End of viability of townhomes

JudyrosellaE
Posts: 57

Posted:

Hi,

I'm probably not using the right words. I live in a townhome community (not a condo). Last year, the subject came up about replacing the siding on these 1996-constructed townhomes. We already replaced the roofs. That was hell. Only the people with leaks wanted the roofing done. In the end, we managed to agree that EVERYONE gets re-roofed. Looks better anyway.

No one wants to face The End.

What happens when eventually it is no longer cost-efficient to update our townhomes?

Eventually they will become more expensive than they are worth, IMHO, to update.

I'm suspecting that a day comes when it is better to raze them. And, then what? We get to sell the quarter-acre or whatever it is that our Unit is worth?

There is an Bylaw that says we have an "obligation to rebuild," but I think that only applies to a disaster or a fire. Is Age a disaster?

What have other townhome communities done? Is that discussed somewhere, with better terms?

Judy

MaxB4
Posts: 3,513

Posted:

Your complex was built in 1996. I was in Italy a couple of years ago before the pandemic and looking on buying a villa there, but in about 1250 I believe, still standing and very livable. Your documents have language that mandates the HOA to continue to maintain.

LetA (Nevada)
Posts: 2,679

Posted:

That obligation to rebuild is likely due to a catastrophic loss like a tornado, fire, flood or earthquake.
You can never rebuild just because the units are 26 years old. My childhood home was built in 1941 and is as strong as
the day it was built. There may be cosmetic blemishes associated with your townhouses, wear and tear and weather beat from the elements.
You repair those as your reserve study directs you to. But your reserve study, provided you do have one will never direct you to demo the units and
rebuild. The very notion of that is just ludicrous.

DavidG45 (Delaware)
Posts: 994

Posted:

“Eventually they will become more expensive than they are worth, IMHO, to update”

I have no idea what that means.

DouglasK1 (Florida)
Posts: 2,046

Posted:

Any house/condo/townhouse is going to have maintenance costs. Unless you live in a very depressed area and these townhouses are worth south of $50k, I don't see a scenario where maintenance costs are would be more than the price of the units.

As others have mentioned, under 30 years is considered fairly new housing, it is not unusual for houses to last well over 100 years, and even longer in Europe where they tend to be built more robustly.

Escaped former treasurer and director of a self managed association.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By LetA on 11/16/2022 9:00 PM
That obligation to rebuild is likely due to a catastrophic loss like a tornado, fire, flood or earthquake.
You can never rebuild just because the units are 26 years old. My childhood home was built in 1941 and is as strong as
the day it was built. There may be cosmetic blemishes associated with your townhouses, wear and tear and weather beat from the elements.
You repair those as your reserve study directs you to. But your reserve study, provided you do have one will never direct you to demo the units and
rebuild. The very notion of that is just ludicrous.

Agree. You'd only need to rebuild if the building's structure was damaged beyond repair or if the ground underneath became unstable for some reason. (We have landslides and sinkholes in my area - buildings can break apart as a result.)

WendyM5 (North Carolina)
Posts: 1,522

Posted:

How old are you. Real estate if maintained increases in value over time. You need to talk to a realator

vis ta vie

MichaelT21 (Arkansas)
Posts: 462

Posted:

Quote:

Posted By WendyM5 on 11/17/2022 8:34 AM
How old are you. Real estate if maintained increases in value over time. You need to talk to a realator

That is a common issue in HOAs. "I don't have money to pay dues / replace my fence / paint my house! You guys are so mean to send me a compliance letter. You should have some compassion for others!"

Two years later: They receive a $500,000 check at closing due to appreciation in their home value, a portion of which is due to the fact that they live in a neat, tidy, well cared for neighborhood with an active HOA.

SheliaH (Indiana)
Posts: 6,964

Posted:

Quote:

Posted By MichaelT21 on 11/17/2022 8:38 AM

Posted By WendyM5 on 11/17/2022 8:34 AM
How old are you. Real estate if maintained increases in value over time. You need to talk to a realator

That is a common issue in HOAs. "I don't have money to pay dues / replace my fence / paint my house! You guys are so mean to send me a compliance letter. You should have some compassion for others!"

Two years later: They receive a $500,000 check at closing due to appreciation in their home value, a portion of which is due to the fact that they live in a neat, tidy, well cared for neighborhood with an active HOA.

Michael's absolutely correct. I don't understand why people buy homes (high rise condo, townhouse, detached unit or mobile home) and think the buildings will last and last to infinity and beyond without doing maintenance. Hell, your own body will break down eventually if you don't take care of it - why do you think your townhouse will be any different?

