special assessment interest

I live in Mountain View, CA. Our condos are freestanding, no shared common walls. Recently, one unit's pipes leaked and caused severe damage. Now, my HOA wants to impose a special assessment to collect $8000.00 from each of the 46 units. $4700.00 is to repipe and the rest is to build reserve to "50%." In the letter I just received, it stated that we will need to vote on this and if it does not pass our dues will go from $280./month to $350./month. It further states that increases like this will continue to follow each year. If it does pass, we can expect smaller increases. Also, the money will be due ASAP. If we need to make payments on the special assessment, the HOA will charge 7% interest until paid. There is no loan from the bank. Can they do this?

KellyH,

The damange seems to have occurred by the unit's pipe leak. However, you did not state what common element outside the unit was damaged. Please explain.

Your governing documents/Master Deed should outline what is a common element, a limited common element, what is not covered by the association, and responsibility of everything else.

$8,000.00 is $173.91 per unit owner, not the end of the world. However, if the element damaged was caused by a pipe leak inside a unit, fault/liability would seem to me to be the unit owner, not the other 45 owners.

The association's insurance policy needs to be reviewed to see what is covered, and what is not.

There's a California state law Davis Sterling Act go to the following link: http://www.davis-stirling.com and read Article 4 Assessments, and the sections it references.

Best of luck,
GeraldT1
NNJ

HaroldS,

You are correct, the assessment is $8,000.00 each, my mistake, Kelly needs to provides specifics of the damage to adequately provide her a response to the situation.

As for why anyone would live in a condo, there are numerous benefits that mostly revolve around the collective bargaining power of a group of owners, and a lifestyle that can be more hands free. For example, my monthly dues are $152.00, that nets me zero responsibility to maintain the outside of my unit, including the roof, the grass, the mulch, the snow removal of my driveway, front walk, landing, the gutters, the siding, the painting, the power washing and seal coating of my deck, the pruning of my shrubs, the replacement of all elements on the outside of my unit (except the door and windows). The $152/month also includes (are you sitting down) the complete replacement of the entire unit's interior in the event of loss, no joke. My COA has extremely comprehensive insurance requirements stipulated in our governing documents. That means every upgrade (granite, cabinets, hardwood floor, sheetrock, lighting, upgraded tile, wood trim, upgraded carpets as originally conveyed to me are covered at market value at the time of replacement. Most COA's insurance only cover builder standard (formica, lenoleum, etc.) and the unit owner has to kick in the difference between standard and the upgrade. That is not the case in my COA, and it is an extremely huge selling tool.

So Harold, for $1,824.00 per year, I as a condo owner get all that. How much do you, or any single family home owner pay a year for all this?

As for planning, and timeliness of repair/fix you have a very strong argument against living in a poorly run COA. If you are fortunate to have a responsible board and management company, than the benefit of COA living is huge. If not, then buyer beware.

GeraldT1
NNJ

KellyH,

1) How old is your development? This could be very important information for various reasons regarding Transition and Reserve Studies.

2) Doing the project on a mass scale is in everyone's best interests because it can reduce the overall cost, and get's all the deficient piping corrected.

3) Why did the pipes fail so soon, who was inspecting the pipes so as to be compliant? Or is your development older and the galvanized piping was acceptable at the time.

4) More important question is, if failure was not premature, why were your reserves not more adequately funded to replace the common element?

5) When was the first Reserve Study done?

6) A payment system is in everyone's best interests, the management company offerring one could be a blessing, but funding is at the decision of the owners. If the interest charged is better than or equal the marketplace, the management company is helping, not hurting. If the interest is more, than shame on the owners for accepting the offer.

Best of luck!!
GeraldT1
NNJ