Condo, Strata and HOA News

Monthly Archives: July 2011

Holmes on Homes on Holmes Approved Home

OK. I’ll admit I’ve always been a fan of Mike Holmes since seeing the first episode of Holmes on Homes. The mixture of anger, resolve, and a powerful moral drive that the world should have been better and people more honest is addictive to me. Add that to an industry which has generated the aura of a helpless homeowner at the knee of the contractor (and that’s not generated out of complete myth), and we have the making of a modern day knight.

And honestly, if the industry wasn’t as rife with incompetency, poor business practices and a history of poor performance – especially at the homeowner level, then the premise of his show would have never generated anything past a pilot episode. Instead, the show survived and Mike has since opened up a business umbrella for several products and services that run on the “honesty and trust” that he developed in the television show. Inspections, products, multiple TV shows, approved products, workwear, and most recent sustainable homes and communities – Holmes Approved Homes.

I’m a big fan of two things (1) Strong industry self-regulation and (2) A big hammer of regulation when self-regulation fails.

This would be a great attempt to build on the self-regulation side, with the creation of a set of standards that are followed and implemented in new building. The program indicates it adds 5-10% to the cost of the building to have a residence that is crafted under the Holmes Approved Homes system. And that sounds cheap if it delivers on its promises.

Having sat at the Alberta review of the Condominium Property Act for the last two years, all I heard from the developers was – any change to legislation would drive prices up so high, that housing would no longer be affordable. They painted scenarios where the costs would skyrocket with massive increases in even basic entry-level housing. At no time did I feel that the price increase that they expressed could be done on 5-10% increase.

So if we can see that real, sustainable, and importantly, trustworthy new development can be had for less than a 10% increase in costs, then I am all for that. I would champion this program.

As always, we do have a 10 year “testing phase” that the commitments made can be delivered, and I also believe that the delivery isn’t in the architecture and materials so much as it is in the physical construction and the quality of the trades. If the trades issue can be solved (based on the massive failings in new condominium developments from poor implementation) then we really have an inexpensive winner of a private building program.

Holmes’ Homes get celebrity inspection

$76,050 Parking Units

Just a small disconnect between the cost of a condominium to house a senior citizen (see previous blog post) and your car, a Midtown Manhattan parking garage (attached as the base of a condominium complex) went for $5.4m USD recently, or about $450/sq. foot (the senior’s complex was running $30/sq. foot).

Sure, I totally give you that location means a lot in the valuation here 🙂

6k Special Assessment On Units Priced Between 12-19k

When things go bad, they go bad – we have a 40 years old seniors complex (55+) Inlet House in Fort Pierce Florida that has been foreclosing on units that haven’t paid the special assessment of 6,000 (USD) to do a major replacement of plumbing. This repair is also requires the vacation of the units during some of the repairs.

What I found interesting was looking at realty listings for the complex; they average $30.50/sq. foot. Please sir, can I have 12 of them! 726sq. feet for $11,900 – list. A little negotiation and I’m sure you can get it for less.

It comes back to the issue that sometimes a “small” special assessment (6k in this case) is still beyond the keen of the owner to pay – especially in this case where the building is a senior’s residence and many are likely on fixed income. That also means they have less flexibility or ability to absorb the costs of vacating their unit for the repair. It also represents 1/3 of the unit’s equity.

What also has me concerned is the tv report which indicates that Florida is looking at making it harder for corporations to foreclose on deadbeat unit owners. Giving unit owners the ability to pass on paying the costs of their common area and corporate bills is always a bad thing.

Toronto Condo Starts Up 70% Compared to Last Year. WTF?

Ok, maybe it’s all those people fleeing those condominiums with no reserve funds and huge debts only to do the same with another condo! But in this, still recession and lackluster recovery, Toronto is going gangbusters for condominiums!

