Are you looking at a condo at The Village Spires and wondering if the numbers add up? You are not alone. Association financials can feel dense, and missing a key line item can lead to surprise fees later. This guide shows you exactly what to request, how to read each report, and what questions to ask so you can buy or sell with confidence. Let’s dive in.
What to request from the association
Start by asking the manager or board at The Village Spires for a complete disclosure set. If your state requires a resale disclosure packet, request the full packet early in your review period.
- Current approved operating budget and the last 2–3 years of budgets
- Year-to-date income statement and balance sheet, plus prior-year comparisons
- Reserve study and the reserve funding plan or schedule
- Operating and reserve bank balances as of a recent date (or bank statements)
- Delinquency summary and the association’s collection policy
- Board meeting minutes for the last 12–24 months
- Any notices of special assessments in the past 3 years and planned capital projects
- Insurance certificate and policy summaries
- Management agreement and major service contracts
- Governing documents and amendments, plus any litigation disclosures
These documents give you the full picture: income versus expenses, cash on hand, major projects ahead, and how the board manages risk.
How to read the budget and P&L
The operating budget shows what the association plans to collect and spend this year. The income statement (profit and loss) shows what actually happened over a period. Compare both to see if plans match reality.
Income lines to scan
- Regular assessment revenue. Confirm total budgeted revenue and understand your unit’s share.
- Other income. Look for laundry, parking, storage, late fees, or interest income and see if it is stable or one time.
Expense lines to compare
- Repairs and maintenance. Larger or rising costs can indicate aging systems or deferred work.
- Utilities and common area services. Compare year over year to spot trends.
- Management, legal, and professional fees. Spikes can hint at disputes or turnover.
- Insurance. Note premium increases and whether deductibles changed.
- Reserve contributions. This is often listed separately. Confirm it aligns with the reserve study’s recommendation.
Surplus or deficit
- Net result. A consistent operating surplus is healthy. Repeated deficits are a red flag.
- If there was a deficit, ask how it was covered. Using reserves or short-term borrowing to fund operations is a warning sign.
Balance sheet basics
The balance sheet is a snapshot of assets, liabilities, and fund balances on a given date.
- Cash. Separate operating cash from reserve cash. Reserves should not be used for routine bills.
- Accounts receivable. This includes unpaid owner assessments. High receivables increase risk.
- Liabilities. Review accounts payable, accrued expenses, and any loans.
- Fund balances. Note the operating fund balance and the reserve fund balance.
Healthy associations keep strong reserve balances and manageable payables while minimizing owner delinquencies.
Reserves and the reserve study
A reserve study estimates the remaining life and replacement cost of major components, then recommends annual contributions to avoid large one-time fees.
- Compare the actual reserve balance to the study’s fully funded target. This is the reserve funding ratio.
- Check whether annual reserve contributions in the budget match the study’s recommended schedule.
- Look for a recent study within the last 1–3 years. Older studies may be inaccurate.
There is no single “right” number for reserves, but persistent underfunding without a plan to catch up deserves a closer look.
Assessments, delinquencies, and cash flow
Regular assessments should cover routine operations and planned reserve contributions. When they do not, associations may levy special assessments.
- Delinquencies. Calculate the delinquency ratio by comparing receivables to annual assessment revenue. Ratios above roughly 5–10 percent can signal collection risk and future fee pressure, depending on context.
- Special assessments. Determine if any are in place or anticipated. Review minutes and budgets for upcoming projects.
- Cash flow. Ask if the association ever transferred reserves to cover operating shortfalls. That is a risk indicator.
Insurance, litigation, and contracts
Financial health is about more than accounting.
- Insurance. Review master policy limits, coverage types, and deductibles. High deductibles can result in owner charges after a claim.
- Litigation. Pending or threatened lawsuits can increase legal costs and disrupt lending. Ask about status and any reserve set-asides for legal exposure.
- Contracts and management. Understand contract terms, price escalators, and termination provisions. Frequent management changes or vendor disputes often raise costs.
How finances affect loans and resale
Lenders commonly review condominium projects for reserves, delinquencies, insurance, and litigation before approving loans. Standards used by many lenders and programs expect stable budgets, adequate reserves, and manageable delinquencies.
- Buyer financing. Severe reserve underfunding, high delinquencies, or significant litigation can restrict loan options or raise costs.
- Marketability. Predictable assessments and healthy reserves support stronger resale demand and values.
