Guess what, America? Other countries have same condo & HOA problems!

By Deborah Goonan, Independent American Communities

Some readers of IAC may be unaware that association-governed communities exist in other countries of the world. Most of them are condominium associations, but may be called by different names such as “strata” or “horizontal properties.”

Detached homes in association-governed neighborhoods are called “villas” in many parts of the world, and, because there’s usually no ownership of individual parcels of land, their communities are more equivalent to condominium associations than planned communities with homeowners’ associations.

The house hunter will find many association-governed, common interest communities in Canada, Australia, the U.K., South Africa, New Zealand, India, Central and South America, Middle Eastern countries such as U.A.E, and Asian countries such as Japan, China, and Malaysia.

Perhaps you’re curious about how condo and homeowners’ associations function in countries with very different national government structures and people with diverse political philosophies.

Are cultures that embrace communism or socialism more suited toward collective ownership and governance? Do people who live in countries governed by authoritarian leaders have HOA and condo boards that are democratic, or are they likely to accept dictators on their boards?

Are housing structures better constructed than here in the U.S., where there has been a severe shortage of skill trade labor for many years?

Is conflict present among neighbors and co-owners?

Are lawsuits just as common as in the U.S.?

Surprisingly, based upon articles published across our borders and around the globe, residents of association-governed housing tend to experience the very same challenges and problems we have right here in the U.S.

Below are several examples, to illustrate that fact.

Australia

Cladding risk for 12,000 Qld buildings

More than 12,000 Queensland buildings carry the type of flammable cladding blamed for London’s Grenfell Tower fire, a taskforce has found.

Australian Associated Press MAY 17, 2018 10:43AM

Flammable cladding blamed for London’s Grenfell Tower fire may have been used on as many as 12,000 buildings in Queensland, a taskforce has found.

A year-long inquiry by the taskforce into 28,000 buildings constructed or renovated since 1994 has found 880 require further investigation and at least 70 need rectification work.

The taskforce was set up by the state government after the 2017 Grenfell disaster, which killed 71 people including two Australians, to assess how many buildings carry the aluminium composite panels (ACP).

It is preparing to assess an additional 12,000 privately-owned buildings, including about 1200 residences.

A lack of central data collection and inconsistency of documentation detailing approvals has hindered the work of the taskforce, it said.

“The complexities and challenges that this brings to the identification process means there is a risk that not all affected buildings might be identified or identifiable,” the taskforce’s report says.

“Private owners and local governments are encouraged to make their own enquiries about the buildings that they control.”

Read more:

http://www.news.com.au/national/breaking-news/cladding-risk-for-12000-qld-buildings/news-story/07bc140f038062df2f7bcb8f0881e8ce

As in the U.S., local governments have not kept track of the number and local of its hastily-constructed condominium buildings. So now that Australian leaders know that thousands of condo towers were clad with dangerously flammable materials, they have no way to identify affected buildings in order to correct deficiencies. 

condo-2414328_1920
(Pixabay.com free image)

Japan

Condo management is in need of repairs
BY PHILIP BRASOR AND MASAKO TSUBUKU

On Dec. 18, the Supreme Court’s petit bench ruled against a man from Fukuoka Prefecture who was suing the management association (kanri kumiai) of his condominium for firing him as its president of the board (rijicho) because the regulations of the association contained no stipulations for dismissal.

Lower courts had ruled in favor of the plaintiff, but the Supreme Court thought otherwise and sent the case back to the Fukuoka High Court, implying that the association could fire the man. It is the first time a court has ruled in favor of a management association in such a case and, according to the Nihon Keizai Shimbun (Nikkei) report of the decision, the precedent will have a profound effect on condominium management rules, since it recognizes management associations as holding the primary decision-making power in such matters.

When you buy a condominium unit you automatically become a member of your building’s management association, since any part of the structure or grounds that is not contained within your unit is considered communal property. The association is represented by a board (rijikai) made up of rotating members, and a president of the board is elected for a fixed period of time. All the rights and responsibilities stipulated in the association’s rules are protected by law. The president calls board meetings and is in charge of the association seal. The building in the Fukuoka case contained 420 units, and the board consisted of 12 members.

Probably the most important task carried out by the president and the board is setting and collecting monthly fees. There are two types of fees: a management fee (kanri-hi), which pays for ongoing maintenance of the communal property, and a repair fee (shūzen-hi), which goes into a fund that will be used for major repairs in the future. Initially, these fees are set by the building’s developer, which in many cases also hires the firm that manages the building, at least in the beginning. Management fees can be problematic. If they are set too high, it can discourage people from buying a condo. If they are too low then the funds will be insufficient to pay for major repairs or large-scale maintenance.

