February 2023 IAC HOA News Digest: Condo, HOA living is getting a lot more expensive
By Deborah Goonan, Independent American Communities deborahgoonan@gmail.com
Rising HOA fees, special assessments, HOA fines, and bitter HOA lawsuits are making HOA living a lot more expensive.
Associations hit members with rising condo, HOA fees, huge special assessments
California HOA fees rise 20%
Many members of the Yorba Linda Villages Condominium Association (CA), fear they will be forced to sell their homes. Homeowners say they cannot afford the recent steep increase in their HOA fees. Their condo association just raised monthly fees by 20%, the maximum increase allowed by California law. In addition, each owner must pay a special assessment of $9,000 in “emergency fees,” for immediate repairs.
Many of the owners in Yorba Linda Villages are first time home buyers and families with young children. They stretched their budgets to be able to purchase their condo units in the past few years. Most never expected such drastic increases in HOA fees, which turning their dream of homeownership into a costly nightmare.
Washington condo owners to pay large special assessments
Unit owners in the Copperfield Condominium Homeowners Association of Portland, WA, recently learned they must pay $40,000 – $52,000 per unit, to fund a $5 million replacement of siding on all of the buildings.
The Copperfield community has 111 dwellings that were built some 50 years ago. Most of its residents are either retired or disabled, living on a fixed income, or employed in low-wage jobs. The HOA considers itself “lucky,”
as it has acquired bank financing of the project. Many HOA do not qualify for construction loans.
The HOA says this will allow owners who can’t pay the full assessment by April 1 to spread out the cost over the next 25 years. However, owners who can’t pay an additional $288 to $387 per month in HOA fees will be forced to sell their condos.
Florida recertification triggers huge special assessment for condo owners
A similar situation is playing out in Miami, FL, where owners of condos in the 40-year old Palm Bay Yacht Club Association are expected to pay a special assessment of $175,000 for each unit they own.
The money is necessary, according to the condo association, to pay for a 40-year building recertification. The recertification process entails an inspection of the structural health of the building, followed by completion of necessary repairs. If repairs are not made quickly, Miami-Dade County will condemn the building and force all residents to vacate.
The Palm Bay Yacht Club is a 27-story condo tower with 235 units. Market prices start at around $300,000 and top out at more than $1 million. Obviously, the huge special assessment presents a bigger hardship for owners of less expensive units, as well as owners who purchased their condos for much lower prices many ingrs ago.
…More details…
But, there’s more to this story. You see, the condo association’s property management company hired an engineer to do the recertification inspection, concluding that the structure requires $46 million in repairs. Not surprisingly, condo association members think that estimate is highly inflated. After all, the entire building is valued at $50 million.
So, owners got together and hired their own engineer, who has estimated repair costs at about $23 million. In other words, the homeowners’ expert’s estimate is half of the HOA’s engineer’s estimate.
That’s why owners have hired an attorney to dispute the amount of the HOA’s special assessment. The legal complaint accuses the management company, AKAM, of a conflict of interes, because AKAM plans to award overpriced contracts to one of its sister companies.
Sources:
New HOA fees at Yorba Linda community may force residents out of their homes, By David Gonzalez, KABC, February 11, 2023
A Homeowners Association in East Portland Is in Knots Over What a $5 Million Repair Might Mean for Its Low-Income Residents, by Sophie Peel, Willamette Week, Feb. 15, 2023
Owners asked to pay $175,000 each toward Miami condo 40-year recertification, CBS News Team, Feb. 7, 2023
Angry condo owner admits to arson
In a shocking report, Miami police have arrested a 53-year-old man on 4 counts of arson. Marc Lane Hermann admitted to setting his Longwood, FL, condo unit on fire in January, then shooting himself in the neck. According to local reports, Hermann claims he was seeking revenge against his condo association.
Four condos were damaged by the blaze, which was ignited after a gasoline explosion. Hermann reportedly has a court date in March. (Source: Homeowner wanted revenge against his HOA, so he set his condo on fire, Florida cops say By Madeleine List, Miami Herald, Jan. 24, 2023)
Chicago’s John Hancock building condo association seeks to evict a 91-year-old unit owner over unpaid fines and HOA fees
Jim Rodgers suffers from early onset dementia.
Long time condo owner, Jim Rodgers, faces fines from the condo association for causing a nuisance by smoking on his balcony. The unit owner has also fallen behind on his condo maintenance fees. For these reasons, a court recently gave the condo association the green light to evict Rodgers. But moving to a new home at this stage of life would be a hardship for Rodgers.
