Condo, Strata and HOA News

Monthly Archives: December 2011

Rats! You Dirty Stinking Rat!

Living in one of the few rat free places in the world, I never fully understand the devastation rats can have on a building or a lifestyle. These little beasties can chew through sheet metal and enjoy swimming through sewer lines and popping up through your toilet!

Now, I’m more concerned over those Norwegian rats (which the Norse must curse the name, as they did not actually originate from Norway), not those small mouse sized rats which have their own condominium developments.

In New York popular lore says there are 4 rats for every human inhabitant. This myth may become something more than true since the Department of Health and Mental Hygiene cut 57 of 84 full-time pest control positions in 2010.

Most condominium and HOA bylaws specifically forbid the ownership or breeding of rats. In this case, I’m fully behind this rule. I’m normally very open for owners to have pets of all types, but rats do pose a significant infestation risk in the case where they may escape. Sorry, I have a strong bias against rats. I highly suggest rat proofing.

I have the greatest sympathy for owners in developing nations. India and Bangladesh both have significant waste and garbage infrastructure deficits. A previous blog post highlighted a condominium corporation in India that initialized its own recycling program to cut down on local unlicensed dumping.

For Suhaila Majid of Titiwangsa Sentral Condominium in Jalan Cemur, Kuala Lumpur, their back lot parking has become a community dumping ground for garbage. This has led to excessive rats invading the grounds.

Singapore residents near a nature reserve have extra visitors every day for their first floor units. The infestation has been going on since 2003, and includes home invasions as the beast go for the food.

For North American condominiums and HOAs, I would think that any long term infestation should show up on an Estoppel, and all exceptional infestations should show up on board minutes.

HOA Treasurer Indicted for over $1 Million in Fraud – Please Get More Than One Person Doing Books

Here’s another example of an HOA possibly being defrauded by the treasurer. Aaron Yashouafar of the Paradise Spa Home Owners Association in Las Vegas just got indicted for looting more than $1 million from an HOA. Over a year it is charged that he wired himself $250,000 for personal projects, and then deposited two insurance cheques for over $830,000 into an out of state account.

To me it doesn’t matter if your HOA or condominium account has millions of dollars or tens of dollars – any money misappropriated is a hardship on the owners.  There are some very simple steps to help prevent fraud:

  1. Self-managed boards should always have co-signatures required on cheques, and standing polices that limit the amounts of electronic transfers.
  2. Books and statements should always be presented by the treasurer to the board at each meeting.
  3. If possible, use a management company to do the bookkeeping. While it’s not unheard of for a management company to “go bad” – it’s a lot, lot (lot) less unlikely because your accounts are run through a third-party, who has to make all your account statements available to your board and treasurer.
  4. Move the role of Treasurer around – do not let the treasure remain the same person for more than two year. The bookkeeping isn’t too hard, and even for self-managed, outsourcing the bookkeeping is hugely inexpensive – just search the internet for services.

$100,000/Year Condominium Fee

I always wondered what those high-end condominiums cost in maintenance fees. In Australia, an 8600 sqf condo at the Bennelong Apartments (nicknamed the Toaster) – which includes cellar, billiard room, an exclusive elevator and a fantastic view of the Sydney Opera House, is about $100,000/year in condo fees.

It is also for sale, and you’ll have to pony up. 91 year old owner Cyril Maloney is asking $30 million (AUS, which is about on par at the moment) and flat out turned down an offer for $22 million.

It is a pretty building.

In Defense of Plastic Santas

In this month, when the frenzy of displaying religious beliefs with copious amounts of coloured lights and plastic Santas, candy canes, and sleighs becomes the norm, remember that you have condominium and HOA bylaws. Most will put a damper on your activities.

One condominium only allows white coloured lights for display, and fines for any colour other than white. Others are very mindful that decorations aren’t allowed on common property – but deeded and assigned used (like a porch or balcony) would be ok.

I’m all for some expression of the holidays – indeed, it would be a sad sad world if we couldn’t let our neighbours express themselves. By-laws tend to force an overly strict homogenization, and we need diversity in our community. So – though check your bylaws to how you can do so – please look to express yourself!

