Burst main water pipe + new heating system in condo... $22,000??

January 3, 2016 10:31 AM

One of my family members lives in a nice condo but is living on a fixed income and doesn't have much in the way of savings. The condo recently had a meeting and informed its residents that they were being assessed $22,000 per resident for a new water + heating system or else they will be forced out. I know that YANML but do we have any recourse against this?

Apparently this began when a resident of the condo called for a city inspector to come in; the condo was found to be not up to code in a number of areas.

I'm not 100% sure but am assuming assessments are covered in the contract since the family member didn't bring it up. I'm going to have a talk with him later regarding the fees and will update this question based on anything else I find out. He was under the impression that there might be smaller fees from time to time, but can't believe how much it is in this case. Obviously the other residents are not happy with this as well.

The first $1400 is due in February and it seems like he's just going to pay it. As I previously mentioned he doesn't have much in savings, so is hesitant to talk to a lawyer; in any case, he thinks he's pretty much screwed. What is the best way to go about this? What advice could I give him?

posted by CottonCandyCapers to Law & Government (14 answers total)

Response by poster: Forgot to mention - family member lives in Cleveland, Ohio.
posted by CottonCandyCapers at 10:39 AM on January 3, 2016

Not up to code is a vague assessment. It could cover a few small things, or a tear down of an unsafe boiler and water circulation system. You need to review an itemized list of findings and price quotes before your can judge if the cost is reasonable.
posted by boo_radley at 11:05 AM on January 3, 2016

Sounds like it's a smaller complex? The fewer the number of units, the more each pay in an assessment and the worse off they are if it's something big, which this clearly is.
posted by cecic at 11:05 AM on January 3, 2016 [1 favorite]

Wait wait wait. How many condos? Is it 10X $22,000, which makes it nearly one quarter million dollars. Is it 50 condos? Hell, I live in a 10 unit development, with massive fraud, relative to momies in. Get a lawyer. Water main? 10 condos split $14,000? That is close to high unless there is massive damage from it. 50 condos, $1,400-that is one hell of a corrupt bill-$70,000 for a common water repair.
posted by Oyéah at 11:08 AM on January 3, 2016 [5 favorites]

I always thought this was what condo fees were supposed to go towards? If they are paying monthly fees, especially if the fees are considerable, I would question what that money is going to and why it can't be used for the exact type of maintenance that such fees are designed to raise money for. If the fees are just going to landscaping and hiring a security guard, it might be that the monthly condo fee needs to be raised to factor in longer-term expenses like this.

If this particular condo association doesn't levy any type of monthly fee, this seems entirely reasonable. It would be smart for your relative to start a savings account to pay into in the manner that most condo owners pay a monthly fee, so that these expenses can be paid as they crop up. It might also be worth your relative selling and moving into a rental if they weren't aware that condo owners have to pay building maintenance expenses out of pocket and didn't factor that into the cost of their unit.
posted by Sara C. at 11:15 AM on January 3, 2016 [1 favorite]

I'm also calling shenanigans. You would not believe how corrupt some vendors are. That's a lot of money for a water main and heating system. Too much.
posted by jbenben at 11:16 AM on January 3, 2016 [8 favorites]

He should ask to see the accounting and verify that the board properly vetted options for necessary repairs, but yes, generally repairs to the common elements of condo buildings are covered by all residents through special assessments. Every state, and usually each city, has slightly different laws governing how boards must chose and authorize contractors to do repairs and likewise will have slightly different laws about payment plans for special assessments and when liens (and ultimately foreclosure) for unpaid assessment can be levied and enforced. It would be unlikely that failure to pay the full amount assessed immediately could result in immediate expulsion from the property, as your relative would still own his condo, even if the association had a lien for unpaid assessments.

