COMMUNITY ESSAY:
A practical view
of condo living
By Marty Lipton
October 12, 2008
A
recent article on the problems that common-interest developments, or CIDs,
incur because of deferred maintenance was revealing (“Bill creating
mediator for HOA disputes draws veto,” Business, Sept. 30). I'm sure
many homeowners in these associations spent more time badgering their
managers and boards to keep costs and assessments low than taking a
practical view of what was needed to maintain their investments. They are
paying for that shortsighted approach today.
Many
buyers purchase homes in these communities with little or no understanding
of their rights and responsibilities. Too many believe their condo or
townhome is an easier and cheaper way to own property, a sort of ownership
apartment where someone else deals with the problems. They believe the
board and managers are the same as landlords.
After
more than a decade as a homeowner and board member in a common-interest
association, here are a few things I would suggest any buyer do prior to
putting his or her money down.
Start
by doing the math. Although your condo mortgage may be smaller than one
for a single-family home, your monthly costs will be about the same once
the dues are figured in. The owner of a single-family home gets to decide
whether to mow the lawn or hire someone to do it, save for repairs or take
out a loan when the time comes, and paint the front door any color
desired. CID owners don't.
Common-interest
ownership comes with restrictions that many people find unfamiliar and
uncomfortable. Be honest with yourself about whether you can live with the
rules and regulations as written. If there is anything that doesn't fit
with your lifestyle, goes against your image of what home ownership should
be or seems unreasonably restrictive, do yourself a favor and keep
shopping until you find an association that is a better fit. For some
buyers, the only right choice is a home that isn't part of an association
at all.
When
you get the documents, take the time to read and understand them. If there
is anything that isn't clear, ask a board member, a manager or a lawyer of
your choosing to explain it. Once you sign your name, you will be expected
to abide by everything in that paperwork.
In
general, sales representatives have not read your community's rules,
bylaws, financial statements and incorporation papers. They will tell you
what you want to hear in order to make a sale. A real estate agent told
one of my neighbors that he could park his truck anywhere on the property.
That neighbor was beyond upset when he began to receive violation notices
explaining the parking restrictions.
Know
your responsibilities. Is the plumbing yours or the association's? Can you
modify the landscaping near your unit? How about holding a party at the
pool? Not knowing could result in unpleasant surprises. You will need
condo insurance. The association insures the common area but if your
bathtub overflows or a plumber sets your garage on fire you will need your
own coverage. Yes, you really will. And, no, your title insurance isn't
the same thing.
Once
you buy in, you are part-owner of a corporation. If you see a problem,
tell your manager so the issue is on record and can be addressed. Board
members, managers and maintenance people can't see everything; everyone
needs to step up and protect the entire investment.
Go
to the annual member meetings and vote. It costs money to hold the annual
meeting; reconvening doubles the cost, yet each year associations have to
pay that bill twice because the minimum number of homeowners, known as a
quorum, will not bother to attend or submit proxies. Read the budget when
it's sent out. Go to board meetings and learn where the money is being
spent. Volunteer for committees or even serve on the board.
Far
from being a distant and unapproachable third party, board members are
your neighbors. They are volunteers who take on the task of protecting the
assets and investments of an entire development. They pay assessments and
deal with the price of gas and electricity the same as everyone while also
handling many of the decisions you would have to make if you were living
in a single-family home.
Good
board members are not necessarily the most popular people in the
neighborhood but they keep the landscaping looking good and the pool clean
and the reserves funded. They may annoy you now but you will thank them
when you sell. Bad board members are everyone's friend, let you break all
the rules you want and keep the dues low. You won't like them nearly as
much when the special assessment hits the mailbox.
Most
of today's buyers didn't grow up with the concept of common-interest
developments. It can be an alien idea made more suspect by the general
media image of ego-driven boards making poor choices. As boomers age they
will downsize into smaller homes, many of them in CIDs. Infill development
within cities and redevelopment in suburban and rural communities will
also make common interest less rare. Local governments are beginning to
require developers to deed new parks to associations rather than to the
larger community. Ultimately, every buyer needs to know enough about CIDs
to make wise financial choices.
Lipton, a