The life of a condo is considered to be about 40 years. After that, in most cases extensive repairs have to be made, especially with regard to the plumbing. According to land ministry estimates, in 2015 there were 510,000 condo units in Japan that were more than 40 years old. In 2025, that number is estimated to triple. Many of these buildings’ management associations have not collected enough money in fees to pay for such repairs, and will likely have to collect a lot more before they can be carried out. As a result, condo owners can suddenly be hit with massive, unexpected bills.

The main problem with management associations, however, is that many owners are not keen on taking on the responsibilities of board membership, which can leave the board being dominated by someone with an authoritarian personality, like the president in the Fukuoka case. Most owners simply want to pay their fees and let someone else do the work. But without full cooperation from all the owners in a building, the association is open to fraud and mismanagement. They don’t call it “collective” housing for nothing.

Read more:

https://www.japantimes.co.jp/community/2018/02/11/how-tos/condo-management-need-repairs/#.WoJMR8pOmhC

Japanese condo association members (called “management associations” in Japan) sometimes disagree with management decisions, and wish to remove the President. In this case, condo association members recalled (“fired”) the President for hiring an unpopular management company without considering the desires of other members. The former President objected to being fired, and sued in court, hoping to reverse the decision. A lower court agreed with the former President. The board of managers appealed. Ultimately, the Supreme Court ruled that condo members can indeed decide to remove the President.

In nearly 80% of condo associations in Japan, unlike the U.S., all members of the association rotate serving on the board (in this case 12 members), and all members elect a President to represent the association. The President makes financial decisions and obligations for the association. Now it has been clarified that association members can effectively recall the President for poor management decisions. 

The article goes onto explain that the vast majority of condo associations have not saved enough money to make major repairs, which tend to be necessary when the building approaches 40 years old. That leads to “unexpected bills” or what we call “special assessments” here in the U.S. And, as in the U.S., most association members aren’t paying attention to how their money is collected, spent, or saved, contributing to the problem of corrupt Presidents keeping most of the money for themselves. 

Malaysia

A three-step problem-solving method to common issues in strata living

Shawn Ng / May 18, 2018

Unrectified defects, stubborn owners who refuse to comply with house rules, late issuance of strata titles, inter-floor leaks — these are some of the issues that may bring grief to strata residential owners.

But how can they resolve these problems? In order to bring certainty to strata property owners, Chur Associates founder and managing partner Chris Tan offered a simple three-step problem-solving method for common issues that crop up in strata living:

1.            Identify the people you will be dealing with
2.            Be clear and find out all you can about the issue
3.            Know what the options are to solve the problem

“As a strata property owner, you must know and be aware of the kind of problems you could face in community living, who you will be up against, and how you can go about resolving the issue,” Tan told the audience at the EdgeProp.my Symposium on Excellent Property Management 2018 on May 12. Themed “Mistakes you CAN’T afford to make!”, the symposium was organised by EdgeProp.my with partners Nippon Paint Malaysia and Panasonic Malaysia. Supporting sponsors were Gamuda Land, Red Ideas Sdn Bhd (Graaab JaGaApp) and Zurich General Insurance Malaysia Bhd. The event was also supported by The Edge Malaysia.

Tan offered that there are plenty of options for homeowners to resolve their issues, depending on the nature of the issue and the people they are dealing with.

Among the options are to seek help from the authorities, bring it up to the respective tribunal or to the courts and even to the media.

Read more:

https://www.edgeprop.my/content/1334905/three-step-problem-solving-method-common-issues-strata-living

Sound familiar? Same types of problems, and similar “solutions,” including taking the matter to tribunal (court) or contacting the media. This article is written by an attorney for the real estate industry. The author makes it sound so simple to resolve condo disputes. Of course, readers know better. 

condo-2825434_1920

Canada

That Gorgeous Toronto Condo You Signed Up For? They Just Scrapped It

Builders in Toronto’s frenzied condo market are walking away from giant towers they have pre-sold, reflecting a rougher road to profits — and leaving buyers in the lurch.

Soaring construction costs and condo values in Canada’s largest city, where prices have surged amid a booming economy and strong immigration, have spurred developers to cancel projects they started when construction was cheaper and pre-sales were less lucrative. Condo prices have increased about 20 percent since February of last year, according to the Canadian Real Estate Association.

“Many projects launched for pre-sales prior to having their proper approvals in place,” Shaun Hildebrand, a senior vice president at Urbanation Inc., said. “By rushing to bring units into a hot market, some projects jumped the gun and added risk to the development.”