Carrick: Strong bank sector, mixed urban use spurs condominium demand in Toronto
In the context of a highly regarded Canadian economy, Toronto kicks up its heels

Regulations That Inhibit Board Participation

It’s hard enough to get owners (and sometimes, if the bylaws allow, tenants) to run for condominium boards. Most condominium bylaws allow a lot of flexibility, including going as far as self-nominations from the floor right before the election of the board (something I encourage).

In Alberta, the rules for appointing a board are loosely defined by the Condominium Property Act, and are similarly loose throughout Canada.

To my surprise, this is not the case in Florida.

The Florida Statute FS 718.112 (2) (d) and the Florida Administrative Code 61B-23.0021 express some very specific requirements for board election notifications:

  1. First Notice of Election should be sent out a minimum of 60 days before the election and should include the date, time and place of the election, number of positions available and instructions for intent to run and information letter.
  2. A candidate should submit his or her Intent To Run a minimum of 40 days before the election and make sure to get a receipt or send by certified mail to be placed on the ballot.
  3. Candidates may submit an Information Lette(sometimes called a resume) a minimum of 35 days before the election on an 8 1/2 by 11 inch sheet of paper (so, not electronically!). The association may not edit, alter, or modify the content, nor is it responsible for the content.
  4. Second Notice of Election should be sent out a minimum of 14 days and no more than 34 days before the election and should include an outer envelope – for validation, inner (ballot) envelope – to make it a secret ballot, ballot and voting instructions.

I find that such strenuous requirements for getting on a ballot (argh in the first place!) and then the distribution of the ballot would only have one effect – chilling participation and limiting new people to participate.

Taking Things For Granted By Being In The Industry

In my role as President of CCI South Alberta, I sometimes get emails to answer. Recently I received an email from a person who is planning to move to Calgary and was concerned that there is no method of condominium contribution control in Alberta.

They sent me four MLS listings, for different units in the same complex, and they were aggravated that the contributions were wildly different between units (varying from $400 to $505/month). Indeed, the person expressed that condominium owners “need at much protection as tenants” to prevent abusive condominium fees.

It took me a few minutes to realize that the person was equating living in a condominium to renting, and that the condominium fee was looked at as rent. They also didn’t realize that on a square foot basis, the monthly contributions only varied by a maximum of 1.5 cents/sq. foot/month. There was no connection that a larger unit may pay more in condominium contributions.

Being in the industry it seems silly that a person equates contributions to rent, and that the size of your unit has an impact on the amount of the contribution. I guess I would call that having industry blinders.

What the letter really hit home with – that people in the condominium industry need to work a lot harder to explain, express, and defined the basic tenants of condominium to the general public. When we howl to the press about the issues of condominium we assume that people understand what we mean by the word condominium. But they don’t, and we cannot assume any more that they do understand. We need to do more work at a very fundamental awareness level to the general public. Only then will our issues be understood, and we will have a change to get the support we need from the general public in building a better condominium experience.

Special Assessments Do Not Need to be 10s of Thousands to be Unaffordable

As we hear of 87 to 187k special assessments that are being levied to some condo owners in Calgary, I read another story that reminds me that smaller assessments may be completely unaffordable.

96 year of Sarah Eisenber has lived in her Fort Lauderdale condo for 12 years, and the building (legally, there’s nothing nefarious here) is assessing a $6500 special assessment for storm window work (there’s big storms a coming!).

For many people, even young and first time purchasers, $6500 could be financed or borrowed against. But for a person who gets $1500/month in Social Security at the age or 96 – there is absolutely no recourse, no expected revenue to borrow against, and no savings.

For her, she had been budgeting on a predictable condominium contribution that she had been paying regularly – and never in default with. But a special assessment, even a smaller one will force her out of her home as the condominium legally forecloses the unit for the monies.

I guess there are two things to walk away from this story with.

One that the cost of livening in a condominium will always be monthly contribution and additional costs as determined. That’s the way it works. To budget without the special assessment possibility will put you behind on payments. That is simply the nature of condominium, and Sarah was in essence living in a house that was too expensive.

