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Condo boards everywhere are unprepared for serious repairs

100 points by prostoalex 5y ago

MattGaiser 5y ago
I would be extremely reluctant to own a condo because condo boards revert to the mean person's attitude to solving problems of putting it off until it is staring them in the face. Grandparents owned one where the board deferred thousands in repairs until it became hundreds of thousands.
- toomuchtodo 5y ago
  There is an easy fix. Condo finances should be public record, and when repairs are needed, the local code/planning/inspector office reviews with the condo board, approves if necessary, and then puts encumbrances on the units in the complex. Those who can afford the cost pay right away, those who can’t have essentially borrowed against their equity to finance their share of the repairs, with the loans paid back with interest when the property is sold. Transparency is one part, but also independent oversight and enforcement of the work necessary.
  - moralestapia 5y ago
    This is the right answer. Some repairs should be mandatory, if the owner can't pay it should be treated as any other debt. If the owner can't afford repairs, it should sell the unit, otherwise the damages are greater for all other owners.
    - deleted 5y ago
      [deleted]
    - briefcomment 5y ago
      I guess there's the potential problem of the inspector suggesting repairs for the sake of business. Mandatory repairs would likely be gamed unless there are robust checks and balances.
      - klodolph 5y ago
        How much of a problem is this? In most places, there are laws regarding the conflict of interest for building inspectors. For example, building inspectors may not be allowed to be involved in the any building business at all, with some exceptions carved out for making modifications to their own home.
  - klodolph 5y ago
    Could you elaborate on how this is different from the current system? With the current system, the condo board decides that repairs are needed, assesses fees, and makes the repairs. The fees are either paid immediately by the condo owners, or the HOA puts a lien on the condo. Local laws require larger buildings to be inspected on some scehdule... in New York I think there's a type of inspection (FSPM: fire safety and property maintenance) that is required every three years, for all multi-tenant residential buildings. From what I can tell, the big problem is that the condo board is just made up of people who own the condos, and the bylaws of individual HOAs require certain actions by the condo board to be approved by the owners. The other problem is that Florida has weaker laws for condos than other states.
    - toomuchtodo 5y ago
      If the condo board doesn’t have the will or the unit owner votes to approve the work, it won’t be done.
      - klodolph 5y ago
        Wouldn't it be more straightforward to tighten the building codes? The condo board is already required to perform repairs to keep the building up to code.
        toomuchtodo 5y ago
        > The condo board is already required to perform repairs to keep the building up to code. A collapsed condo building disagrees.
        klodolph 5y ago
        > A collapsed condo building disagrees. That's a really cutesy way of putting it. My take on this is that the building codes in Florida are perhaps too lax, although I'm not an expert on building codes. From the reports I've been reading, the relevant inspections were to be done on a 40-year interval, and the building lasted less than 40 years (so its first inspection, in service, was never conducted). This, to me, indicates that if the building was ever up to code, the code was too lax. If the maintenance was done to code, then the code was too lax.
- 908B64B197 5y ago
  Not only that, but with international buyers, they might only be interested in holding the asset for resale. And the contractor building the place knows it...
- glasss 5y ago
  I imagine the phenomenon is due to multiple people being responsible but no singular person being accountable. There is probably a board director / president that SHOULD be accountable, but it's easy for them to either consciously or subconsciously blame the rest of their board for inaction. https://en.wikipedia.org/wiki/Responsibility_assignment_matrix https://en.wikipedia.org/wiki/Responsibility_assignment_matr...
  - abeppu 5y ago
    Well, and: - Long term problems can outlast the tenure of any board member. - Board members are volunteering. What sort of "accountability" is appropriate? Can you pin millions in liability on whichever unit owner threw their hat into an election in the year preceding some terrible outcome? Why would anyone be a board member then?
    - lotsofpulp 5y ago
      See underfunded retirement benefits for government employees and unmaintained infrastructure. Even setting aside the issue of incentives in the short term versus long term, by the time leaders and voters will be gone, the voters are usually not willing to pay higher taxes or condo fees, nor are they even in a position to properly evaluate and prioritize problems.
  - MattGaiser 5y ago
    To be accountable, a person needs to be in charge. Board president is often just one vote of many.
- OnionBlender 5y ago
  I rent but it feels like I'm just throwing away money every month compared to owning a condo. I used to own a condo but sold it years ago and moved to the U.S. for work. Selling it was idiotic in retrospect considering how much the value would have increased these past few years.
phlipski 5y ago
I sat on my condo board for a decade and was president for two years. My experience is that the board is not the problem - the non board sitting owners are. Our complex was comprised of 5 separate 3 story buildings. Three of those building had bad water leaking problems but when we tried to raise money for repairs - the people who weren't suffering any interior water damage wouldn't vote yes. Many buyers don't read the fine print or dig into the boards finances before they buy. We ultimately passes a special assessment but not without some serious "log-rolling" to get everyone on board. Nobody wants to pay for what is a collective problem. Sometimes I think condo's shouldn't even be legal because of this. They should all be apartments with a central management company. The solution is really tightening fiducial regulations on condo HOA's. There could easily be a formula of like 10% of annual dues need to be put in a rainy day fund or something... Banks have started to tighten their lending around condos and ask for more up front financial info.
- mchristen 5y ago