What is true is that as we get older and our priorities change, we may find a townhouse doesn't suit our needs anymore. Whether that happens and when depends on each owner. If you find you can't afford a townhouse anymore, it's OK to sell it and live somewhere more affordable. But if you want to get more than what you paid, you need to keep it up and make a few improvements.

When you focus on appropriate and timely maintenance now, you may be able to get a longer life out of the components. When you get regular reserve studies and fund them appropriately, you should have what you need when the time comes to replace the roofs, sidewalks, etc. That beats the hell out of a special assessment.

I live in a townhouse community and when I was on the board, we often worried about this, given the shape of our reserves. It wasn't easy to increase assessments and people grumbled, but we always laid the facts on the table and urged people to come up with suggestions to maintain the property at a lower cost. Usually no one came forward.

This year after hearing the reserve specialist summarize the latest reserve study, our president announced that our assessments will increase at the maximum level every year from now on. To raise them higher (5% is the max) would require homeowner approval and you already know how that would go down.

So that's life as a homeowner of any stripe - pay your money and make your choice on works best for you.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MichaelT21 on 11/17/2022 8:38 AM

Posted By WendyM5 on 11/17/2022 8:34 AM
How old are you. Real estate if maintained increases in value over time. You need to talk to a realator

That is a common issue in HOAs. "I don't have money to pay dues / replace my fence / paint my house! You guys are so mean to send me a compliance letter. You should have some compassion for others!"

Two years later: They receive a $500,000 check at closing due to appreciation in their home value, a portion of which is due to the fact that they live in a neat, tidy, well cared for neighborhood with an active HOA.

I made $600K on my investment property in January of this year. It wasn't in a HOA, was in an ok neighborhood, damn well wasn't tidy and didn't put anything in moneywise prior to closing to improve.

LoriM15 (Florida)
Posts: 1,009

Posted:

Our condo owners always complain about the master association fee and that they pay a condo fee and a master fee. I always say that in my single family home I'm paying even more - because I have to pay for my own roof, paint, plumbing, lawn maintenance, tree trimming, insurance etc. It's such a false economy thinking you are moving into multi-family housing and you are all set with the fee you paid when you move in. The fees are going up as the building ages - just like my expenses go up as my roof gets old or my gutters need to be replaced.

It's going to get much more expensive for condo owners in Florida. After the Surfside collapse, the state senate passed a bill that requires all condos and coops to have an inspection and reserve study done by 2024. Condo's can't waive reserve funds anymore, and everything identified on the inspection and the reserve study must be accounted for in the reserve account. It will be a huge change for many condos and they expect condo fees to skyrocket.

JudyrosellaE
Posts: 57

Posted:

I am 66. I'm not sure why that matters.

Judy

JudyrosellaE
Posts: 57

Posted:

Michael's absolutely correct. I don't understand why people buy homes (high rise condo, townhouse, detached unit or mobile home) and think the buildings will last and last to infinity and beyond without doing maintenance. Hell, your own body will break down eventually if you don't take care of it - why do you think your townhouse will be any different?

------------------

Thanks for the responses.

Our issue is that only a couple of us are willing to come up with a plan to replace siding, and set aside money for it. They keep wanting to put it off, and refuse to even vote on the matter, or come up with a plan. A former President (who moved away) tried to start a major maintenance plan several years ago. Now, no one wants to even talk about it, while a few of us are aware that prices go up all the time, etc. Of course, our townhomes are nowhere near the end of their lives. But, the siding is approaching that. I wish there was some way of making a rational argument for doing it. NOW. Something other than, no one will want to buy your townhome unless you side it anyway. And you can't side just your Unit. It's all or none.

j

JudyrosellaE
Posts: 57

Posted:

Quote:

Posted By LetA on 11/16/2022 9:00 PM
That obligation to rebuild is likely due to a catastrophic loss like a tornado, fire, flood or earthquake.
You can never rebuild just because the units are 26 years old. My childhood home was built in 1941 and is as strong as
the day it was built. There may be cosmetic blemishes associated with your townhouses, wear and tear and weather beat from the elements.
You repair those as your reserve study directs you to. But your reserve study, provided you do have one will never direct you to demo the units and
rebuild. The very notion of that is just ludicrous.

--------------

I don't believe our HOA has a Reserve Study. I'm not exactly sure what that is.

