Grandma Ran the Building in the Old Days
Before I say anything else let me make it perfectly clear that I have nothing against Hoboken grandmothers. In fact, for some things, like watching the grand kids, making Sunday supper, there is simply no one better. I’m using grandma to make a point so hear me out. There are lots of small 4 or 5 family buildings in Hoboken that were at one time owned by Grandma. Originally, the extended family lived in them. Then they became rentals with Grandma as the landlord. Eventually the tenants moved out when a smart cookie advised Grandma to condo her building which is now worth millions. So Grandma sold off all the units but one. Now she lives in that unit with her new neighbors, the other unit owners around her. Her handsome profit is safely deposited in the bank. Since it was her building, she kept on ‘taking care’ of the building as she always had. At first, the other unit owners were happy to have her to look after things they just didn’t have time to deal with. Whether it was getting someone to shovel snow, clean the hallways or paint the front door, Grandma had the Hoboken connection and knew who to call and how to get it done.
Times Change – Grandma is in Over Her Head
Fast forward 10 years. Now each unit sells for close to half a million. One is for sale, has an accepted offer, and during attorney review the buyer’s attorney naturally asks the seller for the finanical statements and condo documents. Seller goes to Grandma but all she has is last month’s bank statement. There really haven’t been any formal condo association or board meetings. In fact, there really is no formal board. Grandma, 100% honest, just took care of things as they came up. The seller has nothing to produce for the buyer to show the history of the building, how it’s been maintained, whether it’s being run according to its budget since there is no budget. There is no real reserve fund and no real records of what maintenance has been collected or how it has been spent. Buyer walks away from the deal.
Let’s Teach Grandma a Lesson – Here’s What She (and the Condo Owners) Needs To Do:
1. Elect a board.
When a building goes condo, as soon as a majority of the units are sold, a condo board should be elected. Typically the legal documents that create the condo will dictate what that board has to look like. In small buildings there is usually one person elected president, another treasurer and a third may be secretary. Remember 8th grade history – checks and balances? The same idea applies here. You need a board to run the building. It’s typically required by the documents that created your condo association. If you don’t do it, a disgruntled condo owner could potentially cause problems for everyone.
2. Hold regular meetings.
Sure it’s difficult to find a day or evening when everyone can attend but serving food and beer often helps. Not only will the unit owners get to know each other, you are neighbors after all, but you can talk about what is going on in the building and what you would like to see happen going forward and make plans and develop a budget. Whether it is shopping for a better, more affordable insurance policy (your condo association does have insurance on the building, I hope) or deciding to put flower boxes in front of the building, meetings provide a forum to voice these issues. Again, the condo docs are going to tell you how often and what type of meeting are supposed to be held, and what notice of these meetings needs to be given to the condo owners.
3. Keep records.
The secretary is the one assigned with the task of keeping records of the board meetings and condo association meetings. In a small condo building, the board may actually comprise a person from each unit so there’s not a real difference between the board and the association. Not every word of the meeting needs to be documented, just the general subject of the discussion and any decisions that were made by the board.
Equally important is keeping financial records. Even if it’s as simple as writing it down in a notebook, you want to know where the money is coming from and where it is going to. Did everyone pay their maintenance? Late fees? Any special assessments? Have the bills been paid? There is insurance, utilities for the common areas, possibly snow removal, exterminators, handymen, an accountant. Did you know that condo associations have to file an annual tax return? Someone has to do the paperwork. As much as Grandma tried, you need real books and records.
Why, If You Own a Hoboken Condo, You Should Care
You Will Need Records To Sell Your Condo
Remember that a buyer is going to ask for these records. Hoboken buyers want to see how a condo building is being run. They want to assess the risk of maintenance increases and special assessments in the future. Has the condo association done renovations? For example, if the roof been replaced or common areas redone, showing that to the buyer and being able to account for how big (and small) items are paid for helps you sell your condo!
Buyers Will Want Your Condo More Than Other Hoboken Condos for Sale
There are literally hundreds of condos for sale in Hoboken at any given time. With so many units competing with yours, do you think a buyer is going to choose a unit in a well run condo with books and records showing the history of the building and its finances or a condo where Grandma just pays the bills as they come and can’t find the bank statements when asked? Buyers – here is a tip: when a building is professionally managed, there will be a sign in the lobby of the building with the name and contact info for the management company. Look for it when you are out looking at condos.
Too Much on Your Plate – Not Enough Time For Condo Business?
Hire a management company. There are lots of them that do a good job. They are not very expensive. They will add value to your condo.
The board still has to decide on a budget and only the board can decide on things like how much maintenance charges should be or whether to incur any significant expenditure. Someone from the board will also keep minutes of the meetings and they can be emailed to the management company for record-keeping purposes.
There are lots of more little things a management company can help a condo association do. For example, every time a unit is sold and there is a mortgage, someone from the condo association has to fill out a questionnaire for the bank. The management company does this.
Why A Well Run Hoboken Condo Pays for Itself
When it is time for you to sell, you can advertise to potential sellers that you have a “strong condo association”. Having a “strong condo association” and “professionally managed building” are very big selling points in the Hoboken condo market. It is equally or more important than having stainless steel appliances. Don’t kid yourself, the days of Grandma running the building are over. Do yourself a favor and get your condo in order.