An addenda – while (according to a poll of Florida condominiums) the winter celebrations of Christmas is the primary drive for granting public expression of faith during the winter – make sure your by-laws allow all owners, of all faiths – in spring, summer, winter, or fall – to have a chance to express their celebrations. You might even get to break the daily fast of Ramadan with a neighbour once or twice.

When Hoarders Abandon

Sometimes foreclosures come with bonus super surprise gifts – like years of accumulated trash. When hoarders abandon a unit (hey, they suffer financial hardship as well) to a foreclosure, by the condominium corporation or the bank, the nearby residents often get the bonus of smell and vermin as parting last words.

At some point the condominium will use by-laws (almost every condominium has these) regarding smells, health, and safety to enter the unit and have all the trash removed. If the property has a mortgage, or the bank has possession, in most cases the costs of cleanup will be paid by the bank. Because outstanding fees imposed by the condominium on the unit need to be paid before sale, there is a pocket to pull the cash from.

In the case of a foreclosure by the condominium on a mortgage less unit, the banks will usually award costs and allow the condominium to collect out of the proceeds of sale.

Indian Condo Recycles Organic Waste, Grows 300kg Grapes

Most municipalities now have recycling programs for single residential and low density housing. With curb or alley pick-up, multi-bin pickup works well, is reasonably economical, and has proven very successful in reducing the volume required to dump.

Condominiums have proven significantly more difficult to bring on line. Many condominium were built 10 or more years ago – and don’t include appropriate space or facilities to recycle. Personally, my first condo we bought was a 1970s built building and while we tried implementing a recycling program during my time on the board, we cancelled it shortly thereafter. There wasn’t an appropriate space that could collect the recyclables and allow access to a company to remove the materials.

Even new builds may not have appropriate space – there is little profit for builders to add additional space just for recycling.

For condominiums that do successfully recycle, they tend to be limited to hard-materials (cans, glass, papers). There is little opportunity for kitchen or biodegradable waste.

In the gated community of  Beverley Park-1, Gurgaon, India there has been a very successful pilot project with biodegradable. In part driven by illegal dumping in their area, they looked at a solution that would empower them to help address the dumping problem locally.

The condominium has been using organic waste converters to produce manure for their orchards, mini plantations and park. The success of the program this year has allowed them to harvest over 300kg of grapes, and a variety of other fruits including oranges, lemons, and peaches. They now have been able to fertilize 4,000 sqm or green space without artificial fertilizer.

Most North America condominiums aren’t as lucky to have available or owned green space to use processed organic waste on. For those that have the available space, municipal and federal laws can prove a significant deterrent as well to organic recycling.  Successful projects, like this one in the McKee Condominiums, Bellevue, Washington, are few and far between.

In all, there are significant barriers for existing condominium in the face or recycling – traditional or organic. A proactive municipality could change that going forward. Making recycling facilities a requirement of any new condominium or HOA development, along with new legislation that promotes and encourages recycling would go far in bringing around a green city.

Toronto Condo Market – Boom, Bust – Banks Divided

Toronto. Again.

The question is – will the growth continue, even with 21,000 units coming on-board this year and the same scheduled for next. The Greater Toronto Region has about 5.2 million people in it, and a growth rate of about 0.4%. That would suggest about 21,000 new people (including births) – if we average it out to the 2.1 people/family, that’s about 10,000 new units required. So we have an oversupply of 11,000 units/year in just condos alone – not including low-density housing.

To this the Bank of Canada, in regards to Toronto, has indicated:

The supply of completed but unoccupied condominiums is elevated, which suggest a heightened risk of a correction in this market.

In July of this year, the RBC said:

We believe that the attractiveness of investing in condominiums will gradually diminish … [and the overall housing market will be] mainly flat in 2011 relative to 2010, with some wakness emerging next year.

