The Cooperator Magazine reported last month about how obtaining project approval is a necessity for marketing and closing condominium units in the new regulatory realm. This fantastic article looks closely at what the new rules require and how the current economic situation in the US is making FHA approval a pseudo-necessity for actually selling units in new developments and ensuring the value of existing developments. It also details the need for reserve studies to reduce costs to a condo association, prevent increases to maintenance fees, and ensure the health of the community:
The most problematic of the new FHA regulations for condo associations is the requirement that annual budgets contain a minimum 10 percent reserve fund contribution. The mandate comes at a time when many cash-strapped condos have cut back on funding reserves in recent years.
At the Expo seminar detailing the new regulations, Tomaselli called the reserve mandate the “biggest issue” currently facing the condo industry. “I can’t wait for someone to write an article that says, ‘Everybody’s maintenance is going up 10 percent,’ because that is what is going to happen,” he said.” There is not a choice anymore.”
The lone exception to the 10 percent requirement, Tomaselli noted, are condos that have a legitimate reserve study that mandates a lesser financial contribution—two examples being a newer community with low maintenance requirements or “green” buildings that only require two or three percent reserves because of long-lasting green materials. “That’s a reason for doing a reserve study,” Tomaselli said.
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