Late Payments
Seattle Times Forum - March 25, 2007
Question: One member of our condo's board of directors is behind in paying her dues. I think this person should be removed from the board, and a lien placed on her unit to protect the association's interests in the event she enters bankruptcy. Which law enforcement agency has jurisdiction over condo associations for rule violations?
Answer: None, it is a civil issue, so it is the association owners who need to resolve the situation. This means reading the bylaws to determine the duties, obligations and authority of the board of directors.
Note: The Sundance HOA policy for late payments is to send an owner a notice, when a late payment occurs. A late payment fee is $25. After the third month, a notice of intent to lien will be issued, and followed by a formal lien on the fourth month after the none payment. Each "issue", is handled on a case by case basis, as determined by the board of directors.
Rentals
Seattle Times Forum - March 5, 2006
Question: My condominium has 60-plus units...and close to 50 per cent are rentals. ...What effect will having a large percentage of rentals have on future units sales and prices?
Answer: Lenders generally don't loan their own money. Instead their loans are underwritten by mortgage giant Fannie Mae, and Fannie Mae will not give automatic approval for loans in buildings where less than half of the condos are owner-occupied.
That means potential buyers in this building likely won't get loans unless they have high credit scores, good liquid assets and a good debt-to-income ratio. Selling only to "highly qualified buyers is going to limit your pool," said Hruza.
"If you're in a building that has $700,000 or $800,000 condos, this won't be a problem because these buyers will have high credit scores," Hruza said. "But if you're in a starter condo building, you will."
That means rental-heavy buildings priced within the reach of first-time buyers — below about $400,000 — could have a hard time landing buyers. Typically, condos limit rentals to 30 percent or less, Hruza said.
Whether a high rental ratio would affect prices would depend, in part, on how much the condos cost and where they are. But in general, Hruza speculated that quality buyers would be less interested in buying a unit in a building where half the occupants can't be expected to treat the property as owners would.
Editor's Note: In the condominium disclosure statement, the rental status is disclosed in the re-sale certificate.
Bankruptcy
Seattle Times Forum - October 23, 2005
Question. Considering that the bankruptcy has changed, how does it affect the board's ability to collect from an owner?
Answer. The new law went into affect almost a week ago. An owner who files for bankruptcy under the new law is personally liable for dues payment until the title to the property is transferred - whether the owners lives there or not. Under both the old and new laws, the condo homeowners association has automatic lien rights, meaning it can compel a unit into foreclosure if the owner doesn't make good on money owed.
Limiting Rental Units
Seattle Times Forum - June 19, 2005
Question. Can a condo association establish a policy that regulates the number of units that can be rented? If so, what is the legal basis of that policy?
Answer. The condominium form of ownership is created by state law, and that state law allows for a document that forms the condo - the condominium declaration - to impose various limitations and requirements. State law allows for amendments to the declarations, so an association could amend its declaration, to limit rentals, if it so chooses.
But what about individual owners' property rights? Put simply, a condo owner does not necessarily have all the rights a single-family homeowner would, with respect to the use of their property. The reason for this fact is the state condominium law, which realizes the unique issues involved in congregate ownership.
Limited Common Element
Seattle Times Forum - June 5, 2005
Question. I used an easement authorized by my condo association to run an electric pipe through a neighbor's garage. The neighbor now wants it moved. Who pays for the move?
Answer. Every condominium is governed by its own set of documents. Your documents probably say the garage is a limited common element. Meaning, it is your neighbors to use but does not personally own it. The easement is probably granted in the condo declarations and probably requires approval by the board. In the absence of something in the declarations, the neighbor would have to pay to move it.
Rentals
Seattle Times Forum - May 8, 2005.
Question. What's the best way to find a tenant?
Answer. "Before you sign a lease, you want to make sure your condo association is on board with you and you're in compliance with all the rules and regulations," says Tamara Simon, owner of Koss Property Management. "Some have restrictions about renting your unit. Some don't allow renting, or only allow a certain percentage in the building. Also, some have rules about reviewing the lease or reviewing the tenant."
Other things you should know: Some associations don't allow renters to have pets; many charge move-in fees to the owners. Your association management may be aware of rental interest in your building. For more on what you'll need to know as a landlord, check the Rental Housing Association of Puget Sound's web site: rha-ps.org. It contains the Residential Landlord-Tenant Act, which you must give to your renter, and a long list of questions and their answers.