  I can relate to this. My parents lived in a 22 story building that had water leaks throughout the entire building from construction defects. Until my mom literally got herself elected to be the president of the condo board nobody seemed to care that the building was broken. Many years later and a lawsuit against the developer, the building association and the owners were finally able to get compensated AND have the construction defects fixed. There is no way you can financially prepare for the magnitudes of repairs needed in their case.
- breck 5y ago
  We recently bought a condo after renting in the building for three years. The board, management and staff of our building are phenomenal—an inside bit of information we knew from having lived here. We looked at a large number of buildings in the area, and was surprised that maybe 1% of the information you need to assess board/management competence is available online. Generally we'd have to do our own DD talking to people in the buildings. IMO it makes a huge difference, >10% of the purchase price should be on the quality of the board and management. Seems like a startup opportunity to be Yelp for Condo Boards/HOAs. (I'm sure there are a dozen+, of course. I haven't done the DD on that!)
spoonjim 5y ago
It's not just condo boards, it's everything in America... physical infrastructure, corporate R&D, software security bugs. It's more attention grabbing and personally profitable to do something new than maintain something old, so people kick the can down the road and cash in, making the problem someone else's (and a bigger problem). Even worse, America's soft power / cultural influence is infecting other countries with this mindset, which once used to have family owned businesses managed on a centuries-long mindset. "A society grows great when old men plant trees whose shade they know they shall never sit in."
- somethoughts 5y ago
  I agree here. And its not just America but really just any government in any country. I've come to think of governments/countries as just a very, very extensive, giant home owners association that happens to float its own currency, fund its own schools, etc. The HOA fees are basically taxes and often times fees are accessed by the size of your unit. Thinking from an HOA perspective - you then become comfortable with all the warts and inefficiencies that a country/government may have. Serving on the HOA board is quasi-voluntary, tends toward folks with free time and a desire for power, no one is particularly accountable. The home owners themselves are a fickle and diverse bunch, the vocal ones mostly complain about stuff, the silent ones don't say anything and are just getting on with their lives and all have varying attitudes toward expenses for improvements and investment for the future.
  - 35fbe7d3d5b9 5y ago
    > I've come to think of governments/countries as just a very, very extensive, giant home owners association that happens to float its own currency, fund its own schools, etc. I'm always nervous about this type of reductive thinking. It tends to go wrong for the same reasons that "the government's checkbook should be managed like a household budget!" goes wrong. Your HOA doesn't control the financial systems of every other HOA in the world and can't freeze the assets of HOAistan because their premier is causing problems. Your HOA doesn't spend nearly half of its funds on a military that has first nuclear strike capability against the D.P.R.H(OA). Etc. Probably the biggest gap in this thinking: if you don't like your HOA, you can sell your house. In this market there's no lack of buyers and you have tons of options – other HOAs, unencumbered properties, etc. This sucks, sure, but compare it to emigrating to a country that you'd like to live in. It's miles apart.
41209 5y ago
This has given me serious pause on buying a condo. If I rent the moment I have unfixed issues I can leave ( breaking a lease is pretty easy in my experience). But I'd hate to buy and then deal with bad neighbors or building issues
- seibelj 5y ago
  The same issue is with houses, and the bigger the house the bigger the issues can be. For a big condo complex, if a problem is truly big, the association can do a bond offering that can be paid off over a very long time (decades).
  - MattGaiser 5y ago
    You don't need your neighbours approval to be pro-active about repairs.
  - bluGill 5y ago
    When it is my home I can make decisions. I can decide the pool isn't worth it and tear it out, or fix it. I can notice leaks before they cause structure problems (or choose not to fix them and face the more expensive bills). With a condo those choices are not yours, and the decisions might not be yours either.
- ocdtrekkie 5y ago
  I would strongly advise against buying a condo in the current environment. I am fighting to have structural issues with a building I own a unit in dealt with, and it's quite the thing. One of the things I find amazing is how unclear the declarations of responsibility are. For instance, there's common elements, which the association is responsible for, and limited common elements, which are elements that you are responsible for, but the association can demand you fix as needed for the benefit of the building whole. I think there's a third category of building limited common elements. Also, I have a garage, but it's not actually mine, I own the right to exclusive use of it, but not the garage itself, but I also end up on the hook for repairs when it breaks... What's fun about that is associations basically place the unit owner responsible for all the likely-to-need-work elements that are exterior. Like windows and the balcony, despite both being exterior building elements, the latter made of the same structural concrete as the rest of the building. But if they need to resurface the balcony, you're going to pay for it, and they're just going to tell you how much you have to pay, or else. (I believe my grandmother once got a $15,000 bill for the balcony at her place, and that's just a mandatory special assessment the association can decide to employ. Good luck if you're living paycheck-to-paycheck.) And then there's just stuff that's completely unlisted in the terms: Building structure is the association's problem, the drywall is generally defined as a unit owner's problem. You know what isn't mentioned at all: Insulation, which is outside the drywall, but not structural. The building can probably refuse to deal with it, and your insurance company can probably refuse to cover it.
abeppu 5y ago
So, condos aren't that old in the US. Is there some similar structure in another country with older urban housing stock that works better? For demographic, environmental and economic reasons, it seems like more people will and should be living in cities with some density, so we need _some_ well-functioning arrangement for ownership for something other than single family homes. Is there not some country with a lot of heritage 18th and 19th century urban buildings which are successfully inhabited by many owners? (Given the intractability of strong tenant protections in most of the US, I don't think it's reasonable to take the position that if you can't afford a whole house you should rent.)