If you’re pro about market growth (average unit cost in November was up 8% from last year), National Bank Financial analyst Stefane Marion indicates that the current inventory of Toronto units could sell in 19.3 months – well below market lows of up to 48 months historically. You can also see in that Montreal, a reasonable close major metropolitan, condominium construction is up 68% year over year. It is unclear if this is added competition or an additional indicator that growth continues in Canada – especially the eastern heart.

I still think it’s due for a correction – earlier reports this year indicated 70% of new condominiums are investor funded. With world markets still tumbling (down 2% yesterday in financial sectors) investors will start limiting their exposure to a housing bubble. This in itself will start the downward trend on cost.


City of Cambridge Punishes Condominiums with Fire Hydrants for $9000/Year

Cambridge, Ontario, has placed a $9000/year charge on condominiums with a fire hydrant or other “big pipe”, a cost which is charged on top of the water and sewage costs each owner individually bears. The water and sewage, up 10% in January, are scheduled to almost double by 2019.

Condominiums offer great boons to a municipality – they create a high density residential area, forming an environmentally responsible, affordable and sustainable municipality. Edward Glaeser sets out this argument in his February 2011 The Atlantic article “How Skyscrapers Can Save the City”

Eric Jaffe points out in his article “The Case for a D.C.-Baltimore Mega-Region” that higher density will save about $1.5 billion a year in spending on roads, schools, and other infrastructure. Residents would also save about $400/year if only 1/4 of the region’s planned low density becomes high-density.

Calgary, Alberta, Canada has recently completed a study that shows dense city development moving forward will save 33% in total capital costs, and 14% less in operating costs, then current density levels.

It is without argument that condominiums contribute significantly to the fiscal wellbeing of municipalities. But instead of rewarding owners in such developments, municipalities punish them with additional costs – often to the benefit of unsustainable low-density zoning and development.

Regarding water, sewage, and condominiums – the municipal cost for supplying and maintaining kilometres and kilometers of piping are saved with high density living. That should be recognized by the municipality, not punished.

The Use of Foreclosure to Collect Fees Needs To Change

We’ve recently seen the law firm that billed about $3000 so the HOA could collect $4.70, and the lawyer who billed $150,000 for a collection on about $24,000. Add to this the newest – an HOA suing for foreclosure on $2400 (including legal and filing fees) for an original amount outstanding of $120 bill.

HOAs and Condominium corporations get told by the little devil angel on their shoulder that courts award costs to the victor of a ruling. With that in mind, these organizations move a lot of their collections to lawyers with instructions to use the heavy-handed ability to start foreclosure (instead of civil suit) on outstanding amounts. These outstanding amounts, as indicated, can be as small as $4.70.

For Asher Essebag and his original $120 amount of missed contribution to the Boca Del Mar Improvement Association, the filing fee alone was about $360.

The ability to foreclose on miniscule amounts, and the costs involved – which outstrip the original amount by magnitudes indicates there is something wrong with this process.

Maybe there needs to be a rule that you cannot foreclose on a unit unless the amount outstanding (before costs) is 5% or more of the unit’s value. Even 2% would likely be acceptable. Just that we require something to strive off this criminal waste of court time, lawyer time, and aggravation cause by HOAs and condominiums using foreclosure to collect on insufferably small amounts.

CondoPapers Gains New Client: Celtic Management Services Inc.

CondoPapers is ecstatic to announce the addition of a new client to their services – Celtic Management Services Inc. of Sherwood Park Alberta.

Celtic Management Services Inc.  incorporated in January of 2006. Over the last 6 years Keri Ramirez, founder, and Suzanne Eacott, Broker, have transformed this company into a leader in the condominium management and rental pool industry.

Celtic Management Services Inc. manages over 50 condominium properties throughout Edmonton and the surrounding area. The properties include of a mix of medium and large scale condominium corporations (including high-rise, low-rise, and townhouse complexes) and rental pools. With such a large portfolio and years of service, Celtic has a proven record in meeting the ever evolving needs of their clients – both long term and new.

On behalf of CondoPapers, I welcome Celtic Management Services Inc. to our family of management companies that benefit from our online document distribution and tracking services.