Condo Special Assessments

[Bill Bumface]

Why new windows so close in succession? Botched envelope? If so, whoever did them last time without noticing really screwed everyone over.

[DownInFlames]

What do the condo board meeting and AGM minutes say? I'd hate to think a board would start major renovations like this without careful consideration. We're due to replace our windows next year, and we're talking about it now, and I've mentioned it at the last two AGMs.

[Ozy_Flame]

I think you're best taking out a loan (any room on a PLC?) and paying it off over the course of 5-10 years or so. Budgeting for this over two years still involves saving about $1666 per month just to pay it off. You could re-coup the money with an increased sell value when you decide to do so.

Just look at it as an investment in your property value, and hopefully it softens the blow.

[maverickstruth]

The first mention of the potential for the assessment was in the most recent board meeting minutes, which basically said (I don't have them in front of me) that this 'may' be needed, but the reserve fund might cover most or all of it. Honestly, I was prepared mentally for up to a $10k assessment after reading this thread... 4x that is just blowing me away.

Basically the letter we got said the following: "The Engineers findings have clearly shown that the siding, windows and doors have failed." When we moved in about 5 years ago, we were told that the windows had recently been replaced; I'm not sure of the full details behind what happened there. It's certainly something that I'll be asking at the meeting next week.

The kicker of all of this is that for the past 4-6 months if not longer, we've been seriously talking about moving as soon as our mortgage was paid off and making a lifestyle move elsewhere, so in 3 years if all went well. (The reason for waiting until then is that I'm in the 2nd year of running my own business. My partner's income covers our daily cost of living and everything I make is savings, mortgage lump sums, and the like. However, my income is quite small and very irregular right now). This was basically all we'd been talking about, weekly if not daily, for months... so it's an extra punch in the gut from an emotional standpoint, to be sure.

[maverickstruth]

To add - I'm not sure where our 2010 reserve fund study is (still looking for it), but the 2005 one which was the most recent when we bought basically said that the doors/windows would need to be done in 17ish years, and that in 10 years (ie. around now) 240k would be required to do repairs/maintenance to the siding.

[nik-]

Seriously. #### the landscaping. If they're doing major repairs and replacements, that's not time to be tacking on dirt and shrubs.

[maverickstruth]

Re: the landscaping, it's "removing overgrown trees and brushes and replacing some concrete steps and porches". Not sure of the details beyond that - but yes, it doesn't seem to make sense to lump all that in unless - for example - there is potential foundation damage from roots or something. Even then.

[bomba]

When is the next AGM? Sounds like a potentially dysfunctional board. Ideas I would pursue:

1) Self nominate for the board at the next AGM, get on and get them to send you all the e-mail threads and engineering reports so you can review personally.

2) Figure out who all the board members are and go to each one personally to talk to them about this assessment. Remember they only need a majority vote to pass something like this so in your case there could be 5 board members and only 3 are in agreement with this path forward. It would be good to figure out how many of the board members are in support of this plan and if there is some that are on the fence maybe you can dig into it with them a little more.

I'm currently on two condo boards and I can tell you some times there is a rift and disagreement between members on there with regards to capital spend. Keep in mind these are volunteers from all walks of life so some people are more concerned with making things looks pretty than the bottom line and what increases housing value and not.

Good luck!

[bomba]

Oh and I wanted to add that I've noticed that boards are far too trusting of the opinion of a property manager. For example in this specific situation, the engineers are recommending a path forward, but the reality is that they are also selling their own work in the process. These engineering companies will come out and do an initial "assessment" for a couple hundred dollars, but then if you want to proceed with the work they come back for a full assessment which costs a couple thousand dollars. Moreover, property managers for residential condos are generally administrators who have no qualifications on construction or building envelope engineering, but are quick to point to the findings of the engineering company.

/rant - I just went through this with one of my condo boards I serve on

So another idea would be to ask the condo board if they received a second opinion from another engineering firm. And even if you can get your hands on the first engineering firms reports and pass it by someone you know that is more construction minded to see if it passes the BS test.

[maverickstruth]

Thanks for the input, Bomba!

Our AGMs are in Fall so we've just passed that recently. However, I definitely hear you about seeing if a second opinion has been sought, both from the engineering standpoint and the contractor (estimate) side.

I should note as well that the board has already voted to use the reserve funds to move forward with the project (which of course is fine; that's what they're there for), but payment plans, etc. are TBD. They're doing it in phases, with an eye toward refining/adjusting the estimate after the first phase is complete.

The board is recommending a 36-month payment structure though the letter notes that this will increase the funds required because it draws out the timeline. I'm hopeful that we can get more information at the meeting next week.

One step at a time, right? :-)

[I-Hate-Hulse]

Originally Posted by maverickstruth

I should note as well that the board has already voted to use the reserve funds to move forward with the project (which of course is fine; that's what they're there for), but payment plans, etc. are TBD. They're doing it in phases, with an eye toward refining/adjusting the estimate after the first phase is complete.

Whoa - just as long as they are not using all of the reserve funds to do the items you mentioned. They are not permitted to take from the funds needed to replace the roof, or boiler, or other items of non affected items listed. If they do to make this special assessment "softer", they will be forced to special assess again to "replenish" what they took.

As a member or President of the Board I've special assessed many times but have always provided residents with full details and explanations as to the required expenditures - I hope they have done so with you.

[maverickstruth]

Originally Posted by I-Hate-Hulse

Whoa - just as long as they are not using all of the reserve funds to do the items you mentioned. They are not permitted to take from the funds needed to replace the roof, or boiler, or other items of non affected items listed. If they do to make this special assessment "softer", they will be forced to special assess again to "replenish" what they took.

