the lowest HOA dues is sometimes the most expensive one to own. Dues are what you pay every month. Reserves and assessments are what you pay when the roof, elevator or siding needs replacing. A smart condo purchase looks at all three.

The document checklist

When you’re under contract, you’ll receive association documents to review. Here’s what I look for with my buyers:

• Current budget. Where the money goes, and whether dues cover real costs.
• Reserve study. A professional estimate of when major components need replacing and what they’ll cost.
• Reserve fund balance. How much is actually saved compared with what the study recommends.
• Meeting minutes, ideally the last year or two. This is where you learn about leaks, disputes, upcoming projects and “we’ll talk about the siding next quarter.”
• Special assessments, approved or under discussion.
• The master policy, what it covers, and the deductible. A high deductible can land on owners after a loss.
• Rules and CC&Rs. Rentals, pets, parking, storage, renovations.
• Any past or pending lawsuits involving the association or the building.

Reading the reserves

A reserve study gives a recommended savings level. If the association has saved close to that amount, big projects can usually be paid for without surprises. If it’s far behind, owners often make up the difference through a special assessment or a sharp dues increase. Neither is automatically a deal breaker, but both belong in your budget.

Compare total ownership risk, not just dues

Two hypothetical condos at the same price:

Condo A looks cheaper on a listing. Over five years, it may not be.

Questions that affect your loan and insurance

• Can your loan program finance this building? Lenders review things like owner occupancy, the association’s finances, insurance and litigation. Ask your lender early.
• What does your own policy need to cover? Condo owners carry their own policy, and loss assessment coverage can help if the master policy deductible is passed to owners.

Don’t skip the inspection

The association handles the building, but you still own what’s inside your unit: appliances, plumbing fixtures, water heater, windows in some buildings. A unit inspection is still worth doing.

Shopping for a condo? Let’s read the documents together before your review period ends, and look at the numbers that never make it into the listing photos.

Example figures are hypothetical. Review association documents carefully and consult your lender and insurance agent.