- 41209 5y ago
  Many condos are converted apartment buildings. You can easily find condos which are 100 years old. They do some nominal renovation, but the bones are essential the same
- sethhochberg 5y ago
  In older urban areas in the US (particularly NYC), you often see co-op buildings. In a co-op, you buy shares in a corporation that owns the building and get a proprietary lease entitling you to use of a certain amount of space, while in a condo you are buying the deed to the individual apartment you own. On paper they're different means to the same end. In practice, condos typically have much less stringent approval requirements - board approvals, background checks, character references, and providing a summary of your complete financial situation beyond the details of how you'll be paying for the apartment are normal in a coop purchase process. The result of this is co-ops tend to have lower turnover and stricter rules overall - in addition to often being cheaper. They also have their problems, because the approvals process can be a mechanism for discrimination against protected classes. But the general perception is that co-ops are harder to get into, and harder to get out of, so the residents (at least in theory) tend to be long term and community minded. In most states, condo boards don't get the right to be selective, and must accept the first applicant who is minimally qualified. Condos tend to give more power to the individual owner, coops tend to give more power to the coop board. I can't speak to how other parts of the world handle this problem, but even in the US there is at least one other common model.
OldHand2018 5y ago
Florida, like all the other states that have a lot of condos (New York, Hawaii, Illinois, etc), have their own laws and do not follow the uniform condo laws that other states have. The laws of these states are responses to problems they have seen with condos in their own states. Florida is going to learn a lot from this tower collapse and will pass a bunch of laws to try to prevent this from happening again. It will be very expensive for the condo owners. Some may even go bankrupt. But there will not be a huge wave of collapses 10 years from now. Up here in Illinois, there are a number of laws that would reduce the likelihood of what happened. - Condo boards have a fiduciary duty to protect the value of unit owners to the extent possible - including conducting proper maintenance. - Condo boards must conduct reserve studies every 5 (?) years that go into detail about the age and condition of every major component of the building (including the structure) and the cost of replacement or repair. Then they have to make sure that the reserves will cover the expected costs. - Condo boards can enact special assessments for repairs without unit owner approval as long as it is less than 115% of the total association dues for a full year. - All board meeting notes, financial statements, inspections, contemplated repairs or special assessments, etc must be provided to condo buyers. Legally, a buyer can cancel a sales contract at any time with zero penalty up until 2 days after all the documents have been delivered to the buyer. This is also given to the mortgage company. You cannot get a mortgage on a condo in Illinois if the association is not paying enough into the reserve fund. You can expect to see some of this stuff in Florida and you can expect that it will make some buildings “unsellable”. But they will recover - there is a price for everything, and hedge funds at least are sitting on tons of cash. It would really suck to live in one of these buildings. But at least you will stay alive.
- deleted 5y ago
  [deleted]
grumblenum 5y ago
Diffusion of responsibility and the tragedy of the commons are pretty textbook psychological phenomena that I’m surprised more people seem to be unaware of. I would be surprised if any committee with custody of any asset were prepared to take quick, decisive, and costly action in the long-term interest of said asset.
breck 5y ago
This has been such a tragic story to follow. Especially as they pull children out of there. I'm not a civil engineer, but have been on those subreddits and blogs reading about the investigation. Curious if anyone knows: is there an equivalent of a "blackbox" data recorder for tall buildings like this? If not, should there be? Would there have been signals given off from the columns that may have forewarned of disaster? What kind of vitals would be good to collect? It seems visual inspection is a bit too subjective.
- h2odragon 5y ago
  The columns gave off signals; there's pictures from the reports of the concrete cracking and rusting rebar. There wasn't any need for fancier sensors and data recording technology than was used.
  - MattGaiser 5y ago
    Reminds me of that West Wing episode and the parable of the man who lived by the river. "I sent you rust, cracks, and an engineers report, and your building still fell down."
  - breck 5y ago
    > There wasn't any need for fancier sensors and data recording technology than was used. Obviously there was. A common refrain in all the civil engineering discussions I'm reading is that this inspection report was in bottom 10%, perhaps bottom 1%, but not 0.00001% off the charts atypical. It's quite apparent that we need more dimensions of data—if for nothing else than to make it crystal clear when a situation is approaching disaster. We also still do not know what actually happened (and may never know), so for post-mortems this sort of thing seems important. What simple steps can be done to reduce the probability of this happening again by 1,000x+?
    - h2odragon 5y ago
      What if it wasn't atypical because there's lots of buildings showing damage like this? Coastal Florida, especially; is harsh environment for building and they've had 40+ years of "slap it together as fast and cheap as possible" construction there. It don't matter how much data you have about the tidal wave bearing down on you; you has to move out of its way regardless.
015UUZn8aEvW 5y ago
It’s not clear that condo units have higher long-term capex costs than single-family homes; arguably economies of scale make their capex lower as a percentage of home value. So the problem isn’t a problem of cost per se, it’s a collective action problem. The issue is that the buyers of condo units don’t really pay much attention to the condo association’s reserve balance. A current owner who contributes $1 to the reserve fund won’t see a corresponding $1 increase in the value of their unit. The increase, if any, will likely be a small fraction of that. So an owner who’s considering selling in the next few years - which is common, since the tenure of condo owners is lower than that of single-family homeowners - is rational to fight attempts to fund the reserve. They’re also rational to keep monthly condo fees as low as possible, since buyers do look at the fees. But that also makes preventative maintenance difficult.
