In the world of coastal real estate, the most dangerous document isn't the one you see—it’s the one that doesn't exist.

If you are buying a single-family home in Hampstead, you get a home inspection. If you are buying a condo in Wrightsville Beach or Carolina Beach, you need a financial inspection. The problem? North Carolina law does not require HOAs to conduct a Reserve Study. This statutory loophole means many associations—especially older ones on Pleasure Island and Topsail—are flying blind, keeping dues artificially low by ignoring future capital expenses. If you don't know how to audit their books, you might be walking into a $20,000 Special Assessment on day one.

Here is how to tell if a condo board is financially healthy or on the brink of insolvency.

The Reserve Study: The "Percent Funded" Metric

If the HOA has conducted a Reserve Study (a professional engineering audit of lifespans for roofs, elevators, and siding), look immediately at the Percent Funded metric.

• 70%–100% (Green Light): The association is healthy. They have cash on hand to replace the roof next year without asking you for extra money.
• 30%–70% (Yellow Light): This is common in our market. It usually means they will rely on a mix of reserves and small annual dues increases to cover projects.
• 0%–30% (Red Light): Run—or negotiate aggressively. This indicates the board is relying on Special Assessments (surprise bills) to pay for basic maintenance. You are effectively buying their debt.

Strategic Reality: The Balance Sheet "Quick Check"

You don't need an accounting degree to spot a lemon. Ask for the Balance Sheet (not just the budget) and check these three Insider ratios:

1. The Cash-to-Deductible Ratio

In coastal NC, master insurance policies often carry massive wind/hail deductibles (sometimes 5% of the building's value).

The Test: If the building is valued at $10 million, the deductible could be $500,000. Does the HOA have at least $500,000 in Unrestricted Cash on the balance sheet? If not, a single hurricane will trigger an immediate assessment to every owner to cover the gap.

2. Accounts Receivable (The "Delinquency" Rate)

Look at the Accounts Receivable line item. This shows how many owners are behind on their dues.

The Red Flag: If this number exceeds 5–10% of the total annual budget, the community is in trouble. When neighbors stop paying, the remaining owners eventually have to pick up the tab. It also makes the building non-warrantable for many mortgage lenders, limiting your resale value.

3. "Net Income" vs. "Budgeted Income"

Check the Income Statement (Profit & Loss).

The Check: Are they consistently spending more on Building Maintenance than they budgeted? In older oceanfront buildings, this often signals a systemic issue (like failing plumbing or spalling concrete) that is bleeding the operating account dry.

Insider Tip: The "Capital Contribution" Fee

Many coastal HOAs have implemented a Capital Contribution or Working Capital fee to bolster their reserves. This is a one-time fee charged to the buyer at closing—often equal to two or three months of dues.

Why it matters: It’s rarely listed in the MLS. You won't see it until the Closing Disclosure appears days before settlement. Ask your agent to pull the Resale Certificate early so you aren't surprised by this $1,500+ charge.

Your Next Step

A cheap HOA fee is often the most expensive mistake you can make. You need to know if that low monthly payment is a sign of efficiency or negligence.

At Aspyre Realty Group, we don't just review the view; we audit the liability. We are experts in listening and communicating people's wants into homes that work for them—and that means ensuring the community you join is as financially stable as the home itself.

Contact Aspyre Realty Group today. Let’s review the condo docs together and decode the financial health of your potential investment.