Condominiums Favorite Target for Surprise Water Bills

Insurance, Natural Gas, Electric, and Water/Sewage are usually the four big budget items for any condominium. Together in one condominium that I own in, that represents 48% of our operating budget (excludes contributions to reserve fund). As they are such large amounts of a budget, even small fluxuations in billing can significantly impact a condominium.

Watson Heights Condominiums in Guelph, Ontario, received a $25,603.89 bill for 21 days of excessive use. The water consumption was normal before and after, and during that time there were no repairs of leaks or burst pipes. The meter was tested and was determined accurate. The residents will have to pay for this ghost water consumption.

Kingman Acres Village Condominiums in Florida was 70 percent higher one month because of a software glitch that public works admits happened (kudos to the city for quickly identifying the issue and owning up to it – that’s admirable and should be supported).

A condominium in Sandy Springs, Ga. received a more than double bill ($16,000 vs. an average of $6,500) ghost consumption bill in early this year.

And a whole swack ( here, here, and here) of condominium complexes this year have received outrageous bills because the city metering system (1) either had been failing to bill over time – sometimes for years, or (2) when the condominium was switched to metered billing, the difference over actual consumption and assumed was back billed – again up to 5 years.

In all my searching though, I never did find a report of a city municipal water service rebating a condominium for having lower metered billing than the averaged billing. Seems payment is a one way issue.

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.

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.

Bella Vista Calgary Interview

On Wednesday 29 June 2011, I was interviewed for CBC Television on a developer’s ability to walk away from buildings that are made with significant structural deficiencies. The story aired at 5PM and 6PM, and was good at expressing the anger being caused by a system that is failing owners.

While it didn’t make the sound bite, I lay the blame fully with the developer. They may indicate the building was passed by the city inspectors, but the inspectors are a lot like police attempting to catch speeders. Overall they help reduce the overall error rate, but they cannot catch everything, and there are developers that will still, wilfully, “drive 225 in a 50 zone” and not be caught. For developers to say “I wasn’t caught by the inspectors, so I hold no blame” is completely without base.

Here is the link to one of the CBC cuts, starting at the 6:55 mark is the condominium segment.

Here’s an article from the Calgary Herald which covers the issue well.