Common roof, fire sprinkler repair

GunelH, you say you would like the "HOA to cover at least partial costs." Do you understand what the HOA is? Your HOA is a nonprofit corporation. The HOA corporation's income is solely what the owners of the units pay each month or by special assessment. When you say you want the HOA to cover costs, in reality this is the same as wanting the owners (you and others) to cover costs.

The reason you and the other owners are being hit with much higher assessments (or possibly a special assessment) to pay the loan is because prior boards did not properly fund what is known as "reserves." Reserves are money that owners have paid over the years, via their monthly assessment, that is not spent on the normal, yearly operating expenses. Instead, the reserves are used to pay for infrastructure that normally lasts much longer than a year, like roofs and sprinklers.

I suspect the HOA is doing a lot more than just tree cutting. Also unfortunately owners in a condo or HOA have to pay for the costs of administration by a manager. These employee/contractor costs are often what one-fourth or so of your monthly assessment pays for. Is the HOA billed by the city for water bills, and part of your assessment therefore is paying for water? What about trash pickup?

To begin to understand your HOA expenses and budgeting, I think you need to request a review of the last several years of annual budgets and also documentation of reserve funding.

-- If a HOA/COA owner is dissatisfied with budgeting and maintenance, then the quickest way to remedy this is to get together a group of people who feel as you do; find candidates among these folks for any board seats that are open at the next annual election; and then gather proxies or get out the vote so that you and people who feel as you do win election to these seats. Sometimes it takes a couple of years to cause real change in the make-up of the board.

-- You want to read the Bylaws carefully to cause the above change.

-- I would have to see the last several years of budgets to judge whether the costs of which you speak are outrageous. To me, what you are saying sounds more like the typical new condo owner who does not understand how COAs are financed; reserve funding; what expenses are; and so on.

-- Reserves of a mere $100,000 when roofs are nearing the end of life are inadequate. It sounds like prior boards planned poorly.

-- It is likely that the finances of the HOA were disclosed to you or available to you prior to purchase. However, most owners do not understand how to read these documents. This is on the buyer, not the HOA or the seller.

there are 154 units, mine is a small 1 bedroom with $260 monthly payment. others pay more than I do. I just think that the budget was managed poorly. this burden could be avoided.

Attached is a sample Reserve Summary showing the financial health of a reserve account.

I wonder whether a real estate agent who makes statements that are beyond what is in the required disclosure could also be out of line.

Some facts about the state of condos in the United States:

-- A form of common-interest ownership has been around for at least a century. But by 1970, there were only about 10,000 condominium and homeowners associations in the U.S., according to the CAI.

-- In the mid-1970s, after federal tax reform permitted condominium mortgages to be deductible, the number of units began to proliferate.

-- The number of condominium units in the U.S. increased by 115 percent between 1980 and 1990, according to the Census Bureau.

-- Today, there are about 160,000 condominium buildings in the U.S.

-- Nationwide as of today, more than half of all condominium buildings have stood for at least three decades.

--Robert Nordlund is the CEO of Association Reserves, which advises condominium and homeowners associations on setting aside money for repairs. Of Nordlund's 30,000 clients, he estimates that 30 percent of properties are significantly behind in their reserve funding, meaning they hold 30 percent or less than the total funding they need for planned and unexpected future projects. Another 40 percent properties are only in "fair" condition, holding just 30 to 70 percent of needed funding.

-- Hence about 70% of condos and HOAs have reserves whose funding is fair to far behind what is needed.

References
https://www.inquirer.com/news/nation-world/condo-owners-financial-challenge-building-repairs-surfside-florida-safety-20210711.html

https://www.kiplinger.com/real-estate/603356/could-surfside-happen-to-you-what-concerned-condo-owners-should-do-now

https://www.nytimes.com/2021/07/01/us/condo-associations-surfside-collapse.html

Signs are that insurers may be the driving force to change the business-as-usual approach of condo boards underfunding reserves (and by a lot). Unfortunately given the age of many condos, this is still going to yield enormous, large special assessments or increases in the regular assessment.