According to Urbanation, which studies the Toronto condo market, there are 10,622 condo units in the greater Toronto area that were offered for pre-sale before 2017 and still await construction. Since the start of last year, 17 projects, with 3,627 units, have been canceled in the region, according to real-estate-services firm Altus Group Ltd. That’s up from seven projects, with 808 units, in 2016.

Homebuyers who have had their projects scrapped will be back in the market again, increasing demand even further, said Mike Czestochowski, executive vice president of the group.

That’s good for builders but a problem for buyers. Many who get their deposits back from the developer of a nixed project probably will have lost equity, because the market is a lot hotter today, Czestochowski said.

With the intense demand for housing in and around the city, many new projects are bound to rise and canceled ones to be revived — at higher prices.

Read more:

https://www.bloomberg.com/news/articles/2018-04-19/builders-scrap-pre-sold-toronto-condo-towers-as-costs-escalate

Canada seems to be creating a gigantic real estate bubble, and it may be about to burst. Looking at the number of condo projects canceled this year, about one third of condo units planned in 2017 will not be built after all — at least not at previously offered pre-sale prices. Instead, spurned condo buyers will be forced to fork over even more money in hopes that they will one day own and reside in the next pre-sale condo they choose.

Gavel and legal books lawsuit court

Condo corporation brings claim against firms

Plaintiff claims conflict of interest, negligence

|Written By
A York condominium corporation is suing Miller Thomson LLP and Goodmans LLP for allegedly acting in a conflict of interest.

The condo corporation is seeking up to $4 million from the two law firms and a number of other defendants for an alleged conspiracy in which unit owners were “duped” into releasing valuable easements on an adjacent property so that it could be sold and developed.

The allegations have not been proven in court.

The statement of claim, which was filed in the Ontario Superior Court, said unit owners of the condo corporation were misled by a number of the defendants into believing that they were benefiting from the release of the easements when in fact they were not. It turned out that the only parties benefiting directly or indirectly were some or all of the defendants, the claim said.

The adjacent property, which was owned by one of the defendants, could not be sold or developed until the easements were released.

The claim said the full extent of the ramifications of releasing the easements was purposely withheld from the condo corporation and unit owners and that the former director who was leading the campaign to release the easements personally benefited from their release. The owner of the adjacent lands sold the property in December 2016 to another one of the defendants for $45 million.

The defendants included three former directors of the condo board, as well as the owner and purchaser of the lands.

Read more:

http://www.lawtimesnews.com/author/alex-robinson/condo-corporation-brings-claim-against-firms-15539

Allegations of corruption and conflicts of interest abound in this Canadian lawsuit! Did the attorneys violate the law by representing clients with opposing interests? While a few insiders made money on a land deal, the lawsuit states that condo association fees increased by $300 per month, and property values dropped after easements were sold. 

Vacation hoome ocean beach

Room with a sue: Airbnb strata battles showing up in court

Short-term condo rental market faces tough times in light of legislation and legal precedent

Jason Proctor · CBC News ·

In one case, a condo owner argued he wasn’t renting his bedroom out — he was licensing its use.

A photograph of about 15 pairs of men’s shoes lined up outside a doorway was entered into evidence in another — proof the townhouse owner in question had used her unit as a kind of hostel.

Both cases ended with fines upheld by B.C.’s Civil Resolution Tribunal (CRT) in favour of strata corporations trying to prevent the rental of units through Airbnb.

Throw in the City of Vancouver’s licensing regime and a crucial 2017 Supreme Court ruling, and you’ve likely got a glimpse of the future for short-term condo rentals. It’s not rosy.

“It’s going to be hard times for Airbnb operators who are operating out of condos,” says Paul Mendes, a lawyer who specializes in condo and strata disputes.

“Because unless your strata is permitting Airbnbs — even without a specific prohibition of that type of behaviour, I could see stratas cracking down and owners being on the losing end.”

Read more:

http://www.cbc.ca/news/canada/british-columbia/airbnb-strata-court-dispute-1.4628872

In a day and age of Airbnb, VRBO, and Home Away, condo owners are cashing in on the opportunity to make money through short-term rental of their units. Owner-occupants and long-term tenants don’t appreciate their community being used as a de facto hotel.

Indeed, Canadians also experience The Core Conflict in HOAs.

No money empty pockets poor

‘I can’t afford it’: Owners outraged after monthly payments double at Ottawa condo

Joumana Azzi says she could barely believe her eyes when she saw it: her monthly condo payments were about to double, thanks to $2.3 million in repairs needed for two buildings.

MAGGIE PARKHILL
Published on: April 30, 2018 | Last Updated: April 30, 2018 1:57 PM EDT

News of the levy, she said, brought other neighbours at a meeting about the cost to tears, describing how they might have to turn their keys over to the bank or take out a loan. Some talked about selling their units.

