Special Assessment for Building Envelope

I do not understand. You want the special assessment to be an insurance claim? Still have to pay your deductible. Is that more or less the cost of the special assessment?

I also think you have the terms assessment confused maybe?

The $54k is per unit. $3.6 million divided by 66 units. There are no reserves to pay for it. For years siding repairs were done on a unit by unit basis and usually involved fairly minor amounts per year. Then the HOA switched management companies and their first priority was to convince the board and a majority of owners that the condos need a complete exterior reconstruction. To me this is overkill especially when there is no money to pay for it. Some owners don't have $54k and will likely lose their homes.

I have loss assessment coverage on the condo policy but I'm not sure they're going to pay. This type of coverage is usually for loss events such as a hurricane. I have filed a claim and they are requesting engineer report and detailed budget.

JamesG23, I gather you are trying to prepare for some tough decisions here. Like whether to take out a loan, or maybe put your unit on the market and sell.

Are you aware that insurance companies are declining claims and increasing premiums at a record pace? The topic of major insurance coverage, huge increases, and insurers denying claims, comes up here much more often of late.

I trust you are aware that this would not be the first time something like this happened at a condo association. For example, see https://www.sarasotamagazine.com/home-and-real-estate/an-unlikely-heroine-steps-in-to-save-crumbling-dolphin-tower

More than ever, expect that your insurer will be seeking grounds to decline coverage.

I doubt insurance will pay. I have $50,000 coverage with no deductible but I think they will take issue with paying for rotted siding when it was the HOA Board's responsibility to take this into account when establishing monthly HOA dues and target reserve levels. The Bylaws required the Board to do this and they didn't. I suspect the insurance company will claim a failure to establish reserves isn't covered by insurance.

One HOA I was in voted in (89% of all owners approving) a $35K Special Assessment per unit (175 townhouse units). The HOA arranged (and backed) loans from a local bank. One could pay it off at once for $35K or finance it up to 6 years with added interest of course. It became a negotiating point when a unit sold.

Two owners did hold it up in court so that dragged out for a few months with the court ruling in the HOA's favor.

Given the Surfside disaster and how that went down, you bring up a great point about the insurance company's possible denial (I bet we'll be seeing a lot of that in the coming years). Of course, if the board didn't do its due diligence regarding reserves and proper maintenance, one has to ask why the rest of the homeowners went along with this.

You didn't say how long you've lived in the building, but having heard all manner of objections to assessment increases during 10 years I was on my board (5 as treasurer), I suspect there was a lot of "I'm on a fixed income and I can't afford an increase", "I don't see what we're getting for our money, so WTH does the board want more?" or various versions of "well, the siding in MY area is fine, so I don't think the problem is as bad as the board is saying" was said and heard. Be honest - what was the conversation before the new management company came in? Are there people from previous boards still around - if so, why didn't they establish a reserve fund? What do old board meeting minutes say about any proposals to increase assessments - were those board members shouted down, voted off, recalled, or did they get disgusted at the lack of foresight and quit?

I wish there was a simple answer to this, but as you can see, there isn't. If you really think a renovation project is "overkill," perhaps you and like-minded neighbors can hire your own expert for a review. You may be right - or your own expert may concur - then what would you suggest? However, this ends, you really need to get a reserve study THIS YEAR so you can see what will be required over the next 10-30 years (reserve studies typically cover a 30 year span). Yes, I know some might not be around by then, but reserves help pay for the common areas you and your neighbors used up in 2023 and the years leading up to it. Just because you don't want to pay now doesn't mean the work won't become necessary down the road, and it would be extremely unfair for a new owner to buy a unit and then be hit with a $54K assessment or more because the current homeowners didn't do THEIR due dilligence in making sure the board did its job.

And how long have you been an owner? Did you ever look at the Reserves?

I've been owner for around 11 years. I looked at the reserves when I bought the condo and read the annual financials and reserve studies. My Mom lives there so I don't see the siding that often. Siding repairs were made as needed and averaged less than $10k/year. Even now, the siding is mostly fine. There are a few units out of 66 that are worse than others.

