Are bad building finances enough to turn a good deal bad.

[Jacob P.]

Hi all,

I'm under deposit for a condo in NYC. Things were going smoothly, and we felt that we were getting the place at a bit of a discount under market price... All our numbers were looking good.

We had already reviewed building financials for 2013 and 2014 (2015 wasn't available). The management numbers weren't stellar, but we felt comfortable moving forward based on what we saw.

Our bank required a condo questionnaire to be filled out, and when we got that back we learned that the building took a serious turn for the worse since the last financial statement. Operating reserves are down to $2500. There are more than $50,000 in outstanding HOA fees and 7 out of the 15 units are more than 30 days overdue.

For what it's worth the building was part of a city supported program that helped low income people purchase apartments about 20 years ago. Since then, the neighborhood has definitely changed a lot and property values have come up. However, a tax abatement just ended which could be part of the reason for the sudden upturn in delinquent HOA fees in the building.

I have a feeling that this new information coming to light might be enough to make what we thought was a good deal into a bad one (and indeed, not even sure if the bank will lend on it with this info). But as this is my first condo purchase, I thought it wouldn't hurt to turn to the forum for some perspective.

Thank you!