How to X-ray an HOA #4 – HOA Reserve Funds

Good HOA’s, like all good businesses, plan ahead.  Every HOA budget shows how much goes to the reserve fund which pays for capital expenditures as the need arises.   Whether the reserve fund balance will actually meet those needs has been a hot topic in recent years. … [Read more...]

How to X-ray an HOA #3 – Monthly Fees and Special Assessments

There are two types of HOA assessments – annual and special. Annual assessments are adopted by the HOA Board of Directors based upon each year’s projected budget.  The total amount is then divided among the home owners.  Townhouse assessments tend to be divided by the number of units, with each owner paying the same.  Condos typically allocate costs according to square footage, so owners of larger units pay more. The annual assessment has two main components – operating expenses and reserve fund allocations.  Operating expenses cover routine maintenance (landscaping, snow removal, garbage … [Read more...]

How to X-ray an HOA #2 – The Financial Statements and Budget

Every HOA is a business and must keep certain financial records for proper management.  Let’s start with the budget.  If you are buying a new unit directly from the developer, the budget you will be reviewing is almost always unrealistic.  Developers typically understate their operating expenses to lure buyers with claims of low monthly fees.  The developer may be subsidizing expenses or not listing items that are definitely needed.  For example, the budget may show “window washing at $5,ooo per year.”  But in fact, this amount pays for only one cleaning per year when two cleanings are … [Read more...]

How to X-ray an HOA #1 – Overview and MN Disclosure Law

This post kicks off a 9-part series on "How to X-ray a Home Owners Association (HOA).”  The posts will help you discover the inside scoop on an HOA’s financial health and social environment so you can decide if it's where you want to live.  The series will cover these topics: … [Read more...]

Pimpin’ Your Credit Score

Buying a house is probably the biggest debt you will ever incur.  The lifetime cost of your mortgage greatly depends on your credit score because that determines the interest rate .   You should check your credit reports about 6 months before applying for a mortgage.  This allows enough time to correct any significant errors.  The three credit bureaus are Equifax, Experian and TransUnion.  Each issues their own score but in general,  you want a FICO score of 720 or higher to get the best interest rate.  And since many lenders use the middle figure from the three bureaus as the "correct" … [Read more...]

“Desperate Housecats” TV Show Rejected

Like all cats, Pearl and Saber believe the world revolves around them and that there is nothing humans find more fascinating than cat-watching.  Recently, they hit upon the idea of starring in a new reality TV series called “Desperate Housecats.”  They contacted every major TV producer and network executive, pitching this new show.  To their utter shock and disappointment, everyone rejected the idea.  Top 5 Reasons Why "Desperate Housecats" TV Series Rejected Pearl and Saber are not allowed to go outside.  Nor are other animals allowed inside.  This severely restricts the cast and … [Read more...]

Dangerous Deficiencies

A common question posed by homeowners in financial distress is "Can the lender get a deficiency judgment against me?"  A deficiency judgment is a charge imposed on the owner when the foreclosure sale price fails to fully pay the mortgage balance.   Whether such a judgment is possible depends upon the property's location because each state has crafted its own rules for this situation.    Numerous websites attempt to explain the mortgage foreclosure process and often provide a list of the states where deficiency judgments are allowed.  Unfortunately, these lists can be wrong.  Many … [Read more...]

Cat Dogma

Pearl and Saber have lived with their new humans in Minnetonka, MN for almost three months now.  They worked hard on putting the house in order, but much remains to be done.  Humans can be very stubborn about accepting new routines, so constant supervision has been necessary.  To assist other cats with their human training, Pearl and Saber share some household philosophies below.    It is mandatory to use the litterbox immediately after a human scoops it clean, even if kitty just "performed."  This act serves as a gentle reminder to humans that their work is never done. The recommended … [Read more...]

Decoding HOA Documents

Most people who live in communities with Home Owners Asssociations don't understand their HOA Governing Documents.  And who can blame them?  Those documents were written by lawyers for lawyers and reading them is as easy and fun as giving yourself a root canal.  Nevertheless, owners and potential buyers should possess a basic knowledge for reasons covered below.   This post discusses some key characteristics of these instruments to facilitate a better understanding of how HOAs work. State laws govern home owners associations so the requirements vary from state to state.  In Minnesota, HOA's … [Read more...]

Pearl and Saber’s Story

Pearl and Saber are siblings born July, 2009  in Cannon Falls, MN.  No one knows their mother's fate, but the two-week-old kittens were found in a hollow tree stump, frightened and hungry.  Nor do we know anything about the other half of the gene pool, but it’s rumored that the father was a one-night-stand kind of guy.  Jackie, the kind soul who discovered these babies, rushed them to the local veterinary clinic.  Vet assistants Laura, Caroline and Dannette saved Pearl and Saber’s lives by providing 24/7 care, all on their own dime.   The kittens thrived and lived with Laura and hubby … [Read more...]

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