But, here's the issue. We currently have about $1,000 in our HOA fund. Yes. That decimal is in the right place. I don't think members realized the impact of that when they agreed to waive the HOA fees of a mere $60/month for each of the 3 board members. Some of us did NOT vote for us. So, the Board is treating themselves, with our blessing, to waivers amounting to $2,160/yr. A Special Assessment for siding is going to kill everyone. So far, ppl are saying they won't vote for it. Every time it comes up, almost everyone refuses to even talk about it. The HOA would be on a shoestring even if we hadn't waived that money. Replacing siding is going to be a huge expense compared to the little $60/month we're paying. Meantime? Those of us who are paying attn realize we need a plan. We don't even know how much we need to be saving toward that Special Assessment, aside from every penny we can. I'm not sure what we can do if ppl don't want to pay. There is a Hardship Waiver but I don't think that would help.

I'm guessing that's what the Reserve Study is about? Coming up with a plan?

I'm guessing the board is suppose to come up with that?

Judy

CathyA3 (Ohio)
Posts: 6,299

Posted:

Oh my.

Unless your governing docs are pretty unusual, waiving assessments for anyone is probably not lawful.

In addition, once they accept money, board members lose the protections of the Volunteer Protection Act which protects volunteers from liability associated with their acts while carrying out their duties. There is no way that paltry sum they're being paid will compensate for this.

A reserve study is an evaluation of the remaining useful life of the major components (eg. roofs, siding, streets) that the association must maintain and projections of the future costs associated with this. This tells you how much should be setting aside each year in order to have the necessary funds available. Many state laws require community associations to have such studies done. My state has a law that says associations must fund their reserves in line with the most recent study, and any underfunding must be approved by a majority of the homeowners. This approval must be obtained yearly.

If an association does not have adequate reserves, the only options left are a special assessment or a loan. There may be limits on how much money an association can raise via these means - and both of them are ways to increase the actual amount you'll be spending on these repairs and the associated pain.

There are other negative effects to not have adequate reserves. For example, many banks refuse to lend to buyers if the association's finances are shaky, which means your buyer pool will be limited to those who can pay cash. This can depress home prices. In addition, it will make your community vulnerable to investors who have the deep pockets to snap up distressed properties. Your community could well end up being Tenant Paradise.

Obviously this is not good.

One of the regular posters here once said that buying a condo is like strolling into a bar and becoming business partners with everybody in the joint. Anyone who owns property in a community association is the financial and legal partner of every other owner. And IMHO, your business partners are nincompoops and a threat to your financial well being. In your place, I"d be giving serious thought to my next steps.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Reserve Study

AugustinD
Posts: 1,027

Posted:

Ditto everything CathyA3 posted and also what SheliaH noted is currently going on with her HOA.

Quote:

Posted By JudyrosellaE on 11/17/2022 8:04 PM

Our issue is that only a couple of us are willing to come up with a plan to replace siding, and set aside money for it. They keep wanting to put it off, and refuse to even vote on the matter, or come up with a plan. A former President (who moved away) tried to start a major maintenance plan several years ago. Now, no one wants to even talk about it, while a few of us are aware that prices go up all the time, etc. Of course, our townhomes are nowhere near the end of their lives. But, the siding is approaching that. I wish there was some way of making a rational argument for doing it. NOW. Something other than, no one will want to buy your townhome unless you side it anyway. And you can't side just your Unit. It's all or none.

As discussed in the other thread, the Illinois HOA statute (a.k.a. the CICAA) presumably applies to your HOA. The statute requires that the HOA annually mail out "a copy of the proposed annual budget together with an indication of which portions are intended for reserves, capital expenditures or repairs or payment of real estate taxes."

If you get on the board, motion that a reserve study must be done. I estimate the study will cost a few thousand dollars. A buzillion certified companies can do a study for your HOA and do it well. No snake oil talk. No salesman talk at all. Just the facts, with input from the board on some topics. These companies are often in the business of educating HOAs about maintenance. And again, the companies are not selling anything other than the importance of having a reserve study done about every five years (updated once a year by the HOA board or manager). All the long-time posters here agree about the importance of having a reserve study done every few years at least.

I expect you folks are going to have to raise the assessment, by a lot. Owners are going to want to go after any director who asks for an increase. Education, including repetition, over several months will be essential to convince owners that a large assessment increase is essential. A special assessment may also be necessary.

Related aside: I think whoever asked, "What's your age?" meant "What's the age of the HOA/COA?" People here write in shorthand. Others and I often forget that folks new to HOA governance may miss the meaning of questions and phrases. Always ask. Never assume. Some of the most benign sounding terms, taken literally, will not mean what a layperson likely thinks the terms mean.

JudyrosellaE
Posts: 57

Posted:

Quote:

Posted By CathyA3 on 11/18/2022 6:54 AM
Reserve Study

Excellent! Thank you so much!

