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BUYERS BEWARE When Buying a CONDO in the Portland Metro Market

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Industry Observer with RETIRED / State License is Inactive Inactive License Oregon

Buyers BEWARE When Buying a Condo in the Portland Metro Market


OMIGOSH -- it's called a RESERVE STUDY!  And you don't get one done when you KNOW that you have latent defects in the condo building complex.  You get a "RESERVE STUDY" done when you DO NOT HAVE PROBLEMS . . . and you plan -- AHEAD -- for them.

A 1981 building . . . is over 35-years old.  Things wear out . . . you plan for that, no?!?

Since my last post "You Can't Spell Assessments Without The . . . ASS" -- this is my follow-up because my real estate spidey senses are becoming very heightened.

The culprit are the HOA's that are, in my opinion, breaching their fidicuariy duties to the members.

How so . . .

Well, here's one from the RMLS listing:  Special Assessment effective May 1st 16. Additional $335.68 per mo-240 months

Does anyone know what 240 months is equal to?  That's 20 years . . . YEARS . . . T-W-E-N-T-Y Y-E-A-R-S

And that's "additional" to the $405/month that are the current HOA dues.

Whiskey Tango Foxtrot is so EXPENSIVE in these 2 bedroom / 2 bath, 1,200 sq. ft. 1981 condo units -- that no one bothered to ASSESS them years ago?  That's over $80K in assessments, if my math is correct.   What Buyer in their right mind wants to pay $741/month in HOA dues?  

 

HOA: Y Dues: $405 / MO Other Dues: $336 / MO

 

I suppose $80K in 20-years is a lot less in comparison to this condo complex located in of Portland (see chart below).  This is for exterior renovation, new siding, roof and windows.  Here's a screen cap of their "ass"essments for the unit owners . . . also on a 20-year spread.  But, wait . . . you can pay all at once and get a discount!

The "Serial Monthly Special Assessment" column is in ADDITION to the HOA monthly dues of @$600/month!   

 

 

It's like the CONDO SHAKEDOW of a life time!

And where is the protection of the members of these HOA's?

There is NONE!

So, let's say you bought Unit 4A and closed August 2015.  You paid $295K CASH for the unit (full list price) Your real estate agent was diligent and asked for all the HOA's minutes, reserve studies, etc. And they were all produced.  You made your decision to buy Unit 4A knowing that you'd be hit up with $201,888 in assessment payments?!?!?  I wonder if the buyer knew about this?  I wonder if these assessments were included in the minutes 

Here's a wonderfully brilliant HOA edict which proves an HOA KNEW about a problem, and solved it by using "aggressive caulking" to mitigate WATER INSTRUSION . . . OMIGOSH, why didn't they just use DUCT TAPE?!?

 

Now, when the "aggressive caulking" for several years didn't work . . . they "deemed" replacing the windows as the "clearly superior path."

Yes, welcome to the world of Queen of Hearts in charge of HOA's . . . and the breach of their fiduciary duties is met with "Oh, let's just toss out a $20K assessment on everyone"

Notice how they did a reserve study in 2015 . . . but KNEW about the issue for several years.  

It's March 2016 . . . 2015 was NOT several years ago.  And, apparently, by the HOA's fuzzy logic, and fuzzy calendars . . .  the time to perform a reserve study is when the "aggressive caulking" isn't working?!?!?

How about doing the reserve study SEVERAL YEARS AGO when you knew there was water intrusion.   

I've never heard of "aggressive" caulking before.  Have you?

It's that the opposite of "passive" caulking?

How does one caulk aggressively?  

Isn't the act of caulking . . . well . . .  the act of caulking?!?  

I did't know there was variations of caulking one can do, but it's nice the HOA board members decided to go with the "aggressive" caulking recommendations, that seemed to help. {rolling eyes}

Pity.

 

Posted by

 

 

Carla Muss-Jacobs has RETIRED effective May 1, 2018

Representing Buyers in the Portland Metro Real Estate Market | Clackamas Multnomah and Washington Counties | Since 1999

Carla Muss-Jacobs, REALTOR®, ABR, CEBA, ePro
Principal Broker/Owner ~~ INACTIVE

Carla Muss-Jacobs' retirement became effective May 1, 2018

Direct: 503-810-7192 

 

All Rights Reserved © 

Comments (8)

Beth Atalay
Cam Realty and Property Management - Clermont, FL
Cam Realty of Clermont FL

Hi Carla, this is insane! Why would anyone want to buy a condo in a building with such crazy monthly HOA dues? 

Mar 21, 2016 05:37 AM
Carla Muss-Jacobs, RETIRED

Yes, Beth Atalay -- this is becoming more and more common in the condo market, which I'm noticing.  It's concerning to me.  The monthly HOA dues are one thing, but I'm seeing these HUGE assessments hitting up owners/members . . . and I wonder if they even saw them coming?