As a solution to the problem, Rodger’s Power of Attorney has located a buyer for the condo unit. The proceeds of the sale would allow the Rodgers to pay his condo association fines and past due HOA fees. The new owner of the condo unit has agreed to allow Rodgers to rent back his unit for the rest of his life. Unfortunately, the condo association won’t cooperate with this compromise. It threatens to add the new owner to its still pending nuisance lawsuit against Rodgers. 91-year-old man faces eviction from John Hancock condo – CBS Chicago (cbsnews.com)
NYC condo dispute over unpermitted addition leads to jail time for penthouse owner
Here’s a truth-is-stranger-than-fiction condo nightmare story. Joe Riccardi, owner of a penthouse condo in New York City, has been locked in a battle over an unpermitted rec room addition to his condo since 2016. Riccardi did not build the addition, which was already in place when he purchased the property. Nevertheless, the courts say it’s Riccardi’s responsibility to have the recreation room demolished, at a cost of nearly $300,000.
The condo owner says he has been unable to find any contractor willing to take the job. And besides, he can’t afford the six-figure cost of demolition. But that didn’t stop a Judge from throwing him in jail — three times — for contempt of court. Riccardi spent several months in prison at Rikers, locked up with gang members and convicted murderers, and was released shortly after Christmas 2022.
After NBC New York aired an investigation report on Riccardi’s nightmare, a pro bono attorney agreed to take Riccardi’s case. Hopefully, justice will be served. (Source: NYC Condo Owner Sent to Rikers Three Times in ‘Nightmare’ Property Fight – NBC New York)
Ontario condo association insists on evicting owner’s service dog
Etobicoke condo owners may file a complaint with the Ontario Human Rights Tribunal against the Kings Gate Condominium Association. According to CTV News, the condo association is threatening to evict their registered service dog.
Before purchase, the owner and his wife provided the condo board with evidence of the service animal’s registration. But apparently that’s not good enough for the HOA. (Source: Young Toronto family says condo board is threatening to evict their service dog | CTV News)
Elected official and neighbors push back against high HOA fees in poorly run community
Richland County (SC) Councilman Don Weaver is the owner of four homes in Brookhaven. He says he also owns dozens of homes in other HOA-governed communities, and that he formerly served on the Brookhaven HOA board. Weaver tells WIST that Brookhaven is the “worst ran HOA” he has ever experienced.
No doubt that, as an elected official, Weaver had sufficient clout to get the local news to broadcast his community’s HOA horror story. The report publicizes widespread dissatisfaction with Brookhaven’s HOA board and management company.
Plenty of other owners in Brookhaven agree that the HOA isn’t transparent about finances. And they complaint that management is harassing owners with fines for alleged violations of HOA rules. (Source: Homeowner’s association under scrutiny by Columbia residents (wistv.com))
Hostile investor buys HOA’s parking lot in tax sale, charges residents $120 per month to park
Cleveland (OH) owners of townhouses and condominiums in Smokey Ridge Estates are furious over a hostile investor’s attempt to collect $120 per month for each parking space in their community. Daniel J. Praznovsky purchased the lots containing parking spaces at a state tax sale auction in September 2022. Smokey Ridge Estates HOA once owned the land parcels as common property for the benefit of residents. Somehow, over the years, the HOA became inactive, and no one paid the property taxes for the parking area.
Praznovsky has offered to settle with the HOA for $2.4 million, which equates to $30,000 per each condo owner in the 80-home community. Understandably, condo owners refuse to pay, and are suing Praznovsky in court.
The big question is: how could the state allow the HOA to default, and then permit a third-party investor to buy the HOA’s property at a tax sale? Apparently, there’s no oversight of HOA, and it’s perfectly legal for a third party to buy common property without the HOA’s knowledge. (Source: Dispute over residents forced to pay surprise parking fees goes to court (dispatch.com))
Partial condo collapse captured on camera at construction site in Ontario
A completely sold-out 5-story, 226-unit condominium building, which was still under construction, partially collapsed earlier this month (February 2023). The building is located in Welland, near Niagara Falls, ON.
Presumably, the accident will cause scores of condo buyers to back out of their sales contracts — if they can. Will skittish condo buyers get their money back?
See this link for video footage. Luxury Welland condo collapse captured on video | CP24.com
Important property rights case to be heard by U.S. Supreme Court
Pacific Legal Foundation is handling the case of a Minnesota woman who lost her home to a tax sale. Geraldine Tyler, 93, owed $15,000 in property taxes. The home sold for $40,000, and the county reportedly kept the excess money from that sale. Tyler sued. A Court of Appeals ruled last year that the county was entitled to keep the money, and had no obligation to return it to Tyler.
Pacific Legal Foundation is now appealing the case to the U.S. Supreme Court. Lawyers argue that it’s illegal for government to keep cash proceeds over and above the tax debt amount. The Foundation’s case calls this ‘equity theft,’ which is not permitted under the Fifth and Eight Amendments of the U.S. Constitution.