- ashtonkem 5y ago
  Bigger condos often include shared facilities and industrial scale equipment that blurs that picture a lot. Not having a pool probably tips the scale in favor of individual houses in many cases. The lowest cost is probably shorter condo buildings without pools. These won’t include a lot of extra equipment that detached houses don’t use, can use closer to standard sized HVAC and water systems, and benefit from increased economies of scale over detached single family dwellings.
- zippergz 5y ago
  Right. As the owner of a single-family home, I control my destiny. Yes, I may pay more dollars to replace my roof than I would pay to replace the roof on a condo building. But I am in complete control of when it happens, who does it, and how it is done. In a condo building, I am at the mercy of my neighbors to agree to the repair and how it is done. And in any sufficiently large association, there will be at least a handful of people who will fight any expenditure at all (yes, this is rational for short-term owners, but in my experience it tended to be the long-time residents who were the loudest complainers...). Frankly, I don't have enough faith in humanity to put this kind of trust in a bunch of strangers.
- salicideblock 5y ago
  That problem is completely avoided in Belgian law, via the following rule: When you sell your fraction, you get the corresponding share of the reserves. When you buy a fraction, you must contribute the corresponding share of the reserves.
giantg2 5y ago
"Condo boards everywhere are unprepared for serious repairs" As are local governments, county governments, and state governments unless they get a big grant from the level of government above them. Even federal infrastructure is in disrepair. My locality had to redo the main street and the water and sewer lines under it. We had to get a grant from the state and they also put a 40% surcharge on our water bills to pay for it.
- entropicdrifter 5y ago
  IMO the headline should say, "Years of corporate bailouts, military bloat and tax cuts have devastated the US's ability to maintain even the most basic of infrastructure"
  - ashtonkem 5y ago
    Plus really bad assumptions about how long reinforced concrete lasts, despite clear evidence that it is actually a short lived substance.
djb_hackernews 5y ago
This topic is interesting. I am on the condo board in a 20 unit association, mostly attached townhomes. The biggest issue is the person in the "owners" unit, the one with the most invested, not playing ball with the other units. That said if anyone has tips on good condo management companies in the Boston area, let me know!
softwaredoug 5y ago
Our small HoA was stuck with owning the under street sewage and water system because 20 years ago it didn’t meet city code. So the builder made it part of the HoA. Nobody can find documentation of sketchiness 20 years ago, and the original owners were less worried about what might happen decades down the line. Sigh…
chiph 5y ago
My townhouse community just found out about a construction defect that was causing water damage to some homes (some flashing was never installed). The builder is long-gone, having merged a couple of times over the years into one of the big national firms and is not able to be sued. The board engaged the community's law firm to look into whether the community needed to be the one to pay for repairs or whether it should be left to the individual owners. [0] The law firm did some truly amazing hair-splitting and decided that the inner part of the walls started at the inside of the brick & vinyl, and not with the wood sheathing underneath them, which is where the flashing would have been fastened. So the good news is I'm not going to be hit with an assessment. The bad news is the board had the community's lawyers draft a finding against their own community. [1] [0] Ordinarily in townhouses & condos, the owner is responsible for repairs to the inner part of the walls, and often the exterior windows & doors. You know this when you buy the house. [1] Which is actually correct - the law firm's clients are the board, representing the community. Not the community itself. Doesn't change that it stinks.
markus_zhang 5y ago
We are facing the same issue (Montreal, pre-WW2 era condo building). I think the key is to: 1 - Gather some condo owners who are serious about the issue and want to help so that board doesn't get into a perpetual persuation war with the owners. 2 - Be transparent with costs and contracts. Yeah I get it that in construction there is a huge variance on the same job (say $5,000 and $30,000 for the same job and laymen can't tell the difference and in fact the $5,000 one might be better in quality). 3 - Hire a good administration company who is quick to response. his is optional if someone on the board can do the admin job but since everyone is working it's difficult to find such guy.
ashtonkem 5y ago
Condo issues aside, another takeaway is that reinforced concrete is a bad material as it’s currently used. You’re lucky to get 50 years out of it with perfect maintenance, and places like Florida are even worse because any water ingress is guaranteed to be salt water. A much more reasonable approach would be to ban iron or steel reinforced concrete in new Florida construction, but I doubt that the government would be willing to do that.
- tomatotomato37 5y ago
  You'd be surprised. Florida has some of the highest building standards in accordance to disaster/hurricane protection in the US thanks to the major hurricanes of the 80s; this may prove a watershed moment for the same to happen for corrosion prevention & maintenance standards today. Of course that won't do anything for buildings already standing (in fact this condo would have also been rolled over by a hurricane too given its construction date) but it could be revolutionary for new construction
- CincinnatiMan 5y ago
  As someone not familiar with large-scale building materials, what should be used instead?
  - ashtonkem 5y ago
    The short answer is “don’t build that tall”. There really isn’t any material available to build that tall that cheaply without it being throwaway work, so don’t. Building tall is really only necessary because of the amount of space we set aside for cars, both for parking and roads. You can get really good density by building 4-6 story apartments close to where people actually want to live and work, plus a bit of mass transit (preferably trains).
dazsnow 5y ago
"everywhere" = "in the USA"...

