Foundation Repairs

We have a condominium owner who called our management company in early Jan 2011 expressing concerns about his pier and beam foundation. His downstairs wood floors are sloping and he has a crack in his upstairs bedroom wall from the door jam to the ceiling. His door jam has dropped one inch on one side and his crown molding is separating.

The owner is in the middle of interior improvements and communicated that the contractor will not warrant his tile flooring, granite countertops, and crown molding because the foundation is off about 1.5". All work has stopped in the middle of his renovations.

The bylaws clearly state that all aspects of foundation maintenance and repair is the sole responsibility of the association.

Our management company sent out their maintenance man with a foundation person (not an Engineer). The Board and property manager did not reply to him until Feb 18. with nothing more than a copy of the foundation report with no course of action or timeline.

The management company set up an appointment with the owner for a licensed engineer to look the condo then the Board [we] cancelled him the day before the visit and told the owner it would be sometime in late April and it would be the reserve study company from out of state.

The owner could not wait that long [would lose his contractor to another scheduled job] and hired a certified professional engineer at his own expense and shared the report with the Board. The only reply given was we would not reimburse him. No action plan or timeline.

The Board then decided to hire an Engineer of their choosing to inspect the foundation. This Engineer has other dealings with the management company.

When the owner asked to be place on the April agenda to discuss the foundation issues he was sent a letter from the association attorney stating that he is not to contact the Board, Management Company, or agents of both to discuss the foundation. He has been persistent and professional, but I believe the Board [peers] are trying to find a way not to repair this. The ASCE states that anything sloping over 11/16" is not acceptable. His foundation is more than his. They [other Board members and management company] keep mentioning that repairing his foundation will set precedence for other repairs. There are foundation issues at our complex. They were built in the 1950's. The board spent 1.3 million dollars on painting and new stoops, but ignored the foundation issues. They do not maintain a consistent watering program for the foundations either.

The Engineer report he submitted states that it is about $2,000 worth of shimming and it would not impact the connecting neighbors. He sent photos of the cracks.

This is awful and sneaky. Does anyone have any ideas on how to harness a sneaky and unethical Board? Any advice on foundation issues like this you have experienced. They want to spend 250k cash on planting azaleas and not repair foundations!

I feel we are headed for a lawsuit of mismanagement. If he spends 20k updating his home and the foundation causes damage, it will not pass sales inspection, we are doomed for a lawsuit!

It's been over 60 days and the Board and management company has done nothing more than a visit. I can't believe they sent him a letter from the lawyers.

Are we headed for a law suit? Is he in his right? Do we have to repair it?

Thanks for your help!

Deferred maintenance and avoided repairs are the bane of HOAs. Your board is short-sighted, if the details you provided are accurate. If the foundation problems are widespread, your association needs to address the problems - not abuse the homeowner - even if it means a special assessment or arranging for a loan to correct them.

Rob

Heh, precedence? The docs say the condo is responsible for the repair and they dont want to repair it?

Be prepared for lawsuits from every homeowner that has this problem and for the judge to award the repair bill, lawyer fees, and possible punitive charges to the homeowner for the board refusing to repair in a timely manner.

If your board is not listening to its homeowners, its time to replace the board. They are not acting in the best interest of the association. If afraid by not fixing the issue, they will incur higher dollar value bills with lawyers, etc on top of fixing the issue vs just fixing the issue.

Thanks Melissa - Good points.

The Bylaws clearly state that the home owner is not allowed to do any foundation repairs and that they Association is fully responsible for all aspects of maintenance and repairs.

I'm told, but can't confirm, that he has had a licensed Texas inspector and appraiser review the unit and both told him that it would not pass inspection if he were to sell [which he might be preparing to do] and that if it is not repaired, sooner than later, it would cause more expensive damage. Today, the licensed professional engineer he hired has estimated the repairs to cost between $1,000 - $2,000 - depending on the foundation company doing the work.

Thanks again, Melissa!

Resale value has not been mentioned and he's not a flipper. He has owned and lived in his condo for 15 years. In Texas the house has to be inspected by a licensed appraiser (from the lending institution) and a home inspector (to ensure structural soundness). At this point, the PE has said the foundation, as it is today, will not pass inspection if he ever choses to sell. He has not claimed anything on the inside, but does not want to renovate tiles floors and granite counter tops on a compromised and sloping foundation. We have the documents showing his contractor will not provide a warranty until the floors are level and stable.

All-in-all, I do not understand why he would not want to renovate if the foundation is going to have be repaired in the future when it can be done now. It will destroy all the interior work he wants to do. Since he has notified us of the repair request in Jan 2011 his report from his insurance company will hold us responsible for damage due to neglect.

I can't seem to get the Board to understand this fundamental responsibility. They are so political and make this their personal social outlet. Power abound and logic not to be found.

I'll let you know what happens...

