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West Chester, Pennsylvania

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10 Questions to ask when buying 55+

Posted at 55plusresales by Geoff Wilkinson, CFP

Mar. 6, 2008

Tagged with: 55, active adult, age qualified, downsizing, homes, housing, retirement, retirement communities, senior, senior housing

10 Questions to ask when buying a 55+ Community!

Buying a home in a 55+ community requires extra diligence to be certain the Community and the Association is well managed and not creating future expenses for you! Remember, as a 55+ Community owner, you are responsible for your percentage of the cost of managing the entire community, not just your home. So in addition to a home inspection, do an inspection of the Association running things. Here are ten questions to ask:

1) Is the Community complete and has the builder turned the operation of the Association to the community? Are there any issues with the builder regarding remaining work to be completed? Remember, if the builder goes bankrupt the cost of completing the community will fall to the homeowners who have purchased homes there.

2) Are the Association Board members available to call and answer questions? Communities need to be open to new residents and make all of the financial information available to a prospective buyer.

3) Are the Board members elected? Are elections annual? Does everyone participate in the elections, or are there just a few people actually running things? Boards and meetings should be open to all residents, and elections available to anyone who wants to provide their input into the management of the community.

4) Have Association Fees risen more than inflation? Monthly Association fees do rise to cover the cost of gas, maintenance, and salaries. If fees have risen dramatically do more research. There may be problems!

5) Are there any pending Assessments? Assessments are additional bills over and above the monthly Association Fee. Assessments occur if there are large unexpected maintenance issues, drainage issues, or other building issues that need to be fixed. Ask if the Association has charged previous assessments or have a potential assessment coming due.

6) Are there any pending lawsuits against the Association? Whether legitimate or not a lawsuit could add costs to the Association. An award in a lawsuit against a community may be covered by the Association insurance policy, but the costs of defending a suit may fall to the residents.

7) Capital Account. All associations should have a Capital Account. How is the account invested? Has the account been growing? Is the Association committed to making continuing contributions to the Capital Account?

8) Budget: Has the Association overspent its annual budget in the previous year? Were there unexpected costs not budgeted? Will the overspending cause a large rise in the monthly Association Fee?

9) Stability of Contractors: Has the Association had different contractors every year providing maintenance services? Continuity of service providers may indicate that the Association is doing a good job monitoring an excellent company and not trying to save money in a futile attempt to chase the “lowest cost’ provider.

10)READ THE 5407! What is the 5407? The 5407 is the disclosure from the Association and management of the budget, operations, and management of the Association. It is provided when you have an accepted offer to purchase a home in the community. Your Real Estate agent should review the 5407 document with you as soon as it is provided to you. Ask questions! Your Real Estate Agent should be available to help get all the answers!

In summary, ask questions! Take the time to meet some of the neighbors in the community. They are usually happy to help, and they will become your first friends as well as your neighbors when you move in.

For additional information on communities and how to buy into a 55+ community visit 55+Resales.Com. Here you’ll find more information on communities and tips on buying 55+!

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