100 points by prostoalex 5y ago

I would be extremely reluctant to own a condo because condo boards revert to the mean person's attitude to solving problems of putting it off until it is staring them in the face. Grandparents owned one where the board deferred thousands in repairs until it became hundreds of thousands.

toomuchtodo 5y ago
There is an easy fix. Condo finances should be public record, and when repairs are needed, the local code/planning/inspector office reviews with the condo board, approves if necessary, and then puts encumbrances on the units in the complex. Those who can afford the cost pay right away, those who can’t have essentially borrowed against their equity to finance their share of the repairs, with the loans paid back with interest when the property is sold. Transparency is one part, but also independent oversight and enforcement of the work necessary.
- moralestapia 5y ago
  This is the right answer. Some repairs should be mandatory, if the owner can't pay it should be treated as any other debt. If the owner can't afford repairs, it should sell the unit, otherwise the damages are greater for all other owners.
  - deleted 5y ago
    [deleted]
  - briefcomment 5y ago
    I guess there's the potential problem of the inspector suggesting repairs for the sake of business. Mandatory repairs would likely be gamed unless there are robust checks and balances.
    - klodolph 5y ago
      How much of a problem is this? In most places, there are laws regarding the conflict of interest for building inspectors. For example, building inspectors may not be allowed to be involved in the any building business at all, with some exceptions carved out for making modifications to their own home.
- klodolph 5y ago
  Could you elaborate on how this is different from the current system? With the current system, the condo board decides that repairs are needed, assesses fees, and makes the repairs. The fees are either paid immediately by the condo owners, or the HOA puts a lien on the condo. Local laws require larger buildings to be inspected on some scehdule... in New York I think there's a type of inspection (FSPM: fire safety and property maintenance) that is required every three years, for all multi-tenant residential buildings. From what I can tell, the big problem is that the condo board is just made up of people who own the condos, and the bylaws of individual HOAs require certain actions by the condo board to be approved by the owners. The other problem is that Florida has weaker laws for condos than other states.
  - toomuchtodo 5y ago
    If the condo board doesn’t have the will or the unit owner votes to approve the work, it won’t be done.
    - klodolph 5y ago
      Wouldn't it be more straightforward to tighten the building codes? The condo board is already required to perform repairs to keep the building up to code.
      - toomuchtodo 5y ago
        > The condo board is already required to perform repairs to keep the building up to code. A collapsed condo building disagrees.
        klodolph 5y ago
        > A collapsed condo building disagrees. That's a really cutesy way of putting it. My take on this is that the building codes in Florida are perhaps too lax, although I'm not an expert on building codes. From the reports I've been reading, the relevant inspections were to be done on a 40-year interval, and the building lasted less than 40 years (so its first inspection, in service, was never conducted). This, to me, indicates that if the building was ever up to code, the code was too lax. If the maintenance was done to code, then the code was too lax.
908B64B197 5y ago
Not only that, but with international buyers, they might only be interested in holding the asset for resale. And the contractor building the place knows it...
glasss 5y ago
I imagine the phenomenon is due to multiple people being responsible but no singular person being accountable. There is probably a board director / president that SHOULD be accountable, but it's easy for them to either consciously or subconsciously blame the rest of their board for inaction. https://en.wikipedia.org/wiki/Responsibility_assignment_matrix https://en.wikipedia.org/wiki/Responsibility_assignment_matr...
- abeppu 5y ago
  Well, and: - Long term problems can outlast the tenure of any board member. - Board members are volunteering. What sort of "accountability" is appropriate? Can you pin millions in liability on whichever unit owner threw their hat into an election in the year preceding some terrible outcome? Why would anyone be a board member then?
  - lotsofpulp 5y ago
    See underfunded retirement benefits for government employees and unmaintained infrastructure. Even setting aside the issue of incentives in the short term versus long term, by the time leaders and voters will be gone, the voters are usually not willing to pay higher taxes or condo fees, nor are they even in a position to properly evaluate and prioritize problems.
- MattGaiser 5y ago
  To be accountable, a person needs to be in charge. Board president is often just one vote of many.
OnionBlender 5y ago
I rent but it feels like I'm just throwing away money every month compared to owning a condo. I used to own a condo but sold it years ago and moved to the U.S. for work. Selling it was idiotic in retrospect considering how much the value would have increased these past few years.

phlipski 5y ago

I sat on my condo board for a decade and was president for two years. My experience is that the board is not the problem - the non board sitting owners are. Our complex was comprised of 5 separate 3 story buildings. Three of those building had bad water leaking problems but when we tried to raise money for repairs - the people who weren't suffering any interior water damage wouldn't vote yes. Many buyers don't read the fine print or dig into the boards finances before they buy. We ultimately passes a special assessment but not without some serious "log-rolling" to get everyone on board. Nobody wants to pay for what is a collective problem. Sometimes I think condo's shouldn't even be legal because of this. They should all be apartments with a central management company. The solution is really tightening fiducial regulations on condo HOA's. There could easily be a formula of like 10% of annual dues need to be put in a rainy day fund or something... Banks have started to tighten their lending around condos and ask for more up front financial info.