Many of us have been saying for years that the ubiquitous "the Board's job is to enhance, preserve and maintain property values" mantra is not true. Very surprised and pleased to see the sentiment expressed here, though.


However, if you're looking to devalue the property, this attitude will probably do the job nicely.

This doesn't make much sense. A HOA won't fix a non-HOA members problem. The HOA is ONLY made up of OWNERS. So the Seller HAS to be a HOA member. Otherwise, there is NO contract (CC&R's) making the HOA for anything. Plus the HOA is NOT responsible for making any real estate deals or setting sales prices. They are NOT in the home selling business.

The likely scenerio is: The seller puts the property up for sale "As-is" for say $100K. A buyer comes along and places a BID on the property for $95K plus any repairs found at inspection. The inspector finds the foundation issue. The buyer then can either ASSUME the responsibility for repairs or NOT make the deal. IF a buyer assumes the repair, then their offer would lower in the amount of the repair costs. It was ONCE they were an OWNER is when they become a member of the HOA. Upon which time they may find out the HOA would be responsible for making that repair. They then would attempt to go the route of the current owner.

If the sale can NOT proceed until the repair is done, then the CURRENT owner has to deal with the HOA. The owner brings in proof that the foundation is bad. They may bring in a bid of what the costs of repairs may be. They then ask the HOA to do the SAME thing. Which honestly, is a long dragged out affair considering it can take 3 months to approve changing a light bulb...It could take months for a repair of this magnitude to take place. Not because the HOA is dragging their feet as much as the process is just long to approve anything.

If the HOA does ultimately refuse to do the repair, then the owner could have a lawsuit potential. However, the owner may have to do the repairs and then sue for that amount plus legal fees. This is a CONTRACTS case after all. The CC&R's work as a CONTRACT. That contract states the HOA is responsible for the repairs.

If the HOA finally does do the work, then the owner will be able to complete any remodel or sales contracts. However, the HOA may require a special assessment of the membership if they don't have the money in their account to cover the bill. Which could add more time for a project to be completed.

You have to keep in mind the way the process works...A owner presents the problem to the HOA BOD to review. The HOA has to do their own homework and gather bids. They then discuss the issue and find if they have the money. If they do NOT have the money, then they have to consider a special assessment. Which takes the vote of the general membership to approve. Then that money raised could still take awhile to be gathered as some may just refuse to pay it. That could lead to additional legal costs to pursue non-payers. In the meantime, the HOA may only meet 1 time a month to discuss issues. So a decision like this wouldn't be unusual to take 6 - 1 year to resolve. Just by the process of approval alone.

It's not pretty but that is the price you pay when living and owning in a HOA...You should try NOT living in a HOA and have to go through the city instead...That's even worse...

Is that how it works where you live, Melissa? In California, the board may levy a non-emergency special assessment up to 5% of the annual budget, without homeowner approval. If the repairs fall into the "emergency" definition, the assessment can exceed 5% without membership approval.

If the HOA has reserves, there ought to be enough in it to cover this particular foundation. If I were a director on this board, I would press to repair the foundation immediately, and then work on a long-term solution for all of the rest.

Rob

Thank you Rob! I am pressing for exactly what you mentioned. My challenge is getting the other Board members to see things the same way. The repair process and money, as Melissa mentions, is not an issue. Reserves are healthy, but not owning up to the responsibility eludes me.

I agree. I've been told that the other Board members are afraid to start this. Apparently, there are foundation issues throughout the community. They repair the ones that are falling off the cliff, per se, but if it is not a safety issue (hole in the floor and falling roof) they balk. Not only will this be preventative, but save so much money in the long run. I don't think they are a business savvy lot. They seem to fight against more than they fight for. I'm really concerned on what I have witnessed. If this guy lawyers up, it will freeze all the homes in the community that are up for sale now. Lenders in Texas will not lend to communities where the Board is in a lawsuit. They, like many bad HOA's, treat and manage this money as their own, power they can't seem to get in other areas of their lives. A little Lord of The Flies.

Thanks for your support.

Miles,

Did they say "no" or "not now".

If they said not now, you might not have many options.

If they said no - and you won't accept that answer, it appears that you might require the court system to settle the issue.

Tim

Tim and Janet: Thank you for your responses.

Finances do not appear to be an issue with this HOA, reserves and cash. They have said no to the repair and will not and have not provided any solid reason. The engineer report states that it is deflected beyond what is acceptable by the American Society of Civil Engineers (ASCE) and repaird are required in order for her interior upgrades - floors, granite counter tops, etc - can be done and warranted.

The HOA Board obtained an attorney to "silence" the homeowner after she asked to be put on the next HOA meeting agenda to discuss foundation issues and to find out if it is an issue in the property and the short-term and long-term plans. The owner has been instructed not to speak to the Board, Management company and all agents and employees about this issue.