2.Mitten will be handling the drywall and paint inside the units, carport areas and stairwells and the estimated cost is $4,000/unit x 154= $616,000

Why is the HOA dry walling and painting the inside of the units? These are usually owner responsibility.

Property is in Charlotte, NC. My agent rushed me that’s true and I wasn’t even I formed about any of these. I was a first time buyer and even asked my agent to let me know everything and give me advice. Now I’m facing this. I think agents just think about their commissions

This discussion illustrates a point I made recently: the true cost of condo ownership and the risks associated with it are hidden, and I don't believe they are currently discoverable by outsiders. I'm not sure that I could do it, and I'm about as well informed as anybody about where the bodies can be hidden.

One thing to keep in mind is that realtors are sales people. I don't think they have a fiduciary duty to their customers at all - at least not in the sense that someone like a lawyer or financial advisor does. The kind of buyer's agent you're envisioning doesn't currently exist - although the Surfside collapse and other recent bad news may cause such a profession to come into being.

Of course adding this kind of person to the team will increase the cost of buying, so I take it as given that the folks who currently make money selling condos will be adamantly against it.

Another thing that can work against the kind of due diligence a buyer needs to do is a hot real estate market. In my area, if a likely property hits the MLS, you put in your offer asap, for over the asking price and waiving all contingencies - and even then you may be out of luck. It's nuts. It's also a recipe for getting taken to the cleaners financially.

My advice to any buyer is to stick to new or new-ish construction. Research possible communities well ahead of time, visit the properties to see what you can tell from the outside, check out sites like Zillow which can still have photos from old listings so that you can get some idea of what the interiors look like, read the CC&Rs (should be public info) to see if there are any deal breakers, and get ready to jump when a listing shows up in a community that's made it through the vetting process. And plan to move periodically. Don't fall in love with any condo - treat it as the business transaction that it is.

I was just going through the hoa documents I was provided by the sellers lawyer and noticed that special assessments and unaudited financial documents were left blank. Basically everything was hidden from me and my agent didn’t even bother letting me know.

I guess because the OP mentioned that the Fire Sprinkler system is being updated or perhaps added. There you will need paint and drywall.

I wasn’t told about any assessment. In fact I went through the hoa meeting minutes for this year and nothing mentioned about roof change and fire system change or possible 1.6 million expense.

But if you are hoa don’t you know that you will have huge expenses next year. 1.6 million didn’t come overnight. I looked at meeting minutes from June 2021, even then therr was nothing about it. And why there’s no bidding? This huge cost should be by bidding. Or am I wrong?
Why past owners just enjoyed low fees, sold and left and now we are left with this? Weren’t they supposed to have some kind of reserve for these?

The phraseology above about the 'hidden costs' of condo ownership got my attention a few days ago. So too did CathyA3's interesting counsel to move periodically. My goodness. CathyA3's remarks are so interesting that I think she should start a web site on condominium ownership. Maybe call it, "The Condominium Unit Buyer After Surfside." It could be a running series of anecdotes about these hidden costs. Just saying.

I used to think that one advantage of owning a condominium is that the costs of home maintenance resulted in a meaningful economy of scale. For example, when new roofs are needed, not just one roof would be replaced, but many would be replaced, and all around the same time. A contractor would surely discount his/her services. I found: Not really. Furthermore about one-third of my last condo's budget served to pay the employees (not contractors) and the employees' health insurance. This was not marketplace (Obamacare) insurance. It was higher end insurance. There was no incentive for the employees to stop smoking like chimneys. Employees' health insurance all by itself was around 5% of the budget.

CathyA3 has described other hidden costs elsewhere. Like the perils of jointly owning housing, one's likely biggest investment, with typically 50+ other owners. It is these owners from whom the board is made. These owners typically have little expertise in infrastructure, covenant law, financial math, insurance, employee costs, and more. Toss in: What single family home owner actually puts away money for a roof on a regular basis? Now the condo owner is expected to chip in every month to save for a roof, a roof that may be some years down the road. The naive condo owner, when hearing that there is $800,000 in the condo's savings account responds, "Huh? What for? I want my assessment reduced!" Also any condo is a gamble on whether or not there will be constant fighting and an un-neighborly community, including significant litigation. I hope I never again land in a condo.