mchristen 5y ago
I can relate to this. My parents lived in a 22 story building that had water leaks throughout the entire building from construction defects. Until my mom literally got herself elected to be the president of the condo board nobody seemed to care that the building was broken. Many years later and a lawsuit against the developer, the building association and the owners were finally able to get compensated AND have the construction defects fixed. There is no way you can financially prepare for the magnitudes of repairs needed in their case.
breck 5y ago
We recently bought a condo after renting in the building for three years. The board, management and staff of our building are phenomenal—an inside bit of information we knew from having lived here. We looked at a large number of buildings in the area, and was surprised that maybe 1% of the information you need to assess board/management competence is available online. Generally we'd have to do our own DD talking to people in the buildings. IMO it makes a huge difference, >10% of the purchase price should be on the quality of the board and management. Seems like a startup opportunity to be Yelp for Condo Boards/HOAs. (I'm sure there are a dozen+, of course. I haven't done the DD on that!)

spoonjim 5y ago

It's not just condo boards, it's everything in America... physical infrastructure, corporate R&D, software security bugs. It's more attention grabbing and personally profitable to do something new than maintain something old, so people kick the can down the road and cash in, making the problem someone else's (and a bigger problem). Even worse, America's soft power / cultural influence is infecting other countries with this mindset, which once used to have family owned businesses managed on a centuries-long mindset. "A society grows great when old men plant trees whose shade they know they shall never sit in."

somethoughts 5y ago
I agree here. And its not just America but really just any government in any country. I've come to think of governments/countries as just a very, very extensive, giant home owners association that happens to float its own currency, fund its own schools, etc. The HOA fees are basically taxes and often times fees are accessed by the size of your unit. Thinking from an HOA perspective - you then become comfortable with all the warts and inefficiencies that a country/government may have. Serving on the HOA board is quasi-voluntary, tends toward folks with free time and a desire for power, no one is particularly accountable. The home owners themselves are a fickle and diverse bunch, the vocal ones mostly complain about stuff, the silent ones don't say anything and are just getting on with their lives and all have varying attitudes toward expenses for improvements and investment for the future.
- 35fbe7d3d5b9 5y ago
  > I've come to think of governments/countries as just a very, very extensive, giant home owners association that happens to float its own currency, fund its own schools, etc. I'm always nervous about this type of reductive thinking. It tends to go wrong for the same reasons that "the government's checkbook should be managed like a household budget!" goes wrong. Your HOA doesn't control the financial systems of every other HOA in the world and can't freeze the assets of HOAistan because their premier is causing problems. Your HOA doesn't spend nearly half of its funds on a military that has first nuclear strike capability against the D.P.R.H(OA). Etc. Probably the biggest gap in this thinking: if you don't like your HOA, you can sell your house. In this market there's no lack of buyers and you have tons of options – other HOAs, unencumbered properties, etc. This sucks, sure, but compare it to emigrating to a country that you'd like to live in. It's miles apart.

41209 5y ago

This has given me serious pause on buying a condo. If I rent the moment I have unfixed issues I can leave ( breaking a lease is pretty easy in my experience). But I'd hate to buy and then deal with bad neighbors or building issues

seibelj 5y ago
The same issue is with houses, and the bigger the house the bigger the issues can be. For a big condo complex, if a problem is truly big, the association can do a bond offering that can be paid off over a very long time (decades).
- MattGaiser 5y ago
  You don't need your neighbours approval to be pro-active about repairs.
- bluGill 5y ago
  When it is my home I can make decisions. I can decide the pool isn't worth it and tear it out, or fix it. I can notice leaks before they cause structure problems (or choose not to fix them and face the more expensive bills). With a condo those choices are not yours, and the decisions might not be yours either.
ocdtrekkie 5y ago
I would strongly advise against buying a condo in the current environment. I am fighting to have structural issues with a building I own a unit in dealt with, and it's quite the thing. One of the things I find amazing is how unclear the declarations of responsibility are. For instance, there's common elements, which the association is responsible for, and limited common elements, which are elements that you are responsible for, but the association can demand you fix as needed for the benefit of the building whole. I think there's a third category of building limited common elements. Also, I have a garage, but it's not actually mine, I own the right to exclusive use of it, but not the garage itself, but I also end up on the hook for repairs when it breaks... What's fun about that is associations basically place the unit owner responsible for all the likely-to-need-work elements that are exterior. Like windows and the balcony, despite both being exterior building elements, the latter made of the same structural concrete as the rest of the building. But if they need to resurface the balcony, you're going to pay for it, and they're just going to tell you how much you have to pay, or else. (I believe my grandmother once got a $15,000 bill for the balcony at her place, and that's just a mandatory special assessment the association can decide to employ. Good luck if you're living paycheck-to-paycheck.) And then there's just stuff that's completely unlisted in the terms: Building structure is the association's problem, the drywall is generally defined as a unit owner's problem. You know what isn't mentioned at all: Insulation, which is outside the drywall, but not structural. The building can probably refuse to deal with it, and your insurance company can probably refuse to cover it.

abeppu 5y ago

So, condos aren't that old in the US. Is there some similar structure in another country with older urban housing stock that works better? For demographic, environmental and economic reasons, it seems like more people will and should be living in cities with some density, so we need _some_ well-functioning arrangement for ownership for something other than single family homes. Is there not some country with a lot of heritage 18th and 19th century urban buildings which are successfully inhabited by many owners? (Given the intractability of strong tenant protections in most of the US, I don't think it's reasonable to take the position that if you can't afford a whole house you should rent.)