I'm not sure about other States, but in Houston, we have to disclose things like this if they are known. The repairs need to be supported by engineer report, foundation company invoice, and final sign-off from licensed engineer, noting the work was done correctly. Without this repair, refinancing and/or selling is impossible. Also, it has been reported that they do repair foundations, but it is at the Boards discretion and typically it has been if the building is falling apart -- when the repair costs triple. There are foundation issues throughout the property, but the HOA and management company keep blaming age of the property as the reason and having faulty foundations is "just a part of living in an old building." I say bunk to this claim. If I don't take care of myself over the years, I would be messed up when I get older. You know, like never going to the dentist, physicals, Dr. when I am sick, etc.

All along there has been the appearance, and rumor, that the Board is afraid of setting precedence with foundation repairs. It seems this would reveal their priorities, financial responsibility, and legal obligation to uphold their end of the contract are off the mark. And, yes, the repairs were quoted at 2,500 - 3K. Arggg/

Hi Miles:

Per your statement:

“The owner has been instructed not to speak to the Board, Management company and all agents and employees about this issue.”

Instructed by whom? LOL … if it was not a Judge with a gag order, then she can speak with anyone desired as guaranteed by freedom of speech, the right to protect property, and get said property repaired as stated in the governing documents.

My suggestion would be for the homeowner to consult with 2-3 attorneys (many will offer free consultation) and have an attorney send a letter to the board.

Janet,

Yes, they actually put it in writing! The letter was sent from the HOA attorney the day after she asked to be put on the agenda for the next HOA meeting to discuss foundations. No, it was not an injunction from a judge, but she did abide by their request and now has a real estate attorney. It has taken six months for the board to say nothing.

The Board members did send out their engineer to look at the foundation and his report noted the floor was deflected beyond engineering standards, but actually put in his report not to repair the foundation. Upon further research from the home owner, it was discovered that this engineer was not a structural engineer, and was in the back pocket of the management company on another large project they were working on. He has been sanctioned, fined, and put on probation by the American Society of Engineers for falsifying reports.

I think this is going to be a blood bath of sorts, but maybe it will shed some light on how the board is doing business.

Do you know much about the impact a lawsuit of this kind would have on the units for sale, the special assessment loan currently in place? Someone told me that the units for sale at this time may not be able to get funded for buyers because of a pending lawsuit against the HOA. And, while I do not know the details of the current loan the HOA has out now, but I was also told that the lender may be able to call the loan if the HOA has a lawsuit against them for mismanagement, etc..

One more question: At what point does this become intentional deferred maintenance? 1,3,5 months? They have been stalling.

Thanks for your insight!

Miles

Hi Miles:

I want to make sure I understand correctly … no lawsuit was filed and they put that request in writing? If a lawsuit had been filed then they could potentially request all communication go through their attorney for the board to address, but should not say not to address period.

If a lawsuit is filed against an HOA it is something that must be disclosed to potential buyers. Also, potentially a lender especially conventional may not lend or fund a buyer to purchase within an HOA which has litigation pending. This is generally because the cost of litigation is borne by the homeowners and may or may not be reimbursed when the litigation is complete and if HOA loses.

With regards to special assessment “loan” or “intentional” deferred maintenance I would have no idea and that is something for the homeowner or association to ask the attorneys. I am not an attorney and do not know of anyone who has experienced a loan being called.

Per your comments you are on the board, so you need to decide what is in the best interest of the community overall. Either spend money to fight the issue and which could cost the association a pretty penny or possibly have individuals in mind who are better equipped for the job and the homeowners replace the board as Steve noted above and stated:

Per your prior statements:

1) The Bylaws clearly state that the home owner is not allowed to do any foundation repairs and that they Association is fully responsible for all aspects of maintenance and repairs.

2) Reserves are healthy, but not owning up to the responsibility eludes me.

With these comments and the facts contained in the Engineer Reports, potentially in litigation the association would probably lose. The money they would pay for litigation would be better spent fixing a known issue as it will eventually need to be fixed anyway. Right now per your statement the reserves are healthy, so why jeopardize the healthy reserves in a possible no win situation. The homeowner’s attorney probably laughed when shown the letter received and could have a hey-day with it in court. Also, what the board members need to keep in mind is in some states failure to perform obligation of good faith, gross negligence, and violating fiduciary duty can incur “personal” liability along with the association liability, if proven in court.

Going by all your statements I would have to agree with Steve as the potential best less costly method to hopefully resolve and get everything on track for a better future.

Hi Miles:

You are most welcome we are all here to help each other when possible.

If there is a potential suit and you have voiced your comments you should not be held accountable for the actions of others. After all you are one individual and a board consists of many. It appears you have tried hard and I want to wish you and your association all the best in your endeavors. No matter what happens I know you will try to get everyone in your association together as a team for a better future.