Condo Media - December 2017 - 28

UntanglingRESERVE STUDIES
funding promotes stability and allows
owners to plan their financial lives
logically with the comfort of knowing
that special assessments are unlikely.
Helping owners understand the relationship between monthly regular
assessments and the health and appearance of their community will allow
them to "buy in" to the process.
MORTGAGE LENDER PERSPECTIVE
Mortgage lenders want to promote
conditions to:
■ Maintain property values
■ Ensure that an owner's financial
position is not negatively affected by
special assessments
The Federal Housing Administration (FHA) requires information about
association reserves for financing.

■ FHA currently has a strict lending
program for condominiums
* FHA is a popular loan of choice for
first-time condo buyers
* FHA requires associations to set
aside at least 10 percent of their
operating income towards capital
reserve accounts
* The 10 percent rule is often applied
to Fannie Mae and other lenders
* Lender may review annual budget
* If budget is deemed insufficient,
then reserve study is mandated
■ Special Assessments
* FHA views special assessments
as a potential red flag
* Indicative of association financial
problems and underfunding
of reserves 
* Thorough explanation of special
assessment is required

KIPCON New England, Inc.
Engage. Envision. Engineer.

Kipcon New England, Inc. is a full-service engineering
firm specializing in Community Associations Services.
Maximizing property values with cost-effective solutions.
Our team of Professional Engineers, Architects, Inspectors,
Green Professionals and Reserve Specialists offer
cutting-edge Transition/Reserve Studies, Engineering
Inspection Reports as well as Design Specifications.

617-275-2290
www.Kipconne.com

* Unsatisfactory explanations can result
in a reserve study requirement or
rejection of the loan application
Lenders want assurance their equity in
a community association unit is secure.
Adequate reserves ensure that the
community can perform needed repairs
and replacements without the need for
special assessments. Special assessments
could be unaffordable to unit owners and
cause mortgage defaults. Lenders want to
minimize this possibility.
POTENTIAL BUYER PERSPECTIVE
Potential buyers share the concerns of
both unit owners and lenders. They do
not want to inherit under- or unfunded
depreciation from prior owners. Fairness
dictates that current and future homeowners pay only for the deterioration
occurring during their ownership period.
Community association buyers are
becoming more sophisticated and aware
of the importance of reserves. Many
realize the risk of special assessments if
reserves are inadequate. Competent real
estate agents will inform their buyers
that condos have additional financial
and legal issues to evaluate. They will
describe operational items their buyers
must analyze and review for a condominium purchase. Adequate reserves
provide assurance to buyers.
THE ULTIMATE GOAL
Association boards, unit owners, property managers, lenders, and prospective
buyers will all benefit from a stable,
financially secure community owners'
association. Regardless of your perspective, adequate reserves will ensure that
the community you love will continue
successfully into the future. Performing a
reserve study and updating it periodically
is an essential part of creating a sustainable association.
■ PAUL HUIJING, P.E., IS REGIONAL
VICE PRESIDENT WITH ADVANCED

470 Atlantic Avenue 4th Floor Boston, MA 02210

RESERVE SOLUTIONS, INC., IN
WILBRAHAM, MA..

28

CONDOMEDIA



Table of Contents for the Digital Edition of Condo Media - December 2017

Table of Contents
Condo Media - December 2017 - BB1
Condo Media - December 2017 - BB2
Condo Media - December 2017 - Cover1
Condo Media - December 2017 - Cover2
Condo Media - December 2017 - Table of Contents
Condo Media - December 2017 - 2
Condo Media - December 2017 - 3
Condo Media - December 2017 - 4
Condo Media - December 2017 - 5
Condo Media - December 2017 - 6
Condo Media - December 2017 - 7
Condo Media - December 2017 - 8
Condo Media - December 2017 - 9
Condo Media - December 2017 - 10
Condo Media - December 2017 - 11
Condo Media - December 2017 - 12
Condo Media - December 2017 - 13
Condo Media - December 2017 - 14
Condo Media - December 2017 - 15
Condo Media - December 2017 - 16
Condo Media - December 2017 - 17
Condo Media - December 2017 - 18
Condo Media - December 2017 - 19
Condo Media - December 2017 - 20
Condo Media - December 2017 - 21
Condo Media - December 2017 - 22
Condo Media - December 2017 - 23
Condo Media - December 2017 - 24
Condo Media - December 2017 - 25
Condo Media - December 2017 - 26
Condo Media - December 2017 - 27
Condo Media - December 2017 - 28
Condo Media - December 2017 - 29
Condo Media - December 2017 - 30
Condo Media - December 2017 - 31
Condo Media - December 2017 - 32
Condo Media - December 2017 - 33
Condo Media - December 2017 - 34
Condo Media - December 2017 - 35
Condo Media - December 2017 - 36
Condo Media - December 2017 - 37
Condo Media - December 2017 - 38
Condo Media - December 2017 - 39
Condo Media - December 2017 - 40
Condo Media - December 2017 - 41
Condo Media - December 2017 - 42
Condo Media - December 2017 - 43
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Condo Media - December 2017 - 45
Condo Media - December 2017 - 46
Condo Media - December 2017 - 47
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Condo Media - December 2017 - 49
Condo Media - December 2017 - 50
Condo Media - December 2017 - 51
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Condo Media - December 2017 - 53
Condo Media - December 2017 - 54
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Condo Media - December 2017 - 61
Condo Media - December 2017 - 62
Condo Media - December 2017 - 63
Condo Media - December 2017 - 64
Condo Media - December 2017 - Cover3
Condo Media - December 2017 - Cover4
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