Subscribe for Daily Updates!
In what cases does your board consider taking maintenance in escrow as a condition of approving a prospective purchaser?
Join the Conversation Comments (3)Unfortunately in my coop escrow was taken from many shareholders - x amount of maintenance for 6 months to 2 years or longer - In the early days, the escrow was put into an escrow account and the money returned to the proper shareholders. However, when a certain board member put herself in charge of the escrow and practically everything else, the money was not put into escrow accounts, even though there were documents stating that it was, and when the shareholders wanted their funds returned, the money was not in an escrow account and had to be taken out of our operating account. This was quite a lot of money that the shareholders had to pay because no one checked the status of the escrow,account and there was no paper work that the board had, only this one person. If you do decide to have escrow requirements, the board must make sure that all the money requested is in the escrow accounts and that the shareholder and board get the statements on these accounts. .I also believe that the escrow should show in the yearly financials so that the shareholders know about the liability and the safety precautions that have been taken -
we do it on a case by case basis. for example a recent purchaser had a good job with a nice salary but very little in the bank in their own name after down payment. so we took 2 years in escrow which will not be released until they can show us 3 years in the bank (along with deposit history so we can see it's not a quick gift that may be taken back). this is NOT a prepay but rather a protection for the building should this person lose their job.
we do it on a case by case basis. for example a recent purchaser had a good job with a nice salary but very little in the bank in their own name after down payment. so we took 2 years in escrow which will not be released until they can show us 3 years in the bank (along with deposit history so we can see it's not a quick gift that may be taken back). this is NOT a prepay but rather a protection for the building should this person lose their job.
Introduce yourself to other members of Board Talk! Log in below or register here.
Board Talk members who registered prior to March 9th, 2016 will need to reset their password.
So far, in 25 years, we haven't done it. Are you considering treating it as a security fund if maintenance isn't paid, or as the payment of maintenance in advance, or other? Either of those 2 ways, what happens if they don't pay? If it's a prepay, they get accustomed to having the extra money to spend, and will have a problem when they need to start making payments later. If it's security, why do you need it? If their finances are marginal, where will they get the extra money to escrow?
Thank you for rating!
You have already rated this page, you can only rate it once!
Your rating has been changed, thanks for rating!
Board Talk members who registered prior to March 9th, 2016 will need to reset their password.