Condo Special Assessments

[Canehdianman]

Originally Posted by I-Hate-Hulse

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.

At least with my house I have the option of doing the work myself and saving $40k.

[maverickstruth]

Originally Posted by Canehdianman

At least with my house I have the option of doing the work myself and saving $40k.

And doing preventative maintenance, staggering it over time, so that it doesn't all come up at once.

[Hack&Lube]

Originally Posted by maverickstruth

And doing preventative maintenance, staggering it over time, so that it doesn't all come up at once.

That's what well-managed condos do, do preventative maintenance, properly manage the reserve fund, increase fees in increments when necessary, etc.

One thing I tried to avoid when looking at condos were the shorter, cheaper developments made of oriented strand board/plywood. They seem to have more problems with rot or structural problems over time than a concrete high-rise but that may be a generalization that is inaccurate.

[maverickstruth]

Yeah, in this case it's a townhouse complex with wood siding. The maintenance, etc. was all written into the reserve fund and it was scheduled to happen over a number of years. In fact when we bought, we had a condo docs check done and they came back saying that it was one of the best run properties and healthiest reserve funds they had ever seen.

Hindsight and all that, I guess. I just like being more in control of my own destiny - which is why when the opportunity arises, we definitely won't be moving into another condo situation! :-)

[Sluggo]

Buump... So hows 2022 going for everybody?

Just had some paperwork slid underneath the door saying we owe north of 40k added on to another 20 k we payed several years ago. The issue is many of the owners are seniors on fixed income and I suspect many will mail the keys to their banks or just simply not pay/foreclose. The second assessment was delayed 1 year ago because of Covid so now my roommate and I have the prospect of renewing for nearly double the previous rate (4 year term), if that is even how it works...

So anyone have do deal with this more recently? I want to have a idea how will the bank behave with respect to this... Will they tell us to pound sand and renew at the current rates? Or will they tell us to do the 40k separately?, or will it be blended based off of roughly 40 k added to 200 k at a low rate?

Like I said earlier I suspect there will be lots of not payment/bickering (Seniors+zoom is going to be fun ) so this may not get settled anytime soon. Obviously we tried the insurance route and was denied on earlier payments since its envelope junk.

Sorry if this is a bit disjointed I had a Covid booster yesterday and feverish with almost no sleep. Any advice or potential solution not involving a jerry can of gasoline would be welcome, thanks

[Wormius]

After reading through this thread again and being interested getting a condo at some point down the road, are there any conflict of interest resolutions that require the condo board to disclose a pending special assessment as soon as they are aware? Like, if you see members of the condo board start putting their condos up for sale en masse, they couldn’t do that, right?

[Regular_John]

Originally Posted by Wormius

After reading through this thread again and being interested getting a condo at some point down the road, are there any conflict of interest resolutions that require the condo board to disclose a pending special assessment as soon as they are aware? Like, if you see members of the condo board start putting their condos up for sale en masse, they couldn’t do that, right?

I’m paraphrasing a bit here, but during the assessment our previous place went through we also had an AGM & the typical board nominations. The lawyer that was on the project made of point of saying “This assessment is already on the books, so I need to warn anyone thinking of running for the board and cancelling the work you would be legally obligated to have the work completed at this point.”

I know at one point one of the owners (not on the board) was trying to get the work cancelled and all mention of the assessment removed from board minutes… they were also advised that was illegal.

I’m not a lawyer and I’ve since sold that unit, but I advise anyone thinking of buying a condo to go in assume there 100% WILL be assessments at one point or another. It might be $5k, it might be $50k, either way property breaks down, and requires expensive repairs over it’s lifetime.

[MarchHare]

Originally Posted by Wormius

After reading through this thread again and being interested getting a condo at some point down the road, are there any conflict of interest resolutions that require the condo board to disclose a pending special assessment as soon as they are aware? Like, if you see members of the condo board start putting their condos up for sale en masse, they couldn’t do that, right?

I suspect (caveat: but can't say with 100% certainty) that the bylaws governing pretty much every condo building will stipulate that meeting minutes for all board meetings must be made available to unit owners within X days of the meeting. But then again, who actually bothers to read the meeting minutes?

[Regular_John]

Originally Posted by Sluggo

Buump... So hows 2022 going for everybody?

