Catastrophic Condo Failure Is Not Caveat Emptor – Buyer Beware

The Bellavera Green Condo, Leduc Alberta, has suffered a massive, catastrophic, failure requiring all 150 of the residents (85 units) to vacate the premises. The reasons: code-failing fire alarm system, missing or damaged firewalls, condemned exterior staircase, non-sustained heat and electric, a second phase abandoned – unsafe and unsecured, and inability for emergency vehicles to access the building.

It is unclear who has title to the units (it’s not clear if the developer handed over title to occupied units), who to go after for costs, and the developer – Kevyn Frederick – has conveniently disappeared. As with catastrophic failures of this type, residents who have mortgages will remain responsible for their payments even if they can never return to their units, or have other costs until such time they could reside again at the Bellavera Green.

In all, 150 people (and those that rely upon them) have suffered grievous fiscal harm due to the mismanagement and greed of yet another developer. And I lay the blame clearly and solely at the foot of the developer and none others. Developers have full and final control over the building and plans. It is their choice to follow legislation, or to cut corners and ignore building codes. The rest of the infrastructure – including building inspectors – is just there to try to catch errors. But these errors are not there because they haven’t been caught; they are there at the failure of the developer. Trying to pass responsibility off on inspectors is a lot like saying “you didn’t catch me, so I’m innocent.”

That’s why fools who imply that the Bellavera Green owners who put down money and purchased mortgages have a responsibility to the failure of the condominium because of “Caveat Emptor” – or “if you were stupid enough to buy into this building then too bad for you” are pathetic and dim-witted.

The whole issue of Caveat Emptor, for a situation like this, was thrown out with Supreme Court of Canada judgement of Winnipeg Condominium Corporation No. 36 v. Bird Construction Co [1995] 1 S.V.R. 85, January 26 1995 (further discussion here):

First, it is reasonably foreseeable to contractors that, if they design or construct a building negligently and if that building contains latent defects as a result of that negligence, [purchasers] of the building may suffer personal injury or damage to other property when those defects manifest themselves.

In this case, the act of negligence: that it fails to meet code, and there is a real and true concern over devastating fire; so that personal injury or damage: the effects of such fire, that –

The reasonable likelihood that a defect in a building will cause injury to its inhabitants is also sufficient to ground a contractor’s duty in tort to subsequent purchasers of the building for the cost of repairing the defect if that defect is discovered prior to any injury and if it poses a real and substantial danger to the inhabitants of the building.

And the ruling seems to support my thought that the sole responsibility for catastrophic failures like this lay solely in the hands of the developer:

Apart from the logical force of holding contractors liable for the cost of repair of dangerous defects, a strong underlying policy justification also exists for imposing liability in these cases.  Maintaining a bar against recoverability for the cost of repair of dangerous defects provides no incentive for plaintiffs to mitigate potential losses and tends to encourage economically inefficient behaviour.  Allowing recovery against contractors in tort for the cost of repair of dangerous defects thus serves an important preventative function by encouraging socially responsible behaviour.

In the end, the owners are in for a long term amount of lost monies and (more importantly) time that will be required in moving forward with their lives. It’s a sad thing, and the province needs to put better protection in place to help stave off this type of abuse by developers in the future.

HOA Uses Community Consultation for Peacock Resolution

Just five days ago I chastised Larry Evans and the Fairfield Plantation for unilaterally slaughtering an established beaver colony, and then posting dead beaver mug-shots on their website.

In comparison, I give a tip of the hat and kudos to the Boynton Beach Florida HOA Fox Follow Housing Association. Dealing with issues of a 400 strong peacock flock, the HOA set out a survey to their members soliciting feedback how the HOA should deal with the birds.

With community feedback, which the video indicates 52% of the residents were in favor of some version of keeping them, the HOA has created a great plan moving forward.

Working with residents and almost a score of humane groups – including the Humane Society – they will relocate about 150 of the peacocks. The reduced flock should (1) retain the value in the community for having the birds and (2) reduce the impact – noise, droppings, and other related nuisances – that 400 (!!!) of the birds bring with them.

