Buying a Condo in Chicago: Evaluating Association Financials and More

Buying a condo in Chicago is always exciting, but to be sure that you fully understand the risks of your investment, it’s important to evaluate the association’s financial health (you should also be familiar with the association’s condo documents). Failing to do so could result in expensive assessment hikes for unsuspecting owners.

What to Look for in Association Financial Statements

Checking the financial health of a condo association is an important step when putting in an offer on a condo unit in Chicago. While paying assessments is part and parcel of living in a Condo Association, you don’t want those fees skyrocketing because the board deferred maintenance.

As you and your realtor write your offer on a condo unit, be sure to request the financial statements and board minutes for at least the past two years. This will give you a sense of how the association manages its money and resources over time. Here are some specific things to look for when reviewing those documents.

  • A well-managed budget – Look at the annual operating budget and meeting minutes to evaluate how association money is being allocated and spent. Are there any notes in the minutes to suggest an issue with delinquent owners or gross overspending (or underspending) in a given category? Any red flags should be taken seriously because if you buy the condo unit, you will assume partial responsibility for those issues. 
  • Healthy reserves – Does the HOA have sufficient funds set aside in a reserve for capital improvement projects and emergencies? If there isn’t adequate money in a reserve fund, that could mean unit owners get stuck with an assessment hike if there were to be an issue.
  • Insurance coverage – What type of insurance does the association have? Is it sufficient to cover the association’s property and rebuild the structure if necessary? While you’ll need your own insurance policy to protect your unit and possessions, it’s also vital that the HOA also carries necessary protection for shared property.

Lastly, don’t be afraid to ask questions about the financial statements, governing documents or any other concerns you have about how the association is managed. If the association partners with a Chicago association management company, they can also be a good resource for answering your questions. 

For your financial benefit, it’s imperative to buy into a stable community with fiscally responsible board members who serve as good stewards of the association. To learn more about successfully managing a condo building in Chicago, please contact us at First Community Management. We manage more than 115 condominium, townhome and homeowner associations in the greater Chicago area. 

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