Just had some paperwork slid underneath the door saying we owe north of 40k added on to another 20 k we payed several years ago. The issue is many of the owners are seniors on fixed income and I suspect many will mail the keys to their banks or just simply not pay/foreclose. The second assessment was delayed 1 year ago because of Covid so now my roommate and I have the prospect of renewing for nearly double the previous rate (4 year term), if that is even how it works...

So anyone have do deal with this more recently? I want to have a idea how will the bank behave with respect to this... Will they tell us to pound sand and renew at the current rates? Or will they tell us to do the 40k separately?, or will it be blended based off of roughly 40 k added to 200 k at a low rate?

Like I said earlier I suspect there will be lots of not payment/bickering (Seniors+zoom is going to be fun ) so this may not get settled anytime soon. Obviously we tried the insurance route and was denied on earlier payments since its envelope junk.

Sorry if this is a bit disjointed I had a Covid booster yesterday and feverish with almost no sleep. Any advice or potential solution not involving a jerry can of gasoline would be welcome, thanks

Ugh happy New Year indeed

Who’s “the bank” in this context? Your usual bank that you’re hoping to finance through? A group loan the board was able to secure and needs to draw additional funds on? Something else entirely?

Assuming you financed the initial $20k in 2019/2020 and now need to borrow an additional $40k it would likely come down to the terms of the initial loan, it was a lump sum at a certain rate you’re gonna get stuck with the 2020 rate, it was a line of credit you may be able to extend it for the additional $40k at the rates outlined in the LOC.

Our board did secure a group loan for the bulk of the assessment, but over the course of the project cost went up (hello asbestos!) and each unit got an additional bill that had to be paid in cash as the group loan couldn’t be extended at that point.

It sucks right now, but I’d say recover form your booster and ask those questions of the lender, whomever it may be.

[Hemi-Cuda]

I've owned a condo for 16 years (that we finally just sold) and I never got hit with a special assessment in that time. And that's with some hail damage to the building's roof and a water heater that broke and caused some flooding in the parade. My condo fees were always higher than other friends that were in condos though, so do higher fees end up offsetting special assessments? I'm assuming that meant the condo management company had a decent slush fund

[Regular_John]

Originally Posted by Hemi-Cuda

I've owned a condo for 16 years (that we finally just sold) and I never got hit with a special assessment in that time. And that's with some hail damage to the building's roof and a water heater that broke and caused some flooding in the parade. My condo fees were always higher than other friends that were in condos though, so do higher fees end up offsetting special assessments? I'm assuming that meant the condo management company had a decent slush fund

It’s possible you struck gold and owned in a perfectly managed/funded building and the higher fees covered the incidentals. Or you’ve just got a horseshoe up your butt, either way I advise you purchase many lottery tickets.

[CorsiHockeyLeague]

Originally Posted by Sluggo

The second assessment was delayed 1 year ago because of Covid so now my roommate and I have the prospect of renewing for nearly double the previous rate (4 year term), if that is even how it works...

I'm confused on this - it sounds like you're talking about a mortgage renewal? Why would an assessment lead your rate to double? I can understand if the 40k is being folded into the principal, maybe, but even in that case the rate doubling seems crazy.

[DownInFlames]

Originally Posted by MarchHare

I suspect (caveat: but can't say with 100% certainty) that the bylaws governing pretty much every condo building will stipulate that meeting minutes for all board meetings must be made available to unit owners within X days of the meeting. But then again, who actually bothers to read the meeting minutes?

The new condo property act requires boards to email the minutes to any owner who requests them. It used to be you only had to make them available upon demand and often at a price. So there’s no excuse now to not be aware of upcoming expenses.

[I-Hate-Hulse]

Originally Posted by CorsiHockeyLeague

I'm confused on this - it sounds like you're talking about a mortgage renewal? Why would an assessment lead your rate to double? I can understand if the 40k is being folded into the principal, maybe, but even in that case the rate doubling seems crazy.

I think Sluggo is saying exactly what you say - that he would have to add the $40K to his mortgage principal. I think he might have gotten a kickass rate in the past and if he had to re-finance now the rate would be much higher which is not surprising.

Sluggo - go talk to your mortgage broker or bank. Maybe they can work some magic for you. They will know all your circumstances and can give better advice than CP.