Since you mention replacement of the entire heating system, I think this could easily be a reasonable cost (even if a huge one), especially if there's some sort of environmental component (such as replacing a coal-fueled radiator system). But your relative could talk to a legal aid office about what the board must do to demonstrate they've appropriately managed the repairs (to not over-charge owners, as well as to ensure compliance) as well as finding out what the board's responsibility for allowing payment plans is and their rights to enforce liens.
posted by crush-onastick at 11:26 AM on January 3, 2016

It is possible they could force a foreclosure sale. Lawyer.
posted by St. Alia of the Bunnies at 12:01 PM on January 3, 2016

I've had similar to this and the vast cost included a lot of insurance and specialist removal of asbestos around pipes. But we did get quotes from different firms that varied by as much as a third of the total, so do ask to see all the proposals.
posted by colie at 12:03 PM on January 3, 2016

Special assessments are generally allowed. I'd be more concerned about what else is lurking in the building's maintenance needs. Letting things fall into the level of disrepair that requires a 22K special assessment is exceptional. That's the problem with low HOA fees (or mismanaged HOA funds!). Maintenance is not getting done to keep the building in working order.

This is a time to look into the HOAs maintenance plans, cash reserve and cash flow management. An independent audit of the books is in order. Take a look at your HOA policies on how residents can demand that.
posted by 26.2 at 12:08 PM on January 3, 2016 [5 favorites]

I remember a case in Boston a few years ago where there was a special assessment of $75 million for the whole complex to replace the HVAC - people were assessed 20% of the value of their units, and some people had to sell to pay the assessment. (Boston Harbor Towers)

This does happen sometimes; it can be an indication of poor management in the past, but sometimes emergencies happen and there aren't enough funds to cover it. (Apparently boards are reluctant to raise regular HOA fees because that reduces the value of the units, although it seems like it all comes out in the wash to me.)
posted by mskyle at 2:12 PM on January 3, 2016

I was on the condo board. There are two different methods. One is to accrue savings against large repairs via condo fees, the other is to assess should a repair be needed. This should have been covered in the paperwork your family member was given when he purchased the unit. Most residents don't want accruals because it's money sitting in an account and it usually dries up monthly HOA fees.

When electing a condo board, you are allowing someone to represent your interests. This is why it's important to attend the meetings and to make your desires known. When I was on the board, frequently we had to twist arms to get any feedback from the other residents and in the 7 years I lived in my unit no one ever wanted to serve on the board. I had to sell my unit to get off the damn thing!

It also helps to review the financial documents that the board is required to provide to owners annually.

Were there meetings about this issue? Did your family member attend them? In Florida (where I was on the board) we were required to get at least 3 estimates before selecting a vendor. Before getting a lawyer, it may make sense for your family member to get together with other owners to review the bid and to discuss alternatives. If there were meetings and votes and your family member chose not to voice concerns, that ship may have sailed.

This is why I warn against buying into condos for folks on a fixed income. This is also why I'm not a fan of home ownership for those on a fixed income. One large repair can be a budget disaster.
posted by Ruthless Bunny at 2:44 PM on January 3, 2016 [1 favorite]

Condo fees typically cover any number of things, depending on the complex. They can cover heat, hot water, snow removal, basic repairs, gardening, security, etc. But when you have giant infrastructure repairs like this, the cost usually gets split among the homeowners. My friend's condo group (many many units in a huge apartment building) voted on replacing windows for the entire building. Each unit paid based on number of windows, but as the windows were enormous, it was hella expensive (min $20K per unit). I think it was only a simple majority that carried the vote. Now with something like water and heating, where it's essential infrastructure, it probably doesn't have to be voted on at all, but asking about the estimates and vendors would be very productive for your family member to at least feel like he wasn't being taken advantage of. I hope it's not one of those situations where he just bought the place and the prior owner knew this was coming but didn't tell him.
posted by clone boulevard at 4:03 PM on January 3, 2016

Also he should find out how long the repairs will take and how much he'll be inconvenienced.
posted by clone boulevard at 4:05 PM on January 3, 2016