As a member or President of the Board I've special assessed many times but have always provided residents with full details and explanations as to the required expenditures - I hope they have done so with you.

Yes - sorry I should have been more precise with my language. Based on what I've read, it is the amount that was set aside for these items that is being drawn down.

Unfortunately, we're really short on details at this point, other than 'these are all the things that need to be fixed and here's how much it's going to cost'. Reasons for why the estimated cost and timelines are not aligned with what was forecast have not been explained, certainly not to my satisfaction. I'm hoping to get some answers next week, at the very least :-)

[I-Hate-Hulse]

How the hell does siding "fail"? You're basically describing an entire exterior envelope repair. That would suggest there is a potential for water penetration and likely mold. Have they found that?

[maverickstruth]

Originally Posted by I-Hate-Hulse

How the hell does siding "fail"? You're basically describing an entire exterior envelope repair. That would suggest there is a potential for water penetration and likely mold. Have they found that?

No idea; nothing has been said that specifically. The word "fail" is an exact quote, though: "The Engineers findings have clearly shown that the siding, windows and doors have failed." I will note though that in the case of the doors, well, you can see daylight between our door frame and the door itself

Re the use of the reserve fund, this is what was said: "Based on the Contractor's quotes received, the total amount of the Envelope Re-Hab and Related Projects is excepted to be $4,182,906 with allowances for the project to be carried out over 4 years... Your Board of Directors has voted in favour of the Reserve Fund contribution for Phase 1 [my note: doing 10 of the units] of this project to be up to $438,055 with a total contribution from the Reserve Fund of $582,906 for the entire project. This amount is as per your last Reserve Fund Study completed by 2010."

[DoubleF]

Condo boards are hit and miss. Mine is great. Sure, they jacked up condo fees every year for the last few years at maximum per bylaws because of a few serious issues that look like they may come up in about 5-10 years and they cluster####ed some landscaping a few years back, but as mentioned before by others, they're all volunteers. Luckily mine is populated with veteran condo board individual, unit owners who want to focus only on improving value of units and we even have real estate law experts on the board.

Special assessments right now SUCK. Per my condo board, all rates have doubled and even tripled because of price increases of contractors due to shortages (thus overcharging) from the June floods. They're holding out and crossing fingers that nothing goes super serious so that they can ride out this pricing bull#### before doing a special assessment on an elevator built in the 1970s. A big project is currently underway on our parking area, but that's all reserve fund covered so far. I was expecting something like $5k, but I guess after reading posts I should really spend time to put away a bigger portion until I know what the elevator will cost me. I tried asking at the last AGM and the board + property manager refused to give an answer on a ballpark even. I think even they are furious with the quotes they received and are currently looking for additional quotes. They seriously wouldn't even answer whether they thought it was a $500k job vs 2 MIL+ so I couldn't even estimate what my portion would be.

Always get to know the condo board. One thing my board was discussing (because they're pretty honest people) is the fact that they essentially get monopoly to make decisions because no one shows up to the AGM or meetings and thus they're the only ones who vote.

[Hack&Lube]

I have yet to attend an AGM or met my board, but after this thread I definitely will. I live in a much more upscale condo full of wealthy professionals so I was hoping that would translate to smart, responsible, and knowledgeable people being on the board as well but of course that might not be the case. This could turn into that episode of Frasier.

[Canehdianman]

I want to thank everyone in this thread for re-affirming that I made the right decision when I bought a house instead of the inner-city condo I was considering.

So many of my friends have been hit with special assessments in the past few years, most of them due to shoddy workmanship with regards to work done (sometimes during contruction) on the building envelope.

Anyways, to be a little helpful, I'll add an article from the Alberta government on updating condominium laws. Unfortunately, it doesn't seem to address the expiry of the limitation period for shoddy work, but what can you do. Any additional protection is better than what we have in place now.

http://alberta.ca/release.cfm?xID=36...A597DB91237015

[maverickstruth]

Appreciate the input, everyone. Now that the emotional shock has worn off (mostly... I think...), it's now down to problem-solving mode.

We will definitely be pushing for more information at the meeting next week.

Until then, from what I've been seeing online it seems like something like a HELOC may be our best bet?

This is all new to us - the only debt we've ever had is the mortgage (which while it does put us in a far better situation than most of our neighbours, I'm sure, makes this a far bigger unknown). From what I've been able to see, our mortgage lender doesn't do HELOCs, only refinances. Is getting a loan like this similar to a mortgage in that you want/need to shop around to get the best rate, or are they all pretty much the same? Is a HELOC likely our best option, or are there other avenues available to us?

Again, I really appreciate y'all sharing your experiences and insights.

[I-Hate-Hulse]

A secured HELOC is probably the way to go to get the lower rate. 3.5% is more or less the going rate, but talk to a mortgage broker.

[I-Hate-Hulse]

Originally Posted by Canehdianman

I want to thank everyone in this thread for re-affirming that I made the right decision when I bought a house instead of the inner-city condo I was considering.

So many of my friends have been hit with special assessments in the past few years, most of them due to shoddy workmanship with regards to work done (sometimes during contruction) on the building envelope.

Ever watch Mike Holmes? The same crappy people working on condos are the same crappy ones working on new build houses.

It's a crap shoot either way - the difference between a home owner and a condo board being confronted by big problems is that the home owner gets to ignore the problem and see if the next buyer notices.

It's like buying a car - you want the condo/house that's been maintained constantly and "done right". I've been in several houses listed for sale that needed thousands of dollars in fixes (ie the one that drained water from the patio slab back into the basement) but zero mention of it from the selling agent.