No Long-Term Maintenance Plan in the HOA? What Now?

A well-functioning Homeowners’ Association (HOA) should have a long-term maintenance plan (LTMP). However, it’s not uncommon to encounter HOAs operating without one. What does this mean for buyers, sellers, and agents?

What is an LTMP?

An LTMP outlines the HOA’s maintenance plans for shared areas like roofs, façades, and elevators over the next 10 years. It includes:

• Necessary maintenance tasks.
• Estimated costs for each task.
• A schedule for when maintenance should be performed.

Why is an LTMP important?

• Financial planning: An LTMP helps owners anticipate and prepare for future expenses.
• Legal compliance: Since 2018, HOAs must set aside funds annually based on an LTMP or at least 0.5% of the building’s reconstruction value.

Implications of an HOA Without an LTMP

1. Financial uncertainty:
   1. Without an LTMP, it’s hard to predict future maintenance costs, potentially leading to unexpected expenses.
2. Reduced marketability:
   1. Buyers and lenders value well-organized HOAs. A lack of an LTMP can raise red flags.
3. Increased risk of deferred maintenance:
   1. Without a plan, maintenance may be delayed, leading to higher long-term costs.

What Can Agents Do?

• Review HOA documents:
  • Ask whether an LTMP exists and ensure it’s up to date.
• Advise the seller:
  • Suggest working with the HOA to draft a basic maintenance plan.
• Inform the buyer:
  • Explain that the absence of an LTMP poses risks and may result in additional costs.

Practical Tip

An HOA without an LTMP isn’t necessarily a dealbreaker, but be transparent about potential risks. This prevents surprises post-sale.