- Protections. Include a document review period in your contract and coordinate with your lender on project approval needs.
Step-by-step review checklist for The Village Spires
Use this practical sequence to keep your review efficient and thorough.
- Collect documents
- Full resale disclosure packet or association document set
- Current budget, last 2–3 years of budgets, YTD P&L, and balance sheet
- Reserve study and funding schedule; recent bank balances for operating and reserves
- Minutes for the last 6–12 board meetings; special assessment notices
- Insurance certificate and policy summaries; litigation disclosures; key service contracts
- Run quick metrics
- Reserve funding ratio = current reserve balance / fully funded balance from the study
- Delinquency ratio = assessment receivables / annual assessment revenue
- Operating months of coverage = operating cash / average monthly operating expenses
- Assessment trend = year-over-year change in regular assessments
- Scan for alignment
- Do reserve contributions match the study’s recommended figure?
- Are expenses tracking close to budget? Any repeated shortfalls?
- Are upcoming capital projects anticipated in the study and reserves?
- Ask clarifying questions
- Recent or upcoming special assessments and why
- Collection policy details and progress on large delinquencies
- Insurance deductibles, recent claims, and any coverage gaps
- Any threatened or pending lawsuits and expected financial impact
- Decide next steps
- Request missing documents, negotiate repairs or credits, or adjust timelines
- If needed, consult a CPA or real estate attorney familiar with association finances
Smart questions to ask the board or manager
- What is the current reserve balance and how does it compare to the fully funded target in the latest reserve study?
- Have there been special assessments in the past three years? What were the reasons and outcomes?
- What percentage of units are owner occupied versus rented, and do any rental caps or trends affect cash flow?
- What is the total amount and age of delinquencies? What collection actions are underway?
- Are there upcoming capital projects that exceed current reserves? How will those be funded?
- What is the master policy deductible, and have there been recent insurance claims?
- Are there any pending or threatened lawsuits that could affect owners or lending?
Red flags to investigate
- Repeated operating deficits or transfers from reserves to cover routine bills
- Reserve funding far below the study’s recommendation with no recovery plan
- Frequent or large special assessments in recent years
- High or rising delinquencies and weak collection results
- Significant litigation, insurance coverage issues, or high deductibles
- Lack of a recent reserve study or outdated component assumptions
For sellers at The Village Spires
You can make your listing more attractive by getting ahead of buyer concerns.
- Gather documents early. Have the current budget, financials, reserve study, insurance summary, and minutes ready.
- Disclose material issues proactively. Buyers appreciate transparency around reserves, special assessments, or planned projects.
- Coordinate timing. If a large project or assessment is pending, discuss strategy with your agent to avoid last-minute surprises.
- Help your buyer’s lender. Be responsive to reasonable requests for association information to keep financing on track.
You deserve a clear, confident path to closing. If you want help reading the numbers, aligning your contract timelines, or positioning your offer or listing, reach out to Alexis Miller for personal guidance tailored to your goals.
FAQs
What are the essential condo financial documents for The Village Spires?
- Request the current budget, last 2–3 years of budgets, year-to-date P&L and balance sheet, reserve study and funding plan, recent bank balances, delinquency summary, board minutes, insurance summaries, and any special assessment or litigation disclosures.
How do I know if The Village Spires reserves are adequate?
- Calculate the reserve funding ratio by comparing current reserves to the fully funded level in the latest reserve study; then check if annual reserve contributions match the study’s recommendation and whether upcoming projects are covered without large special assessments.
What delinquency level is a concern in a condo association?
- Context matters, but a delinquency ratio above roughly 5–10 percent of annual assessment revenue can signal collection risk and fee pressure; ask about the collection policy, largest delinquent accounts, and recent progress.
Are special assessments at The Village Spires a dealbreaker?
- Not necessarily; a one-time, well-explained assessment for a planned capital need can be reasonable, but repeated or very large assessments, or assessments used to plug operating shortfalls, warrant deeper review.
How do association finances affect my mortgage approval?
- Lenders often review project reserves, delinquencies, insurance, and litigation; severe underfunding, significant lawsuits, or high delinquencies can limit loan options or increase costs, so coordinate early with your lender.
What if there is no recent reserve study for The Village Spires?
- Ask the board to provide the most recent study and any updates; if the study is older than 3–5 years, request a timeline for an update and verify that reserve contributions reflect current costs and component lifespans.