The new management company had an immediate agenda. I don't know if they are compensated for pushing through a building envelope project or not. They pushed a construction company they had worked with in the past. Gores Construction.

The HOA is composed of 5 members, all elderly and 3 over 80 years old. They rely almost entirely on what the management company says.

Our condo here in Florida had a special assessment this year for about $2500. Florida has the mandated $250 deductible for condo insurance. I put in a claim. However, because the condo board decided to label the assessment for insurance increases and not for hurricane damage/cleanup (which would have been legitimate) the claim was denied. At least in Florida, the loss assessment has to be for storm damage.

These same condos just negotiated a $43 million settlement for the construction defect lawsuit they had against the builder. This has been agreed to but the money hasn't been transfered yet. But once it is, I suspect we will be hearing about it in the news because it's the largest non-disaster (like Surfside) construction defect award in the state. The point is that none of the previous special assessments for engineering services and repairs (that are now covered under the settlement) were covered by loss assessment from insurance either.

How do you know the siding is "mostly fine?" You may be right, but if you don't have any expertise in this area, it's just an opinion (and you know what people say about that).

It's good that you looked at the reserves when you bought the condo 11 years ago, but when was the last time it was updated - a lot can happen in five years, and especially 11. Building codes and materials may have also changed - those repairs costing less than $10K may have been on a few years ago, but people forget about the cost of living, which varies around the country. There's also been supply chain issues and labor issues that have led to increases in everything. A dollar from 2012 doesn't buy the same amount in 2023.

As for the make-up of the board members, you may also be right that they depend a little too much on the management company. That's not unusual either. The property managers do the day-to-day work, and so people figure they know what they're talking about because they see stuff every day as opposed to homeowners who may only be interested in their position. Then again, maybe you have those five elderly members (3 over age 80) because young'ums like you are much too busy to step up to volunteer or run for a position (it interferes with watching WWE Raw or The Match which was on TBS last night).

If you don't like how a board is running things, you can step up and offer to help them - maybe extra research or your asking questions may have given them something more to consider. You could certainly run for a spot at the annual board election - if these folks have been there for years and years, you can talk about "new blood" and so on and so forth. That said, I've met plenty of 80 and 90-year-olds whose faculties are more than intact, while the young folk continue to blow their brains out with meth, fentanyl and/or watching too much NewsMush.

ElleN may be right that the board should consider a loan, although I'm concerned that it will cost even more money because loans mean loan payments and interest. To pay that, fund reserves properly and cover routine expenses, you'd definitely looking at higher assessments to pay for it all, and then you'll be back to the same concerns you have now over a special assessment. Considering that you don't have any reserves to speak of, I fear you and your neighbors are in for special assessments, loans AND assessment increases, no matter what you choose.

With that, you may as well talk to your insurance company and get the information they're requesting - it may very well end up as a denied claim, but you'll be told why. In fact, this is something you could take to the board - have they considered that some (many?) homeowners might not have any loan assessment coverage to help with some of this $54K special assessment? Is there a way it could consider doing the more serious repairs first and spreading the rest out over a few years? The building envelope is only the beginning - y'all better be looking at other components like the elevators, less you wind up with some major repairs there. Good luck in whatever your community chooses to do.

PS - be careful about listing the names of vendors or communities. You listed the name of the construction company, which may be against posting rules.

I'm shocked owners voted to approve. Votes counted by HOA management company. I don't trust them one bit.

They rushed to sign contracts within days of the vote. Board member removal wouldn't accomplish anything. HOA is legally bound to the project.

The election was partially electronic and partially paper ballots. HOA manager says paper ballots were shredded after verified by board attorney. Same board attorney who will be billing $7500 for legal work on the construction contract.

I don't see anything about retaining voting records in the bylaws or the Oregon statutes.

I think this whole think stinks. I'm resigned to accept this because it would cost a fortune to enter litigation and there is no guarantee it would be successful. HOAs can be a positive force but in my case this is an HOA nightmare.