[Sluggo]

Originally Posted by jaydorn

Ugh happy New Year indeed

Who’s “the bank” in this context? Your usual bank that you’re hoping to finance through? A group loan the board was able to secure and needs to draw additional funds on? Something else entirely?

Just the usual bank that holds the loan that we will have to fold the new assessment cost into. Payed the original assessments out of pocket but 40 is too steep this time. If it was not for the covid delay, we would have been able to lock it all in last years rates which were 1.XX% less then they are now.

Originally Posted by I-Hate-Hulse

Sluggo - go talk to your mortgage broker or bank. Maybe they can work some magic for you. They will know all your circumstances and can give better advice than CP.

Yeah I will, just needed to vent a little in order to help get some sleep instead of constantly thinking about it and not sleeping.

[Wormius]

Originally Posted by jaydorn

I’m paraphrasing a bit here, but during the assessment our previous place went through we also had an AGM & the typical board nominations. The lawyer that was on the project made of point of saying “This assessment is already on the books, so I need to warn anyone thinking of running for the board and cancelling the work you would be legally obligated to have the work completed at this point.”

I know at one point one of the owners (not on the board) was trying to get the work cancelled and all mention of the assessment removed from board minutes… they were also advised that was illegal.

I’m not a lawyer and I’ve since sold that unit, but I advise anyone thinking of buying a condo to go in assume there 100% WILL be assessments at one point or another. It might be $5k, it might be $50k, either way property breaks down, and requires expensive repairs over it’s lifetime.

I guess on the flip side then, if you’re looking at a condo and want to know if there is possibly a special assessment in the future, there might not be a lot to go by?

[Regular_John]

Originally Posted by Wormius

I guess on the flip side then, if you’re looking at a condo and want to know if there is possibly a special assessment in the future, there might not be a lot to go by?

You should have opportunity to review all condo documents/minutes as purchase condition, either through a review service (should run you $200-$400) that specializes in such things, or just running through them yourself.

I know my realtor puts in ‘document review’ as a sale condition along with the standard property inspection/walk through stuff. He also mentioned he’s had deals fall through because buyers didn’t like what they saw in the documents.

Having said that, with our last complex there was a buyer who bought about 2-3 months before the formal notice was given and they were livid. The board asked her if she’d done a document review, as the possibility of it had been in minute minutes & AGM documentation for at least 12 months prior… they had not done a review as part of their purchase.

[I-Hate-Hulse]

Originally Posted by jaydorn

I’m not a lawyer and I’ve since sold that unit, but I advise anyone thinking of buying a condo to go in assume there 100% WILL be assessments at one point or another. It might be $5k, it might be $50k, either way property breaks down, and requires expensive repairs over it’s lifetime.

Quoted for emphasis - especially apartment style condos. The unpredictability of special assessments is swift and brutal. In theory, a good Reserve Fund report will over the routine and expected expenses to replace failing equipment.

Unfortunately, it's the unexpected that really kills you - developer incompetence (i.e envelope problems, security deficiencies) but most of all - strugglers residing in the complex causing water claims.

Things are so bad right now, I would only consider purchasing an apartment style condo that is structured as an investment somehow. That way if the dreaded SA happens, it's at least tax deductible. This can get a little complex though.

This whole thread is an interesting counterpoint to the "moar condos now" thread also going on elsewhere on CP. I would bet handsomely that a 4 year term on a condo board (and a $500,000 investment on their part) would change these proponents tune very quickly..... I have always thought it ironic that many of the greatest proponents of condos chose not to live in one themselves....

[The Fisher Account]

As the owner of two condos, both of which have had special assessments and haven't appreciated a cent in a decade, I implore anyone thinking about purchasing one to run FAR, FAR away.

[Regular_John]

Originally Posted by The Fisher Account

As the owner of two condos, both of which have had special assessments and haven't appreciated a cent in a decade, I implore anyone thinking about purchasing one to run FAR, FAR away.

As some one who went through a $45k assessment, and eventually sold for less than we paid, I’ll balance this out a bit and say “Know what you’re getting into, and be realistic about the possible outcomes”.

Despite getting burned on our purchase, we still had a roof over our heads for 10 years, and managed to pull enough equity for a large downpayment on our current place due to the balance of the mortgage we’d paid down.

Do I regret buying that specific unit as my first home? Yes absolutely, do I regret making a purchase at all? No, I do not.

Time in the market not timing the market, blah blah blah.