Q&A: My HOA Asks Me to Pay Fees in Escrow for Three Years

Q. I am at the end of the purchase of a condo in Pompano Beach. I just found out that the association wants me to pay one year of condo fees in escrow for three years, and continue to pay the regular fees monthly. With all the cash outlay when purchasing a condo, and having to replace windows and doors, and the electrical box, we don’t have the money to tie up for three years as we are retiring. Could you please advise?

     —Can’t Afford This Added Burden

A. According to Rachel Frydman, an attorney for the Frydman Law Group in Coral Springs: “After the last housing market crash, condominium associations were very concerned that new owners would purchase a unit with very little down and end up not being able to make ends meet, which resulted in a delinquency to the condominium.  Such delinquency then caused a burden to the remaining owners who had to make up the shortfall in the budget. 

 “Therefore, in an attempt to avoid such financial strain on the condominium owners, boards of directors have chosen to adopt escrow policies, which require funds to be placed in an escrow or other separate account for a certain number of years, until either the owner becomes delinquent and the funds are used by the association; or the owner reaches the number of years delinquency-free and then is able to receive the refund of the escrowed funds.  This type of escrow scenario is beneficial to all members of a condominium association.  However, check the governing documents for the association as this type of burden placed on the purchase of a unit should be effectuated by an amendment to the Declaration, and not just a rule and regulation.” 

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Comments

  • We have a similar situation at our Condominium in Miami, Fl. We had an assessment added to our association fee due to a delinquent balance and to correct some issues around the building such as maintenance for the parking lot, gardens, building painting and flooring. The money was paid, and the only thing that was done with it was to change the paint color of the building. Now, we are informed that a new assessment has to be issued to pay for the delinquency which we already paid but was not resolved with the previous assessment. We are up to almost $600 on association fee and a Assessment all together, that we will have to pay for the next three years and taking the risk that at the end of that term, we will get the same story again and nothing to show for. Our building should be kept spotless for the amount of money we are charged monthly...mind you, that's apart from our mortgage payment. Needless to said, we are all desperate, new and old owners, and still processing the news which represents and extra $20,000 for our pockets. 😞