Did you hear about the potential changes in buying requirements for Palm Aire Condo 1 properties along North Palm Aire Drive?
Palm Aire Condo Association #1 is currently trying to change its rules for purchasing & refinancing condos, villas, and townhouses along North Palm Aire Drive. Last night there was a big meeting at the Herb Skolnick Community Center so that residents could find out more information and ask questions regarding the changes that the Board of Directors is trying to enact.
Several years ago PACC #1 changed their bylaws so that all buyers who were taking out a mortgage had to put down at least 20% in order to get condominium approval. However, given the foreclosure crisis which is occuring across the United States there have been several owners within Palm Aire that are defaulting on their loans and also cease to make their quarterly maintenance payments.
When maintenance payments are not made the whole condo assocation has to cover the expense until the property is foreclosed on and even then they may not get the full amount returned if any. This bad debt raises the cost of the overall expenses of the assocation via legal fees, interest, etc. and the Board of Directions in Condo #1 is trying to promote a solution.
Their proposed solution is that they lower the downpayment requirement to 10 percent and require a buyer to put a full year of maintenance in escrow to be held for 3 years of more (depending on late payments, etc.) While this idea sounds perfectly acceptable at first glance, there are a number of issues that remain unmentioned.
- Should a cash buyer have to put down the full year's maintenance in escrow?
- If I cannot qualify for a 10% down loan and put 20%, do I still have to pay a year maintenance?
- One year of maintenance can be anywhere from $2500 to $6000, held for 3 years would accrue a lot of interest. Shouldn't this be interest-bearing and doesn't the Buyer deserve that interest since it is their money?
- What if I do not plan to own this condo for 3 years? Where does my money go?
One of top producers, Ted Goldstein, happens to be a resident of Condo #1 and went to the meeting. We discussed this issue at length prior to the meeting and Ted proposed that the Association allow the buyer to choose path to take when purchasing. They could either:
- Pay cash with a year of maintenance to be used as soon as they buy the property
- Put 10% down with a year of maintenance held in escrow for 3 years
- Put 20% down with no further requirement
This way the condo is covered as best possible while still leaving the buyer some options that best serve his or her needs.
The vote will take place is roughly 90 days and I will be sure to post the outcome whatever it is.