With less than two months’ notice, residents of 85 units at 2630 and 2650 Southvale Cres. in the city’s south end were told by their board of directors in mid-February that they would have to contribute more than $2.3 million over the next three years after a “special assessment” concluded the buildings were in need of major repairs and upgrades.

While this may seem like an unfair demand, it’s legal under Ontario law. What’s happening to the residents along Southvale Crescent is an illustration of the very few options — none of them ideal — condominium owners have if they find themselves in a similar situation.

The $2.3 million amounts to a 504 per cent increase in the total contribution to the condo’s reserve fund, a special fund all condos are mandated to have to pay for major building repairs or upgrades. The fund is managed by the condo’s board of directors.

The $2.3-million increase is the result of a reserve fund study, which a condominium corporation is supposed to complete every three years, according to the Condominium Act.

A third-party expert, usually an engineer, is tasked with evaluating the property and determining what major repairs or replacements it needs in the near future, such as a pool or garage.

The amount each unit owner is expected to contribute to the reserve fund is changed, depending on what the study says.

If major repairs are needed, or if the reserve is underfunded, the board can levy a “special assessment,” or an amount that must be paid by all owners, regardless of whether they use the “common elements.” If an owner cannot pay, the condominium corporation can put a lien on the home. A special assessment can happen with no vote by the individual owners.

Read more:

'I can't afford it': Owners outraged after monthly payments double at Ottawa condo

Provincial law requires regular reserve studies for condominium associations. The board has the power to raise assessments to cover any gap in reserve funding, and members have no say in the matter.

Now facing steep assessment increases for their 17-year-old condominium, many unit owners, unable to pay higher costs, fear losing their homes by way of condo association foreclosure. 

Despair sadness

Fort McMurray condo owners face financial ruin despite court settlement

The building was demolished in 2015, but owners have continued to pay their mortgages

Though settlements have been reached and the building has long-since been torn down, the saga of the troubled Penhorwood condo complex in Fort McMurray is far from resolved in owners’ minds.

After 11 years of litigation, a Calgary Court of Queen’s Bench judge approved the final settlements in September 2017, court documents show.

The only thing that’s left is for the courts to approve a process under which owners can deal with the banks still carrying unpaid mortgages, said Christine Burton, president of the Penhorwood Condo Association.

Even after that’s worked out, some owners will continue to live in financial ruin, Burton said.

“Some people went bankrupt,” she said. “A lot of people foreclosed, stopped paying their mortgages. We had a lot of marriages break up over this.”

Problems from roof to foundation

The seven-building, 168-unit complex was built between 2003 and 2004.

Three years later, in January 2007, condo owners filed their first statement of claim. In several amended claims filed later, owners alleged numerous building deficiencies from roofs to foundations.

“Just about every single system in the building was failing,” Burton said.

In 2011, municipal building inspectors determined the complex was structurally unsound, and ordered a sudden evacuation on a cold night in March.

Condo owners filed a $60-million lawsuit that year against the companies that built the complex — 970365 Alberta Ltd, Prairie Communities Corp., and Dome Britannia Properties Inc. — the architect and engineering firms that designed it and the municipality that approved it. The condemned building was torn down in 2015.

Since then, owners have continued to pay their mortgages.

The exact amount the defendants paid to condo owners is unknown because the 2017 settlement is sealed under a court order.

Read more (video):

http://www.cbc.ca/news/canada/edmonton/fort-mcmurray-condo-penhorwood-1.4637788

A story of personal stress and tragedy, all because of a shoddy construction. The condominium structure was only a few years old when it began to fail. In 2011, residents had to evacuate the building, which was torn down in 2015. A seven-year legal battle with developers, builders, architects, and engineers was settled under seal of confidentiality in 2017.

But by now, many of the former condo owners are in financial ruin. Some have endured the break up of marriages, miscarriage of unborn babies, and stress-related illness. 

The amount of money recovered in litigation doesn’t cover financial losses, with some owners still on the hook for paying mortgages on their non-existent condos.

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One Reply to “Guess what, America? Other countries have same condo & HOA problems!”

  1. This article saddened me as many home owners were financially destroyed. and it is so interesting to learn that Condo, HOA, is a universal issue. Many residents are not aware of what goes on after you “buy in.” In many cases depreciation of the common area becomes a major issue when funds were not properly reserved creating a financial burden down the road. Hidden knowledge of developer errors, etc. However, I have found that there are very few who complain prior to an incident, many homeowners just don’t know what they purchased and mock those who push for change.

    Liked by 1 person

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