Owners of mold infested condo consider dissolving association

By Deborah Goonan, Independent American Communities

Unit owners are reportedly considering dissolving their leaky, mold-infested condo association in Winter Haven, Florida.

In a report from ABC Action news, condo manager Joe Garrison explains that only 60% of owners at Royal Crescent Condominium are paying their monthly assessments, currently about $300.

Condo owners say they’ve been complaining about persistent water leaks for at least the past two years. Condo management has not been able to find the sources of these leaks, due to lack of funds to conduct invasive inspections, and make needed repairs.

Common causes of water leaks in multifamily buildings such as Royal Crescent Condominiums include:

  • leaky roofs,
  • deteriorated or improperly maintained rain gutters,
  • worn out exterior cladding (siding, stucco, or brick), and
  • corroded or leaky plumbing.


Not-so-affordable condos

Most owners of these so-called affordable units (recent sale prices under $100,000) are single adults and single parents with children. Two women interviewed by Action News have been forced to move out of their homes, due to illnesses  related to persistent mold and mildew.

One unit owner, Erica Ray, is a mother of two children. She’s currently receiving chemotherapy to treat breast cancer. Fortunately, some of her neighbors are helping to pay for the family to stay in a nearby hotel.

In Royal Crescent, owners are responsible for maintaining the interiors of their units, but the Association is responsible for maintaining the exterior envelope of the building, and other common areas and elements, including shared utility lines.

If the condo association cannot or will not repair the sources of water leaks, unit owners cannot keep their unit dry and free from mold and mildew.

Garrison says that, unless owners are willing and able to pay a special assessment to make extensive repairs, nothing will be done about the water leaks and mold.

Winter Haven Code Enforcement has also issued violation notices to Royal Crescent, regarding deficiencies with doors, roofing, and drainage.

The repair bills are racking up.

That’s why unit owners have organized a meeting to discuss the possibility of dissolving the condo association.


Not an isolated problem

Leaks, poor drainage, mold, and pest infestations are common in poorly maintained multifamily housing.

But don’t assume that these horrid living conditions only occur in low-income rental apartments. Increasingly, we’re seeing more reports of decay in aging condominium and co-op housing complexes.

Here’s why.

A residential housing association’s only form of revenue is the monthly fees it collects from owners. But when the condo association does not collect enough money from unit owners, it often has no other choice but to defer maintenance.

Over time, most residential structures develops leaks. These leaks can be corrected by replacing worn out materials such as roofing, siding, windows, doors, caulk, and plumbing.

However, most condo owners underestimate the cost of normal maintenance. Even if they pay hundreds of dollars per month in associations fees, it may not be enough to pay for major repair or reconstruction.

Most condo associations raise fees to try to keep up with repair costs. However, sooner or later, many cash-strapped condo owners can no longer afford to pay high monthly fees.

When the money starts to dry up in the condo association, nothing gets done, and living conditions just get worse over time.


Long-term damage is expensive to repair

When moisture lingers inside the building or its wall cavities, mold infestations follow. But that’s just one consequence of not repairing leaks.

Excessive moisture can also lead to wood rot, termite damage, and rodent problems. If a condo association continues to neglect its buildings and grounds, wood framing and foundations eventually fail, leading to potentially hazardous living conditions such as building or balcony collapse.

Most novice condo owners are surprised to learn that old plumbing and electrical wiring deteriorates after several decades, leading to water leaks and possible fire hazards.

Since most of this damage occurs behind walls, it often goes undetected for years. By the time the problems are discovered, the cost of reconstruction is beyond the reach of the condo association.

If a condo or co-op association has a high assessment or maintenance fee delinquency rate, it’s unlikely that it will qualify for a loan to help spread out the cost over time. That’s especially true when the amount of money the Association needs to borrow exceeds the value of the residential property.


Condo Dissolution

It’s often impossible to collect large quantities of money from a few owners, in a futile attempt to bring the common structure back up to current safety standards.

In such a case, dissolution of a condo association is a more practical solution.

State laws vary, but dissolution usually requires at least 75-80% agreement of the voting interests in the Association.

Following the approval of a dissolution, condominium assets are liquidated. Then all owners get a share of the proceeds. Unfortunately, when the common elements are in dire need of repair, the liquidation proceeds tend to be low.

Each condo owner will likely end up with a small amount of money, or perhaps no money at all, if there’s a mortgage to repay.  In many cases, unit owners often wind up renting their next home.


A risky investment?

As you can see, buying a condo as a primary residence is risky business.

Even if you can well afford to pay condo fees at the time you buy, steep fee increases or special assessments can make your home unaffordable within a few years.

Plus, you cannot control the actions of your neighbors, who are co-owners in the condo or co-op corporation.

If and when some do not pay their monthly fees or special assessments, you and other neighbors who can still afford to pay will be picking up the difference, in the form of even higher fees.

I’ve talked to many condo owners who pay more in condo fees than their mortgage payment.

If the condo association chooses to collect fees through HOA foreclosure, it further reduces property values.


Selling to investors

Selling an unaffordable condo can be difficult, unless you’re willing to take a loss on the sale. Some owners ultimately choose this option. They sell their unit to an investor, usually at a low price.

The investor then rents the unit to a tenant. After several years, most of the residents in a condo association are tenants. Investor-owners eventually take control of the condo board. But since they often do not reside in the community, investor-owners may have little interest in preserving the housing.

Some investors plan to hold onto their rental units until they can force out minority owner-occupants through a condo termination or dissolution. Then they convert the housing to rental units, or do a complete tear down and redevelopment.


Think twice before you buy

If you’re thinking about buying a condo because the purchase price seems affordable, think again.

As owners of Royal Crescent Condominium have discovered, just because a condo is affordable to buy, does not mean it’s affordable to own. ♦



Polk County condo owners claim homes are infested with mold
Andrea Lyon, ABC Action News |Posted: 6:20 PM, May 01, 2019
Updated: 5:38 AM, May 02, 2019

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