41209 5y ago
Many condos are converted apartment buildings. You can easily find condos which are 100 years old. They do some nominal renovation, but the bones are essential the same
sethhochberg 5y ago
In older urban areas in the US (particularly NYC), you often see co-op buildings. In a co-op, you buy shares in a corporation that owns the building and get a proprietary lease entitling you to use of a certain amount of space, while in a condo you are buying the deed to the individual apartment you own. On paper they're different means to the same end. In practice, condos typically have much less stringent approval requirements - board approvals, background checks, character references, and providing a summary of your complete financial situation beyond the details of how you'll be paying for the apartment are normal in a coop purchase process. The result of this is co-ops tend to have lower turnover and stricter rules overall - in addition to often being cheaper. They also have their problems, because the approvals process can be a mechanism for discrimination against protected classes. But the general perception is that co-ops are harder to get into, and harder to get out of, so the residents (at least in theory) tend to be long term and community minded. In most states, condo boards don't get the right to be selective, and must accept the first applicant who is minimally qualified. Condos tend to give more power to the individual owner, coops tend to give more power to the coop board. I can't speak to how other parts of the world handle this problem, but even in the US there is at least one other common model.

OldHand2018 5y ago

Florida, like all the other states that have a lot of condos (New York, Hawaii, Illinois, etc), have their own laws and do not follow the uniform condo laws that other states have. The laws of these states are responses to problems they have seen with condos in their own states. Florida is going to learn a lot from this tower collapse and will pass a bunch of laws to try to prevent this from happening again. It will be very expensive for the condo owners. Some may even go bankrupt. But there will not be a huge wave of collapses 10 years from now. Up here in Illinois, there are a number of laws that would reduce the likelihood of what happened. - Condo boards have a fiduciary duty to protect the value of unit owners to the extent possible - including conducting proper maintenance. - Condo boards must conduct reserve studies every 5 (?) years that go into detail about the age and condition of every major component of the building (including the structure) and the cost of replacement or repair. Then they have to make sure that the reserves will cover the expected costs. - Condo boards can enact special assessments for repairs without unit owner approval as long as it is less than 115% of the total association dues for a full year. - All board meeting notes, financial statements, inspections, contemplated repairs or special assessments, etc must be provided to condo buyers. Legally, a buyer can cancel a sales contract at any time with zero penalty up until 2 days after all the documents have been delivered to the buyer. This is also given to the mortgage company. You cannot get a mortgage on a condo in Illinois if the association is not paying enough into the reserve fund. You can expect to see some of this stuff in Florida and you can expect that it will make some buildings “unsellable”. But they will recover - there is a price for everything, and hedge funds at least are sitting on tons of cash. It would really suck to live in one of these buildings. But at least you will stay alive.

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grumblenum 5y ago

Diffusion of responsibility and the tragedy of the commons are pretty textbook psychological phenomena that I’m surprised more people seem to be unaware of. I would be surprised if any committee with custody of any asset were prepared to take quick, decisive, and costly action in the long-term interest of said asset.

breck 5y ago

This has been such a tragic story to follow. Especially as they pull children out of there. I'm not a civil engineer, but have been on those subreddits and blogs reading about the investigation. Curious if anyone knows: is there an equivalent of a "blackbox" data recorder for tall buildings like this? If not, should there be? Would there have been signals given off from the columns that may have forewarned of disaster? What kind of vitals would be good to collect? It seems visual inspection is a bit too subjective.

h2odragon 5y ago
The columns gave off signals; there's pictures from the reports of the concrete cracking and rusting rebar. There wasn't any need for fancier sensors and data recording technology than was used.
- MattGaiser 5y ago
  Reminds me of that West Wing episode and the parable of the man who lived by the river. "I sent you rust, cracks, and an engineers report, and your building still fell down."
- breck 5y ago
  > There wasn't any need for fancier sensors and data recording technology than was used. Obviously there was. A common refrain in all the civil engineering discussions I'm reading is that this inspection report was in bottom 10%, perhaps bottom 1%, but not 0.00001% off the charts atypical. It's quite apparent that we need more dimensions of data—if for nothing else than to make it crystal clear when a situation is approaching disaster. We also still do not know what actually happened (and may never know), so for post-mortems this sort of thing seems important. What simple steps can be done to reduce the probability of this happening again by 1,000x+?
  - h2odragon 5y ago
    What if it wasn't atypical because there's lots of buildings showing damage like this? Coastal Florida, especially; is harsh environment for building and they've had 40+ years of "slap it together as fast and cheap as possible" construction there. It don't matter how much data you have about the tidal wave bearing down on you; you has to move out of its way regardless.

