Financial information is part of our daily lives. We balance our checkbook, keep track of our personal expenses, file tax returns, and so on. If you are entering into a business partnership it is a common practice to verify the economic solvency and credit history of the counterpart who will be your business partner. This financial verification is just a preventive measure that is applicable in many cases and especially if you are buying a condo in Mexico. Verifying that the HOA where you plan to buy a property has healthy finances is an important part of your due diligence in the purchase process.
So what financial information from an HOA should I ask for if I’m buying a condo?
The first thing you should do regarding the financial situation of the condo you are buying is to verify that the condo is current in the payment of the HOA fees. You should ask your realtor or the seller to show you the latest payment receipts for the HOA fees of the condo. You should also ask to see the latest financials of the entire HOA. Some HOAs have big liabilities and have many owners that are in arrears. The lack of income for the HOA can represent serious problems for you if you are not made aware of this at the time of buying. That is why prior to the purchase you should ask to see the financials of the HOA which can be the financial report presented to the homeowners at the annual ordinary meeting or the trimestral reports that the Administrator should have available for all the homeowners.
And what about utilities and other payments related to the condo?
You should verify that the seller is current in payment of utilities such as water, gas and electricity. You also should ask to see the last payment of the property tax. If the seller is behind several years in the payment of property tax and also owes surcharges, this can also represent a serious problem for closing.
A proper verification on the financial status of the condo will prevent you from entering into an HOA where homeowners that pay the HOA fees in time are subsidizing the homeowners who are in arrears. It is just a matter of asking for the information, but in the end, it will be you who decides if you want to enter into a bad marriage.