Note that is case does not apply to HOAs, only to governments. Still, the parallels to HOA foreclosures are strikingly similar. The decision in this case could prompt similar lawsuits against HOA foreclosures that essentially steal equity from homeowners. (Source: Supreme Court takes up property ‘theft’ dispute over unpaid taxes (yahoo.com))
HOA Legislative news
Connecticut lawmakers to consider updated home sale disclosure requirements
Homeowner consumer advocates in Connecticut ask for legislation to protect homebuyers, some of whom find out, after the sale, that their concrete foundation is faulty. A proposed bill would require that home sale disclosure documents inform buyers that they are unable to obtain state funded concrete foundation repair assistance when they waive a home inspection.
Crumbling foundations, due to faulty concrete that contains a corrosive mineral called pyrrhotite, have become a common problem for homes in the state. In order to save their homes, condominium associations, as well as owners of detached single family homes, must apply for CT state funding to repair or replace their failing concrete foundations. (Source: Concrete Crisis Remains Focus of Lawmakers – NBC Connecticut)
North Carolina constituents call for regulation of real estate developers in control of HOAs
Homeowners in North Carolina are asking state lawmakers to help regulate real estate developers that remain in control of HOA communities for many years, sometimes decades. One particular problem is that many of the planned communities built by corporate developers (such as Lennar) are constructing roads in HOA communities that don’t meet Department of Transportation standards.
When the developer finally hands over control of the HOA to its members, homeowners find out — too late — that they’re stuck with subpar private roads. Bringing roads up to state standards can cost HOA homeowners millions of dollars. And state government will not accept responsibility for public maintenance until NDOT approves construction.
Other privately-funded HOA infrastructure expenses for owners in planned communities include stormwater ponds, drainage pipes, retaining walls, and sidewalks. In both planned communities and condominiums, while developers control HOA boards, they tend to underfund capital reserve accounts, leaving it up to homeowners to make up the difference in the future. Homeowner-led HOAs are then forced to drastically increase HOA fees to cover the gap in reserves.
Property owners say legislative oversight — with enforcement — is necessary. (Source: Homeowners vs Developers: The fight for HOA control in North Carolina (wbtv.com))
Colorado legislature to debate creating HOA, Metro District task forces
Meanwhile, in Colorado, the Legislature is considering a bill that would create two task forces to study HOAs and Metro Districts in the state. The task forces would then recommend appropriate regulatory legislation.
As expected, the HOA industry opposes the bill. But hopefully Legislators will ignore the real estate and CAI lobbyists this time. (Source: Bill aiming to hold HOAs accountable has first committee hearing (denver7.com))
Virginia Senators defeat bill that would have created more incentives for HOAs to fine homeowners
Here’s a bit of good news on the Legislative front.
This year, Community Associations Institute’s Legislative Action Committee made an attempt to override Covenants and Restrictions of older HOA-governed communities in Virginia. The group convinced the Assembly to introduce VA HB 2098, a bill that would have made fines legal throughout the state, even iVirginiaf the authority to fine is not included in the HOA’s Covenants.
Property rights attorney John Colby Cowherd explains that, if the Legislature chose to pass HB 2098, it would result in more HOA fines, and fewer rights for owners to appeal those fines. The bill passed easily in the Assembly, but, thankfully, it was soundly defeated in the Senate.
You can view several state Senators speaking in opposition to the bill in this video of the Senate of Virginia Committee and Floor Streaming, February 21, 2023 – Regular Session – 10:00 AM. Fast forward to view the relevant commentary at 2:48:00 – 2:60:00.
Finally, some state Legislators are starting to acknowledge HOA overreach and fight back against HOA-trade group lobbyists.
Sources: February 22, 2023 – Regular Session – 10:30 am – Feb 22nd, 2023 (granicus.com)
2023 Statutory Amendment Would Stimulate HOAs to Fine Virginia Homeowners Even More, by John Cowherd, PLC (Feb. 8, 2023, updated Feb 21, 2023)
After many years in court, FL condo owner loses property to hostile investor, plans to appeal
The New York Times recently printed a full-page article highlighting the story of Howard Fellman’s years-long battle to keep his condo. Fellman has been the lone holdout in a condo termination attempt that began nearly 2 decades ago.
As explained in NYT , when he purchased his Boca Raton condo at Crystal Palms, the governing documents stated that the condo association could only be terminated if 100% of unit owners voted in favor of it.
However, over the years, an investor acquired most of the units in Crystal Palms, enough to vote himself on to the condo board, and appoint allies. After several years, the investor voted to amend the Condominium Covenants to change approval for termination to just 80% of unit owner interests, instead of 100%.
Condo law in Florida and many other states allow less than unanimous approval for a condo termination or deconversion.
Since the investor already controlled more than 80% of the vote in the condo corporation, it was easy to terminate the condominium, eventually forcing Fellman to sell on terms favorable to the investors. Fellman plans to appeal the court’s decision to force him to sell.
(Source article posted on LinkedIn)
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