No mass slaughter, the residents are participating in both the decision and in the resolution of the issue, and an HOA which can proudly move forward saying that the Fox Follow Housing Association – unlike other associations – is focused on building a proud, inclusive, and participatory community. And that would be for owners and wildlife alike. Nicely done!

Colorado Looks to Legislate HOA and Condominium Transparency

Imagine living in a jurisdiction where the HOA or condominium corporation can deny your document requests with impunity. If you live in Colorado, that is exactly what can, and does, happen. State legislation indicates the association can deny providing documents unless there is “proper purpose” for the request.

There is absolutely no way to determine proper purpose, and owners are being forced to hire lawyers in order to get the documents they need. That is totally ridiculous.

Thankfully it looks like HOA regulations in Colorado are going to get a huge overhaul. In 2011 the state started tracking complaints voiced against HOAs – and the information is amazing. Complaints are not focused on pets, parking, and paint – which most people have always assumed. The complaints are about board and associations being closed for review, tightly controlled, and abusive in the use of their power.

From the 2011 Annual Report of the HOA Information and Resource Centre:

An additional and perhaps one of the more troubling complaint types the Office heard was that
the HOA board or manager was harassing, discriminating or retaliating against homeowners.
Many homeowners felt that their boards had singled them out and were arbitrarily fining them
for violations, when they were not in violation; engaging in selective enforcement of covenants;
and precluding them from participating in meetings.

The 2011 Report is a great read – and truly eye opening about the nature of a person’s relationship with their HOA. It’s a well suggested read for anyone involved in condominium and HOA work.

Anyways, it’s always nice to write a blog post about how a group or organization “gets HOAs and Condominiums” and a big, positive, tip of the hat to the Colorado State Legislature in drafting new legislation to address some well needed change.

HOA Kills Established Beaver Family

Even though it was legal, posting photos of the dead beavers isn’t the way to win friends and create a great name for your HOA. It’s a great way to alienate your HOA from the rest of the community.

Fairfield Plantation HOA of Stallings, North Carolina, hired a trapper to kill a family of 6 beavers that had resided in the area for several years. The HOA president Larry Evans referred to these beavers as criminals, using the term they had been “apprehended” (nice way to say slaughtered) and that HOA members could see the “mug shots” of the (dead) beavers on the HOA site (now removed).

North Carolina appears to have a healthy population of beavers after their overhunting in 1930s. Reintroduction programs between 1939 and 1956 have brought the population back enough for an extended hunting season to be allowed on beavers.

But at the end of the day, it’s the callous action of the HOA board in failing to realize that a population of beavers, established for several years, is a part of the community. Given that, there were a multitude of other options – including berm building and other activities – that could have let the beavers continue to inhabit and contribute to the community.

With the world of Twitter, Blogs, and other tools of social media – handling this issue so poorly will (justifiably) continue to haunt the Fairfield Plantation HOA and Larry Evans for years or even decades to come. The posting of the pictures, the reference to animals acting naturally as criminals, that’s beyond the pale of proper decorum, civility, and humanity. If one cannot show restraint with the culling of beavers, why show compassion or decency anywhere else in one’s home or business dealings.

Plus, I’m Canadian, so that’s our national symbol your killing.

Mixing Board President and Management Company President Roles Led to Fraud

If there is one easy piece of advice I can offer condominiums – always use an unrelated management company to manage your books. While this won’t eliminate fraud it most certainly cut down on it.

For owners in the Lovers Key Condominium, Estero, Florida – this lesson came with a rude shock: $291,500 stolen from the association’s funds by past president Charles Bennett III, and past vice-president Kenneth Marwick. In this case Lovers Key Condominium also used Bennett’s property management company, EID Management & Realty, to operate their condominium.

When the president of your board is also the owner of the management company you contract, it is too easy for bad things to happen.

In this case both Bennett III and Marwick have pleaded guilty to first degree grand theft charges. Both have been sentenced to prison time and following probation.