Mar 21, 2016 05:58 AM
Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

We have an association like that here Carla Muss-Jacobs, Principal Broker/Owner and the Sellers are darn lucky if they can half of the market value of other condos because of it. They almost have to give them away to get rid of them.

Mar 21, 2016 05:53 AM
Carla Muss-Jacobs, RETIRED

Bob "RealMan" Timm -- that's right RealMan!  These units would go for double their current "fair maket value" if it wasn't for the poorly run HOA's which are hitting them up for TWENTY YEARS additional monthly dues, to the tune of $800 more a month?  The units are depreciating as I speak and it's due to the poorly run HOA's lack of reserves . . . oh, and caulking windows that have water intrusion.  These brillant HOA's forget we're in the Pacific NW?!?  It rains here . . . it rain a lot here!

Mar 21, 2016 06:00 AM
Chris Ann Cleland
Long and Foster Real Estate - Gainesville, VA
Associate Broker, Bristow, VA

I am actually representing buyers fleeing a situation like this, not with a condo, but an HOA.  They want financial info up front on the HOAs where the homes they like are located and I don't blame them.

Mar 21, 2016 10:10 AM
Carla Muss-Jacobs, RETIRED

The odd thing with all this HOA condo crap is that the "several years ago" we knew about water intrusion . . . and they caulked?!? Can we say misrepresentation of material facts, boys and girls?  Thanks Chris Ann Cleland I agree buyers have a right to know especially if any of it smacks of common law fraud.

Mar 21, 2016 10:14 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Condo life can be really liberating for those with busy lives who don't wish to do yard work, or worry about exterior maintenance.  However, as you point out, a poorly run HOA can help create a nightmare, when it comes to making that maintenance happen.  There can be delays in needed care, and wild hikes in dues to pay for it all.

Mar 21, 2016 08:04 PM
Carla Muss-Jacobs, RETIRED

When the HOA is not well-run, there goes the members' property values and hard-earned . . . right out the water intrusion window!!  Thanks Myrl Jeffcoat 

Mar 22, 2016 02:47 AM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

Carla,  My condo expert says that in California ... don't know if it applies in other states ... that board members can be sued civilly for their negligence in their duties. Now, I am going to call her and get a refresher course.  Fodder for a post. 

Mar 23, 2016 05:32 AM
Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate Services

FEATURED IN CRAP-TACULAR

 

 

MR. CRAPPY THINKS (HE REALLY DOES THINK) THAT SELLERS ARE IN THE CRAPPER IN THAT CONDO COMPLEX.

Mar 23, 2016 05:33 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

OH CRAP . . . it just got Mr. Crappier!!

Kathleen Daniels -- I just saw a condo unit BOM (back on market . . . wonder why!?!)  So, I looked up a condo history and saw this BOM unit  was sold in 2014.  In the prior listing the RMLS sheet reads:  "refurbished Windows & High Efficiency HVAC system installed 2013"

And that might very well be true!  BUT . . . there are three buildings in the American Plaza and ALL OF THEM are getting assessed per the Feb. 2016 notice.  So even if this building, and particular unit which sold in 2014 did have "refurbished windows" . . . the unit owner is STILL being hit up with the "sorry members  . . . we don't have enough money in our reserves" ASSessment!

Wonder if the unit owner/2014 buyer knew about this (from the Feb. 2016 assessment notification document):  [which is rhetorical, because of course they didn't . . . surprise, surprise!!]

My first thought, after reading the above is:  WHY?

Why didn't they have enough in their reserves?  "Projects of this size" just don't get that way overnight.  It's a 45-year old development. 

This is going to be fun to watch!  We have liability protection for board members, but if it's gross negligence, I don't think they are protected.  This is GROSS!

Mar 23, 2016 06:16 AM
Barbara Altieri
Better Homes and Gardens RE Shore and Country Properties - Shelton, CT
REALTOR-Fairfield County CT Homes/Condos For Sale

Carla -- That is total mismanagement. The sad part is that many owners were probably not even aware this was coming. It's going to be a tough sell for those owners.  Have a complex here in my area with a 10 yr assessment. Had an interested buyer and she said 'no way'.  But 20 years??? That complex would be off most buyers lists unless the pricing came way down to compensate. Enjoyed your commentary on the 'aggressive caulking'.

Apr 11, 2016 04:47 AM
Carla Muss-Jacobs, RETIRED

These things just boggle my mind.  And I really feel for the people that bought in on fixed incomes.  As I approach 58 (next week) I am steering clear of all things condos/HOA's.  I can't get hit up with an assessment.  And yeah, I'm surprised they just didn't DUCT TAPE the windows, LOL!!  Thanks for your comment Barbara Altieri 

Apr 11, 2016 01:26 PM