When talking to those looking for investment condos in Lexington, the final question that often arises is whether the association is financially healthy. No matter how appealing the property photos or location may be, if the association's finances are weak, you may end up facing significant expenses later on. Therefore, it's best to ask this question first.

The average price of condos in Lexington ranges from $267,950 to $290,000, while the downtown area is slightly higher at around $299,000. The average monthly fee for the entire Lexington area is $350, and for downtown, it is $368. The average home price in Kentucky last month was $363,000, which is a 4.3% increase from the previous year, maintaining a seller's market, so condos are also somewhat competitive. In a competitive market, buyers can feel rushed, but it's even more important during these times to set aside time to review the association documents.

So, how can you check the financial health? The Kentucky Condominium Act allows for the inclusion of a reserve fund item in the budget but does not mandate that it must be funded. The Kentucky Horizontal Property Act KRS 381.870 states that co-owners must share the costs of replacing the reserve fund, but it does not specify a concrete funding formula. In other words, Lexington associations have considerable discretion in deciding how much to accumulate in their reserve funds, leading to significant variations in financial health between different associations.

Therefore, it is important to directly request the association's budget and the financial statements from the past 2 to 3 years before purchasing. According to Kentucky regulations, associations must disclose unpaid amounts, capital expenditure plans for the next two fiscal years, the status of the reserve fund, current budgets and financial statements, insurance coverage details, lawsuits over $10,000, and pet and rental regulations to prospective buyers. By reviewing this information, you can gauge whether the complex is facing significant expenses in the coming years or if there are any pending lawsuits. When you receive the documents, the amount of information may seem overwhelming, but rather than trying to understand everything at once, it is advisable to first focus on the reserve fund balance and the planned capital expenditures.

Don't forget to review the minutes of the association board meetings as well. Minutes often contain discussions about planned special assessments or issues related to insurance renewals, which may not be evident from the property listing alone. It's also good to remember that if the reserve fund is less than 10% of the budget or if there are pending lawsuits, obtaining a conventional loan may become difficult. If you are approaching this with rental income in mind, keep in mind that the financial status varies among associations in Lexington, so it is recommended to compare the documents of several nearby complexes rather than focusing on just one property.

• Review the association's financial statements and budget from the past 2 to 3 years
• Check the status of the reserve fund and future capital expenditure plans
• Verify discussions about lawsuits and special assessments in the board meeting minutes
• Confirm rental and pet regulations

By checking the financial health in advance, you will feel more at ease when the time comes to make a purchase. Properties with ample reserve funds not only have relatively fewer concerns about special assessments but also affect the resale speed since buyers will find it easier to obtain loans later on.

If you are moving to Lexington from another state, please consider that Kentucky's property tax system may differ from your previous residence. If you are choosing Lexington based on school districts, it is advisable to verify the assigned school directly at the address before purchasing. This article is not investment or legal advice, and it is recommended to consult with an accountant and a real estate attorney before finalizing any contracts.