Being in the role of both control of the condominium board and the management company they were able to funnel money into companies controlled by the two men, all of them unrelated to association activities. (video)

As more and more money sits or flows through condominiums and HOAs, we need legislation that forces boards and management companies to be non-related. The use of two eyes – the boards Treasurer and a management company is a powerful way to keep the books legitimate and funds safe, and that relationship needs to be kept separate.

Residents Charged with Forging HOA President’s Signature, Stealing Gates

There will never be a shortage for the “dumb things residents do when frustrated” file on CondoFeed. Take for example Desislava Gliha and her husband John Gliha. Desislava was caught on camera buying a money order. Nothing illegal in that, unless you then forge the HOA president’s signature on it, and then use it to pay for the removal of the gates (you know – the gate part of a gated community).

Both Desislava and her husband have been charged with forgery and grand theft regarding the gate removal.

Local news video here.

As always, there’s a history of years of dispute between the owners and the HOA board, and as often happens one side (and HOAs can be asinine and juvenile as well) decides that some “real action” must be done.

Such happy news though, the gates were found and remounted, perfect for the Gliha’s to drive through when returning to their Bristol Estates home after posting bond.

Do You Have Subway Collision Coverage in Your Insurance Condominium Rider?

Not being an insurance expert, I’m not certain what type of coverage your condominium could use to help protect it against wild and untamed subways rampaging across the crowed city skyline. As seen below, this Lo Ovalle, Santiago, Chilean condominium, and 4 cars, was not exempt from these savage attacks.

Apparently this was a high-speed test of the line after the rails had undergone some repair. As such, the train had only the driver on it – who escaped with only minor injury.

Condo Loses Court Case, Considers Fining Defendant Anyways

Gateway Plaza Condominium Association, Vail Colorado, has been unsuccessful in preventing the Arthrex company from opening a surgical training centre in their complex.

The complex, a mixed use building, holds 9 residential condos and about 9 current commercial tenants (realtors, a couple marketing/media companies, designers, financial advisors, and some home contractors and an upscale restaurant). The space Arthrex is looking to utilize previously held a medical office with OB/GYN and ear, nose and throat doctors.

Charles Lipton, president of the condo association, in what I can only read as an act of pettiness and donkey-ness, has indicated the board will examine fining the company for every day it runs the surgical training center. This is a classic example of a board looking at its quasi-judicial powers, and the ability to be their own judge, jury, and executioner (as the real courts didn’t award them their court case) to sledgehammer whoever ticks them off or fails to meet their level of decency.

Hey, if you don’t win in a actual, honest to goodness, real court – you might as well utilize your divine right of condominium to correct that!

Arthrex’s cardinal sin – the surgical (note “surgical”) training lab will utilize parts of actual cadavers. Specifically, the training will use human joints in educating surgeons on orthopedic procedures.

It’s not like the training lab is serving Soylent Green. There’s already a restaurant in the complex.

Compulsory Board Education for Condominiums, Strata and HOAs

In 2008 Florida enacted mandatory education for condominium boards. From some accounts the move has been an overwhelming success, and to others it has been simply more paperwork.

Having argued that the housing represents the largest asset, and form of enforced savings, that all but a few people will ever have – extra diligence and care should be taken by boards in managing condominium and HOA complexes. A poorly educated board can cause significant hardship to a huge amount of people, and jeopardize their financial well-being with only a few poor decisions.

To that, I fully support some sort of mandatory education process even though this is a volunteer, non-profit organization. I recognize this education requirement is more restrictive than business boards which have no mandatory requirements.

It is important to realize that this is mostly an issue for self-managed condominiums or those that don’t retain a paid manager at their board meetings.

A condominium management company fulfill the need for mandatory education. Management companies (generally) have exceptionally qualified individuals who know the local and federal legislation, and are trained in manners of ethics and process. They act as an in-person book of knowledge for boards. They are the best resource (and are worth a lot of the management contract cost) for a board.

But for those that don’t have a manager at their board meetings, training of the members is essential.

For disclosure, I serve on the Canadian Condominium Institute’s National Executive; teach condominium board education classes through the CCI, and our Ontario chapters in conjunction with ACMO have presented opinion to the provincial government supporting director education.