Two, that a well-run corporation should be able to predict and forecast this need (especially something like window/storm protection) – building a reserve over several years and having minimum impact on residents with a compromised ability to meet special assessments. As a board member, there is a responsibility to realize that not everyone had fiscal flexibility, and a good board tries to protect against additional unscheduled cash calls.

At 96, this is a tragic situation for Sarah. No ifs ands or butts. But it is a story that needs to be communicated to owners so they realize that the contribution alone may never be sufficient in meeting their fiscal responsibility to the condominium.

Canada Is Advanced When It Comes To HOA and Condo Fee Collection

It is always easy to assume that what you experience is universal. With condominium legislation, that is most definitely not the case. Canada is dramatically different than the US as a whole, and we are well in advance with legislation that protects the viability of the corporation.

In Alberta (and most provinces has similar rules) we require a managed and adequate reserve fund for the replacement and upkeep of common property and the building envelope. The number of states that require such a reserve (I believe) can be counted on two hands.

In Alberta, condominiums can get orders to direct rental tenants to pay their rent to the corporation to pay off owners who are deadbeats on their monthly condominium contributions and any special assessments.

So it comes as a surprise (but an interesting point that the best way to grant condominiums the protection they need in the US is a massive economic collapse and the creation of what seems to be an unlimited number of deadbeat owners) that Florida is only now legislating the rights for corporations to collect from renters the debts of the owners (through the collection of the rent).

As well, most bylaws I know of disallow a delinquent owner to vote at annual general meetings. This also is only now being legislatively supported in Florida.

While all this seems a little late (and I would hope it spreads to other states), I’m glad it is happening. A corporation needs the ability to ensure the funds required to maintain their ongoing viability.

Mixed Zone Development, Perfect for Condominiums

There is an article in the Globe and Mail entitled “Why condo-villes don’t work” by Shelly White which I agree with completely. I don’t get the title – it’s actually a very positive article about the benefits and joys of building community focused developments that include residential, business and commercial in one area. Where everything you need is within your community (read: walking distance, or very short public transport/bike/scooter). It is an approach to development that I have held for a long time.

In Calgary, every planning and development zone is its own, and never shall any overlap or meet. That has led to one of the lowest population densities in North America for a metropolitan centre, and an overly extensive infrastructure to maintain this approach. This is an approach that I find dreadful, and has created for dozens of years a downtown core that literally empties at the end of the work day. A ghost “down”town, as citizens car commute mostly back to their suburbs. If we say that such design costs 70 minutes of commute time a day per person, and 160k people commute, then we kill (70m*160k*250day) 5327 years of productive, enjoyable, life every year to commute (and that’s only if 160k people commute a day – Calgary Transit says it is more).

A mixed zone development approach to all towns – which can be driven by condominiums as the residential part with business on the bottom, would substantially help to increase a quality of life.

Adding Flames to Condominiums Banning Smoking Anywhere

There is a small (small) percentage of condominiums that are moving towards completely smoke free for their owner units. Not just content to ban smoking in the common property, they have enacted by-laws that prevent smoking anywhere in the complex.

There are a variety of reasons for this – buildings that are old or improperly sealed between units will leak second-hand smoke between units (I once lived in a rental condo where my unit acted as a chimney for the unit directly below). Wood structure complexes have started doing it for fire and insurance reasons. Some just do it to promote a healthy community.

I’m not all that excited about banning smoking in titled spaces (units). I think there should be opportunity for owners to have some control over their private spaces (for the record I’m a non-smoker). It would be too easy for a condo to move from banning smoking to banning ethnic foods in my mind. There is a level where protection in many issues become ethnic division – indeed, if everybody was exactly like you we would never have strife!

Anyways, there’s been another fire caused by cigarettes left improperly disposed of. In this case most of the fire damage was limited to the originating unit, but the unit below (that’s always the case) suffered significant water damage (and some minimal fire damage).

That will add heat to the debate for condominiums looking to ban smoking in owner residence as well.

Discarded cigarettes cause Millcreek condo fire – Salt Lake Tribune
Cigarettes spark Millcreek condo fire, officials say -Desert News