JudyrosellaE
Posts: 57

Posted:

Quote:

Posted By AugustinD on 11/18/2022 7:28 AM
Ditto everything CathyA3 posted and also what SheliaH noted is currently going on with her HOA.

Posted By JudyrosellaE on 11/17/2022 8:04 PM

Our issue is that only a couple of us are willing to come up with a plan to replace siding, and set aside money for it. They keep wanting to put it off, and refuse to even vote on the matter, or come up with a plan. A former President (who moved away) tried to start a major maintenance plan several years ago. Now, no one wants to even talk about it, while a few of us are aware that prices go up all the time, etc. Of course, our townhomes are nowhere near the end of their lives. But, the siding is approaching that. I wish there was some way of making a rational argument for doing it. NOW. Something other than, no one will want to buy your townhome unless you side it anyway. And you can't side just your Unit. It's all or none.

As discussed in the other thread, the Illinois HOA statute (a.k.a. the CICAA) presumably applies to your HOA. The statute requires that the HOA annually mail out "a copy of the proposed annual budget together with an indication of which portions are intended for reserves, capital expenditures or repairs or payment of real estate taxes."

If you get on the board, motion that a reserve study must be done. I estimate the study will cost a few thousand dollars. A buzillion certified companies can do a study for your HOA and do it well. No snake oil talk. No salesman talk at all. Just the facts, with input from the board on some topics. These companies are often in the business of educating HOAs about maintenance. And again, the companies are not selling anything other than the importance of having a reserve study done about every five years (updated once a year by the HOA board or manager). All the long-time posters here agree about the importance of having a reserve study done every few years at least.

I expect you folks are going to have to raise the assessment, by a lot. Owners are going to want to go after any director who asks for an increase. Education, including repetition, over several months will be essential to convince owners that a large assessment increase is essential. A special assessment may also be necessary.

Related aside: I think whoever asked, "What's your age?" meant "What's the age of the HOA/COA?" People here write in shorthand. Others and I often forget that folks new to HOA governance may miss the meaning of questions and phrases. Always ask. Never assume. Some of the most benign sounding terms, taken literally, will not mean what a layperson likely thinks the terms mean.

Thanks, CathyA3!

We have a board who doesn't seem to realize how important the board is and that what they do has legal implications.

Thanks, everyone!

JudyrosellaE
Posts: 57

Posted:

Quote:

Posted By CathyA3 on 11/18/2022 6:50 AM
Oh my.

Unless your governing docs are pretty unusual, waiving assessments for anyone is probably not lawful.

In addition, once they accept money, board members lose the protections of the Volunteer Protection Act which protects volunteers from liability associated with their acts while carrying out their duties. There is no way that paltry sum they're being paid will compensate for this.

A reserve study is an evaluation of the remaining useful life of the major components (eg. roofs, siding, streets) that the association must maintain and projections of the future costs associated with this. This tells you how much should be setting aside each year in order to have the necessary funds available. Many state laws require community associations to have such studies done. My state has a law that says associations must fund their reserves in line with the most recent study, and any underfunding must be approved by a majority of the homeowners. This approval must be obtained yearly.

If an association does not have adequate reserves, the only options left are a special assessment or a loan. There may be limits on how much money an association can raise via these means - and both of them are ways to increase the actual amount you'll be spending on these repairs and the associated pain.

There are other negative effects to not have adequate reserves. For example, many banks refuse to lend to buyers if the association's finances are shaky, which means your buyer pool will be limited to those who can pay cash. This can depress home prices. In addition, it will make your community vulnerable to investors who have the deep pockets to snap up distressed properties. Your community could well end up being Tenant Paradise.

Obviously this is not good.

One of the regular posters here once said that buying a condo is like strolling into a bar and becoming business partners with everybody in the joint. Anyone who owns property in a community association is the financial and legal partner of every other owner. And IMHO, your business partners are nincompoops and a threat to your financial well being. In your place, I"d be giving serious thought to my next steps.

Yeaahhhh.... I've been wondering about all this for years, especially waiving Association Fees. Again, it wasn't on the agenda. No one had time to think about it. No one knew what to do. A few people voted Yes, and most of the rest looked around and slowly raised their hands in agreement. In retrospect, I wish I, or someone, had put it into perspective. THAT is one reason I want to see an Agenda. We don't see them until the meeting.

I really appreciate everyone's help.

Judy

JudyrosellaE
Posts: 57

Posted:

Quote:

Posted By CathyA3 on 11/18/2022 6:50 AM
Oh my.

Unless your governing docs are pretty unusual, waiving assessments for anyone is probably not lawful.

