$3M HOA assessment looming for NJ condo owners

By Deborah Goonan, Independent American Communities

The North Jersey Record reports that a Wayne, New Jersey, condominium association is facing a huge special assessment, because the foundations of two of its 395 condos are failing.

Several homes in the compact Brittany Chase Condo community are built into a steep slope. Two attached homes in on Brittany Drive are sited on unstable soil, their rear yards held back by a retaining wall.

The condo association discovered unusual settling in 2006, when it hired an engineer to look into the cause of a cracking foundation for the twin townhouses. At the time, the association paid thousands of dollars to stabilize the foundation and reinforce the soil, but the repair turned out to be temporary. Condo attorney Jennifer Alexander is now investigating whether it’s feasible to sue the engineer or construction company responsible for that inadequate repair.

Alexander explains to owners that the unstable earth beneath and behind the townhouses at 8017 and 8018 Brittany Drive is a landslide risk. Another engineer has been asked to recommend a course of action. His proposed solution is to drive multiple structural piles into the uncompacted soil, in order to stabilize the hillside. But the total cost for a permanent solution comes at the steep cost of at least $2.6 million.

Since the foundations of each condo unit are considered common property of the condo association, the cost would be shared among owners of all 395 units. Special assessments would range between $4,000 and $11,000 dollars per condo unit. Homeowners living on fixed incomes, especially those on Social Security, would be most hard pressed to come up with thousands of dollars.

Some of the homeowners cannot understand why they should be expected to pay to repair foundation damage to homes they believe they don’t own. But the truth is, in a condominium association, all members collectively own common property. In Brittany Chase, that includes foundations, and most exterior surfaces, as well as the grounds surrounding each dwelling or multifamily structure.

It’s yet another example of an unexpected risk of condo ownership. Common ownership of property, often sold to homebuyers as an affordable path to ownership, also obligates each homeowner to countless unknown future maintenance and repair expenses.

And, as is the case with Brittany Chase, when the association discovers a construction defect, the cost to repair damage or correct safety hazards to common property can quickly add up tp thousands of dollars in special assessments.

Be sure to read the letter from the condo association’s attorney in the following North Jersey Record article. It’s an eye-opener.

Cracked concrete foundation

Wayne condo owners could be on the hook for $3M in repairs

Philip DeVencentis, North Jersey Record

Published 10:00 a.m. ET Aug. 31, 2018 | Updated 3:24 p.m. ET Sept. 5, 2018

Brittany Chase, a sprawling complex of 395 condominiums and town houses off Berdan Avenue in Wayne, is meticulously landscaped and its streets are home to families and senior citizens alike.

Beneath its polished exterior, however, a problem exists that could disrupt hundreds of lives: the foundations of two town houses on the eastern edge of the complex are failing, according to documents obtained by NorthJersey.com and the USA TODAY NETWORK New Jersey.

And the cost to repair it is in the millions.

For homeowners at Brittany Chase, the situation has become a potential financial nightmare: they’ve been told they may have to foot the bill to pay for the repairs — even if their homes aren’t directly affected. A final decision is pending.

“I don’t understand how it could be fair,” said 92-year-old Lucille Kotran, a condominum owner on a fixed income.

Unit owners were told in May about the problems, which were blamed on a “construction defect.” The price to fix them: more than $2.6 million.

Read more (video):

www.northjersey.com/story/news/watchdog/2018/08/31/wayne-nj-condos-owners-could-hook-construction-defect/800940002/

It’s not surprising that Brittany Chase community has a history of corruption involving city leaders and its former developers, dating back to the late 1980s. And it’s also not surprising that the land parcel changed hands several times, and was rezoned, before it was ultimately developed into condos by River Bank America in the early 1990s.

Long time homeowners say that the developer threw all sorts of loose debris into a hole in the ground and simply covered it up with soil, then built two condos on the site. Over the decades, the soil and debris have settled and shifted, leading to the cracked foundations. By now, the developer is long gone, and the statute of limitations for a construction defect lawsuit has expired.

Even worse, the Association fears that more than two units could be affected. Additional soil testing will be needed to determine the extent of uncompacted soil beneath neighboring properties on Brittany Drive.

Who will make the repairs?

Attorney Alexander’s letter to homeowners explains that, out of 10 contractors contacted by the HOA’s engineer (Falcon Engineering), 7 came out to look at the problem, but all of them — except one — declined to bid on the project.

Apparently, it’s a job beyond the scope of most construction companies, or they simply don’t want to get involved in the potentially hazardous, complex project.

Two views of the steep drop-off behind Brittany Ln. condos
Two views of the steep drop-off behind Brittany Dr. condos (Google Maps image captured Oct. 1, 2018)

094EB4DF-664C-40FB-A6FE-2E4CF49ECE44

What are the lessons learned?

First, we learn from Alexander’s letter that building inspections are essentially useless in preventing a developer from engaging in shoddy construction. Much of the time, a local building inspector will not personally witness poor workmanship, especially if contractors cover up their mistakes. There’s very little deterrent to prevent land developers and home builders from cutting corners to save money and meet tight construction deadlines.

Unfortunately, local governments in New Jersey are unaccountable to housing consumers, too. Because they are entitled to legal immunity, they can avoid liability for future claims of negligence. As for common property in an association-governed community, since the city or county isn’t responsible for maintaining it, there’s little incentive to enforce high quality construction standards.

Insurance policies don’t cover construction defects, either. Insurance CEOs figured out a long time ago that, if they were to reimburse homeowners for their losses due to poor construction, they’d never turn a profit.

Ultimately, a myriad of unknown risks and liabilities get passed onto homeowners.

Confusion-question-mark-blackboard
(Pixabay.com)

Is there a better solution for homeowners?

One proposed solution is for Brittany Chase Condo Association to consider buying out the two unit owners at 8017 and 8018 Brittany Drive, demolishing their homes, and reapportioning ownership share in the association among remaining owners. But the HOA attorney says this is a complex process that would require everyone in the association to cooperate.

And what are the chances that owners representing 395 homes will agree to this option?

That depends on how extensive the damage is, and how much it will cost to solve the problem, once and for all. When the cost to repair or rebuild exceeds the value of one’s home, or makes living in it unaffordable, homeowners are more likely to agree to a buyout. If more than two properties are found to be at risk, a buyout becomes more likely.

The community might qualify for a grant. But the city of Wayne has shown no interest in offering administrative support or financial assistance, even though the city was initially responsible for providing approval of the community and all of its construction and occupancy permits.

Incredibly, the HOA attorney had hoped the association could prevent unit owners from talking to local media, realtors, and their insurance companies. But then reality set in. The word is out. Brittany Chase condos probably won’t be the first choice of homebuyers. And investors aren’t likely to make attractive offers either.

Unfortunately, at this point, homeowners cannot easily escape from this financial crisis.

Additional news reference:

Single mom thought she found the perfect Wayne home. Turns out it’s sitting on a sinkhole (North Jersey Record)

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