The 5-Point HOA Financial Health Framework

A reserve study estimates the cost and timing of major repairs (roof, elevators, facade, plumbing, parking membrane) and compares the recommended reserve balance to what the association has actually set aside. The ratio of the two is the percent funded. A well-funded reserve means the next big repair is paid for by past dues, not by a surprise check from you.

Where to find it

The reserve study and the resale certificate (Washington requires the resale certificate to disclose reserve information).

Healthy threshold

At or above 70 percent funded is strong. 50 to 70 percent is workable but worth questions. Below 50 percent is a concern.

Red flag

A percent-funded figure that has fallen year over year, or a reserve study that is more than three years old and has not been updated.

Special assessments are the cost that surprises condo buyers most. A single assessment for a planned project can be healthy. A series of them usually means the reserve was underfunded and the board is catching up on deferred maintenance one emergency at a time. The history tells you which building you are buying into.

Where to find it

Board meeting minutes, the resale certificate, and the association ledger. Ask directly for the assessment history.

Healthy threshold

One assessment in 20 years is normal for an aging building. Multiple assessments in a short window is a governance and planning signal.

Red flag

A recent or pending assessment that is not yet reflected in the dues, or a pattern of assessments that suggests the reserve is being used as a backstop for deferred work.

Dues that never rise can be a warning, not a feature. Costs go up every year, so a board that holds dues flat is often deferring decisions that you will inherit. A smooth, predictable increase curve is the sign of a board that plans ahead.

Where to find it

Historical budgets and the resale certificate. Compare dues today against dues five years ago.

Healthy threshold

Steady annual increases of roughly 3 to 5 percent indicate a disciplined board keeping pace with costs. Flat dues are not automatically good.

Red flag

Years of flat dues followed by a sudden jump of 15 percent or more. That pattern usually means the board avoided necessary increases and is now correcting all at once.

The budget shows what the board actually prioritizes. A building that funds its reserve every year is paying for its own future. A building that spends almost everything on operations is borrowing from its future, and the bill comes due as an assessment or a dues spike.

Where to find it

The current annual operating budget, line by line.

Healthy threshold

Roughly 15 to 25 percent of the budget flowing to reserves is healthy for most buildings.

Red flag

90 percent or more of the budget going to operations with only a token reserve contribution. That is a building living paycheck to paycheck.

Insurance is the fastest-growing line item in Seattle condo budgets, and a hard insurance market has pushed premiums and deductibles up sharply. Pending litigation can both raise costs and complicate a buyer's financing. This point is where a strong-looking building can still carry a hidden liability.

Where to find it

The insurance certificate, the resale certificate, and meeting minutes.

Healthy threshold

A renewable master policy with manageable premium increases and no pending litigation is the baseline you want.

Red flag

A premium that has spiked, a policy with a large deductible the reserve cannot cover, or pending litigation that could trigger additional owner costs.