In addition, once they accept money, board members lose the protections of the Volunteer Protection Act which protects volunteers from liability associated with their acts while carrying out their duties. There is no way that paltry sum they're being paid will compensate for this.

A reserve study is an evaluation of the remaining useful life of the major components (eg. roofs, siding, streets) that the association must maintain and projections of the future costs associated with this. This tells you how much should be setting aside each year in order to have the necessary funds available. Many state laws require community associations to have such studies done. My state has a law that says associations must fund their reserves in line with the most recent study, and any underfunding must be approved by a majority of the homeowners. This approval must be obtained yearly.

If an association does not have adequate reserves, the only options left are a special assessment or a loan. There may be limits on how much money an association can raise via these means - and both of them are ways to increase the actual amount you'll be spending on these repairs and the associated pain.

There are other negative effects to not have adequate reserves. For example, many banks refuse to lend to buyers if the association's finances are shaky, which means your buyer pool will be limited to those who can pay cash. This can depress home prices. In addition, it will make your community vulnerable to investors who have the deep pockets to snap up distressed properties. Your community could well end up being Tenant Paradise.

Obviously this is not good.

One of the regular posters here once said that buying a condo is like strolling into a bar and becoming business partners with everybody in the joint. Anyone who owns property in a community association is the financial and legal partner of every other owner. And IMHO, your business partners are nincompoops and a threat to your financial well being. In your place, I"d be giving serious thought to my next steps.

Yeaahhhh.... I've been wondering about all this for years, especially waiving Association Fees. Again, it wasn't on the agenda. No one had time to think about it. No one knew what to do. A few people voted Yes, and most of the rest looked around and slowly raised their hands in agreement. In retrospect, I wish I, or someone, had put it into perspective. THAT is one reason I want to see an Agenda. We don't see them until the meeting.

I really appreciate everyone's help.

Judy

DonnaR5
Posts: 162

Posted:

The agenda should go out to homeowners at least a couple weeks before the annual meeting. This requirement would be specified in your bylaws.

WendyM5 (North Carolina)
Posts: 1,522

Posted:

run for the board and increase dues so in 5 years you have enough saved to pay for new siding.
My homes vinyl siding is from 1995 and it doesn't need replaced. plus you can get vinyl siding painted for a lot less than replacing it.
like this youtube video shows.

https://www.youtube.com/watch?v=qBiyktzfBpE&t=23s

previous hoa board replaced a $40K park playground system, when all it needed was paint.

either get on the board to make changes or sell your house before it looks so ugly no one will buy it.

vis ta vie

JudyrosellaE
Posts: 57

Posted:

Thank you, WendyM5! Good to know.
Judy

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Judy

3 side of our homes are vinyl siding with a life expectancy of at least 35 years. You say your complex was built in 1996 thus the siding should not need replacement beginning in 2031 or later.

TimB4 (Tennessee)
Posts: 21,059

Posted:

John,

Keep in mind that the climate and maintenance of the siding greatly determines it's life expectancy.

I've read anywhere from 15 to 40 years based on this.

JudyrosellaE
Posts: 57

Posted:

Quote:

Posted By TimB4 on 11/22/2022 10:02 AM
John,

Keep in mind that the climate and maintenance of the siding greatly determines it's life expectancy.

I've read anywhere from 15 to 40 years based on this.

Thanks, everyone. We really need to get an professional to come make the determination. Someone who knows this area. Wouldn't it be cool if we had the warranty from the company the siding was purchased from? I realize climate matters but we don't even know what the company promised. At least, we might have a ballpark until we can get an expert opinion on our actual property.

Judy

JudyrosellaE
Posts: 57

Posted:

Quote:

Posted By DonnaR5 on 11/19/2022 1:57 PM
The agenda should go out to homeowners at least a couple weeks before the annual meeting. This requirement would be specified in your bylaws.

I responded to this elsewhere. The Bylaws are so badly written. They just say a "Notice" needs to go out 14 to 30 days in advance. The Bylaws NEVER mention the word "Agenda." I literally OCRd the Bylaws. Nope. The word is never mentioned anywhere.

Well. It will be. I am determined. Bylaws should be a Good Thing, right?

Judy

KerryL1 (California)
Posts: 14,550

Posted:

I believe Il statutes about HOAs most likely require notice to owners.

JudyrosellaE
Posts: 57

Posted:

Quote:

Posted By KerryL1 on 11/23/2022 6:21 PM
I believe Il statutes about HOAs most likely require notice to owners.

Yes. The word Notice is used. Never the word Agenda. And we don't see the Agenda until we get to the meeting.

Seems like we should get to see the Agenda before we get there.

J