A reminder of why condo governance, reserves, insurance, and management oversight matter

Over the past week, a well-known Boston-area property management company entered a liquidation/restructuring process, creating uncertainty for a number of local condominium associations and owners.

While the situation is still unfolding, it serves as an important reminder that many condo owners pay close attention to monthly condo fees — but far fewer pay attention to the actual financial structure, controls, and oversight behind the association itself.

For many owners, their condo represents one of their largest assets. Yet very few review:

• reserve balances

• operating accounts

• insurance coverage

• audit practices

• who controls banking access

• delinquency rates

• capital project planning

• or how financial reporting is actually handled behind the scenes

In situations where a management company experiences financial distress, the biggest concern is often not day-to-day operations — it’s whether association funds, records, vendor payments, and financial reporting were handled properly.

This is also a reminder that:

LOW condo fees do not automatically mean a healthy association.

In fact, some of the most financially stressed associations are those that have artificially suppressed fees for years while underfunding reserves, delaying maintenance, or failing to properly plan for future capital expenses.

As lending standards continue tightening nationally — particularly after Surfside and increased scrutiny from Fannie Mae and Freddie Mac — buyers, lenders, attorneys, and insurers are paying far closer attention to:

• reserve funding

• deferred maintenance

• insurance adequacy

• financial transparency

• special assessments

• and overall association governance

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For condo owners, board members, and prospective buyers, this is an important time to become more proactive.

A few questions every owner should know the answer to:

• Where are reserve funds held?

• Are reserve and operating accounts segregated?

• Does the association carry fidelity/crime coverage?

• Are financials independently reviewed or audited?

• Are major projects adequately planned for?

• Is the association relying on special assessments to survive?

• Are meeting minutes transparent?

Strong condo associations rarely happen by accident. They require consistent oversight, healthy reserves, competent management, and boards willing to make difficult long-term decisions rather than simply keeping fees artificially low.