015UUZn8aEvW 5y ago

It’s not clear that condo units have higher long-term capex costs than single-family homes; arguably economies of scale make their capex lower as a percentage of home value. So the problem isn’t a problem of cost per se, it’s a collective action problem. The issue is that the buyers of condo units don’t really pay much attention to the condo association’s reserve balance. A current owner who contributes $1 to the reserve fund won’t see a corresponding $1 increase in the value of their unit. The increase, if any, will likely be a small fraction of that. So an owner who’s considering selling in the next few years - which is common, since the tenure of condo owners is lower than that of single-family homeowners - is rational to fight attempts to fund the reserve. They’re also rational to keep monthly condo fees as low as possible, since buyers do look at the fees. But that also makes preventative maintenance difficult.

ashtonkem 5y ago
Bigger condos often include shared facilities and industrial scale equipment that blurs that picture a lot. Not having a pool probably tips the scale in favor of individual houses in many cases. The lowest cost is probably shorter condo buildings without pools. These won’t include a lot of extra equipment that detached houses don’t use, can use closer to standard sized HVAC and water systems, and benefit from increased economies of scale over detached single family dwellings.
zippergz 5y ago
Right. As the owner of a single-family home, I control my destiny. Yes, I may pay more dollars to replace my roof than I would pay to replace the roof on a condo building. But I am in complete control of when it happens, who does it, and how it is done. In a condo building, I am at the mercy of my neighbors to agree to the repair and how it is done. And in any sufficiently large association, there will be at least a handful of people who will fight any expenditure at all (yes, this is rational for short-term owners, but in my experience it tended to be the long-time residents who were the loudest complainers...). Frankly, I don't have enough faith in humanity to put this kind of trust in a bunch of strangers.
salicideblock 5y ago
That problem is completely avoided in Belgian law, via the following rule: When you sell your fraction, you get the corresponding share of the reserves. When you buy a fraction, you must contribute the corresponding share of the reserves.

giantg2 5y ago

"Condo boards everywhere are unprepared for serious repairs" As are local governments, county governments, and state governments unless they get a big grant from the level of government above them. Even federal infrastructure is in disrepair. My locality had to redo the main street and the water and sewer lines under it. We had to get a grant from the state and they also put a 40% surcharge on our water bills to pay for it.

entropicdrifter 5y ago
IMO the headline should say, "Years of corporate bailouts, military bloat and tax cuts have devastated the US's ability to maintain even the most basic of infrastructure"
- ashtonkem 5y ago
  Plus really bad assumptions about how long reinforced concrete lasts, despite clear evidence that it is actually a short lived substance.

djb_hackernews 5y ago

This topic is interesting. I am on the condo board in a 20 unit association, mostly attached townhomes. The biggest issue is the person in the "owners" unit, the one with the most invested, not playing ball with the other units. That said if anyone has tips on good condo management companies in the Boston area, let me know!

softwaredoug 5y ago

Our small HoA was stuck with owning the under street sewage and water system because 20 years ago it didn’t meet city code. So the builder made it part of the HoA. Nobody can find documentation of sketchiness 20 years ago, and the original owners were less worried about what might happen decades down the line. Sigh…

chiph 5y ago

My townhouse community just found out about a construction defect that was causing water damage to some homes (some flashing was never installed). The builder is long-gone, having merged a couple of times over the years into one of the big national firms and is not able to be sued. The board engaged the community's law firm to look into whether the community needed to be the one to pay for repairs or whether it should be left to the individual owners. [0] The law firm did some truly amazing hair-splitting and decided that the inner part of the walls started at the inside of the brick & vinyl, and not with the wood sheathing underneath them, which is where the flashing would have been fastened. So the good news is I'm not going to be hit with an assessment. The bad news is the board had the community's lawyers draft a finding against their own community. [1] [0] Ordinarily in townhouses & condos, the owner is responsible for repairs to the inner part of the walls, and often the exterior windows & doors. You know this when you buy the house. [1] Which is actually correct - the law firm's clients are the board, representing the community. Not the community itself. Doesn't change that it stinks.

markus_zhang 5y ago

We are facing the same issue (Montreal, pre-WW2 era condo building). I think the key is to: 1 - Gather some condo owners who are serious about the issue and want to help so that board doesn't get into a perpetual persuation war with the owners. 2 - Be transparent with costs and contracts. Yeah I get it that in construction there is a huge variance on the same job (say $5,000 and $30,000 for the same job and laymen can't tell the difference and in fact the $5,000 one might be better in quality). 3 - Hire a good administration company who is quick to response. his is optional if someone on the board can do the admin job but since everyone is working it's difficult to find such guy.

ashtonkem 5y ago

Condo issues aside, another takeaway is that reinforced concrete is a bad material as it’s currently used. You’re lucky to get 50 years out of it with perfect maintenance, and places like Florida are even worse because any water ingress is guaranteed to be salt water. A much more reasonable approach would be to ban iron or steel reinforced concrete in new Florida construction, but I doubt that the government would be willing to do that.

tomatotomato37 5y ago
You'd be surprised. Florida has some of the highest building standards in accordance to disaster/hurricane protection in the US thanks to the major hurricanes of the 80s; this may prove a watershed moment for the same to happen for corrosion prevention & maintenance standards today. Of course that won't do anything for buildings already standing (in fact this condo would have also been rolled over by a hurricane too given its construction date) but it could be revolutionary for new construction
CincinnatiMan 5y ago
As someone not familiar with large-scale building materials, what should be used instead?
- ashtonkem 5y ago
  The short answer is “don’t build that tall”. There really isn’t any material available to build that tall that cheaply without it being throwaway work, so don’t. Building tall is really only necessary because of the amount of space we set aside for cars, both for parking and roads. You can get really good density by building 4-6 story apartments close to where people actually want to live and work, plus a bit of mass transit (preferably trains).

dazsnow 5y ago

"everywhere" = "in the USA"...