No Reserve
Seattle Times Forum - April 3, 2005.
Question. ...the townhouse I bought needs a complete new roof for all the units. Even worse, our association has no money to pay for it. How do we go about getting a loan for the work?
Answer. There are a couple of ways homeowners-association members can get a loan to re-roof your building. (1) One is by voting to approve a special assessment, a portion of which is passed on to every owners. If they don't have the cash to pay it up front - and many don't - owners can individually apply for a loan from the lender of their choice. (2) The other option is to go to one of the few banks that makes loans directly to homeowners associations. Most associations increase dues to pay for the loan, which generally runs from three to ten years.
What well-run associations have in common is a high degree of owners education and involvement. One resource that can help you learn how associations should run, is the Community Associations Institute, and there is a local chapter. See www.caionline.org and www.wscai.org.
No Reserve Refund
Seattle Times Forum - March 13, 2005.
Question. I am about to sell my condo, which has $200,000 in its reserve account. I figure $2,000 of this is money I've contributed....which I should get back because once I sell, I no longer will be responsible for the expenses. How can I get the money back?
Answer. Sorry, but you can't, said Jim Talaga, president and co-owner of Association Reserve Washington, a firm that performs reserve studies for homeowners associations. (Note: A reserve study assesses the life expectancy of "common area" elements, such as a roof, then calculates how much money homeowners need to set aside to repair or replace those elements.)
Washington , unlike Oregon, California, Hawaii, or Canada, has very little in the way of legal requirements for reserve accounts, and there is nothing in the law that speaks to sellers getting refunds. Condo governing documents don't usually address refunds. All this leaves, is the industry standard to not grant a refund. Why?
The thinking is that unit owners are "paying their fair share" of the ongoing use of the items that are deteriorating every day around them, such as the roof, the asphalt, and the exterior paint. And, this is the heart of the issues. They are not entitled to that money back because the reserves are offsetting their use of the common areas.
Concepts of Owners Rights:
The Seattle Times - November 14, 2004
The state Supreme Court has found that: "The central concept of condo ownership is that each owner must give up a certain degree of freedom of choice which he or she might otherwise enjoy in a privatively owned property". That freedom is given up in exchange for the benefits of the association with other rights of individual owners. As a result, the property rights on individual owners are subject to the condo declaration and bylaws.
Condo Reserve Study:
A reserve study is a long-term repair and replacement plan that helps condo associations adequately budget for future maintenance. Many associations hire them to be made, and a typical a study might note, for example, that a 530-foot-long wood fence has seven years' life left and will need to be replaced at an estimated cost of $16,000 to $19,000. Many states, including California, Hawaii, and Oregon (and all of Canada) require condominium associations to conduct periodic reserve studies. Washington is not one of the states. Generally, condo associations resist facing the facts; either the dues have to be raised high enough to adequately fund a reserve account, or a one-time special assessment is needed to pay for a particular project because not enough money we set aside in the past. The writer then goes on to point out that a condo's value is tied directly to its maintenance, or lack thereof. That is, maintenance should not be ignored. Further, that board members legally have a duty of ordinary care - sound business planning. Board members that shirk the law can be sued. Source: The Seattle Times, circa 2004
Delinquency:
Ms Jane Bryant Quinn, in her column on "Personal Finance" writes that if you own a condominium, you are your brother's keeper. If other residents of your condo don't pay their share, your own lifestyle and investment are in trouble. The building's budget may be cut, maintenance deferred and assessments might have to be raised to cover the lost revenue.
She writes that condo boards of directors need to be tough on delinquent owners and suggests these five rules:
(1) Charge a late fee on assessment that are late, even if one day overdue. (2) Send out delinquency notices every time an assessment isn't paid on the due date. (3) Include with the delinquency notice, a list of legal remedies the condo will take if payment is not received within a specified date. (4) Follow through if the money is not received. File a lien if necessary. (5) Treat everyone alike and apply your collection policy uniformly.
She advises would-be condo buyers to (1) Avoid any condo where more than 10 percent of the owners are delinquent. (2) Inspect the condo's budget. (3) Avoid a condo that does not have very much reserve. (4) Avoid any condo where there are more than 10 percent of the units held as rental investments. Investors are more likely to default than resident owners. Source: The Seattle Times, circa 2004
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