Criminals Treat Condo as Giant Living Piggybank, Owners Attempting To Respond

The Estates at Westbury, Bluffton, South Carolina has a couple of issues. The first is crime, and the second appears to be a failure of the management company to respond.

The 300 unit complex is riddled with crime and negligent owners and tenants. And I get the feeling that criminals are treating the site as a giant piggy bank. Two (news, news) units have recently been home invaded by armed group of men – both times forcing the owners to lay face down while they rifle through the home for valuables.

Less heinous, one resident describes the building on goings as:

the Estate could be a beautiful and serene place to live, there are a number of facts that make this a less than desirable home. With a number of armed robberies, muggings, residents who are permitted to move in and hold drunken parties until the middle of the night, fist fights breaking out at said drunken parties, carloads of people coming in to the community who do not belong here, people driving at undesirable speeds through the community that are a threat to the children playing here, drug dealings going on that are known to both the Association Manager and to the maintenance team, and music so loud that it shakes entire buildings – the lifestyle and feeling of “home” at the Estate is in sharp decline

It is so bad that one elderly couple fear even their walk to collect mail.

Ouch. That means it’s time for the management to step up.

To their credit, it appears the management is improving lighting and putting in brontosaurus in size speed bumps to limit vehicle speed. Where they fall down is communicating with the owners, and supporting their actions.

Most importantly, when it comes to supporting a proven method to reduce crime in an area – creating a neighborhood watch – the management has been resistant to at each step. The residents put up over 500 flyers to communicate with the community, the management tore them all down. Owners and tenants try to engage the Association Manager; she has banned tenants from her office because they are not owners. Tenant Jennie Krogulski has gathered about 30 tenants and owners volunteers to start a watch; and the final message from the manager – the residents are not allowed to set up a Neighbourhood Watch.

I  would counter with the following: if serious injury occurs to any member of the community – which a reasonable person would deem a neighbourhood watch would have helped prevent – I would go after the resident manager. I would hold her responsible.

Neighbourhood Watch programs have existed for a long time and are supported by the police department. Volunteers receive training and support. Issues of liability have all been resolved over the 50 years the program has been in place. USAonWatch even has a copy of the Neighbourhood Watch Manual free for download.

A Neighbourhood Watch program for a complex with these issues is reasonable, accessible, and empowering for the residents. It is a great and awesome program to support, and should be seen as a progressive action to combat the real and tangible threat of harm and danger these residents have.

For up to date information, the active residents have a Facebook page for the complex that can be seen here.

Case Study On Condominium Price: Cloud 9 Sky Flats

Some people look at the price of housing much like stocks – if they go down enough, then at some point they have to be a great value to buy. Today we are looking at The Cloud 9 Sky Flats at 5601 Smetana Drive, Lake Minnetonka Communities, 55343.

The Cloud 9 a 165 unit conversion from an office building into a condominium that was turned over from the developer in 2005. Conversion from an office building is a little uncommon in itself (though not unheard of) and brings with it some baggage – including in this case windows that don’t open, a lack of balconies, floor plans not originally designed for residence, and large lot based parking among other factors.

Zillow shows four units currently for sale in the complex. Most attractive to purchasers are the unit prices which average at $152/sqf. This is around 50% of the cost of the units from only a few years ago (2006 peak). Half off a condominium seems like a good price on its own, but the condominium has several other issues that may mean the price is appropriate, and not at a discount.

First off, multiple individuals have been charged with mortgage fraud cash back scheme on over 40 of the units sold in The Cloud 9 during 2006 through 2008. These fraudulent sales both artificially inflated the price of the units, and then assisted in the price collapse as more than 80% of those sales went into foreclosure.

Second, the condominium appears to have a maximum rental limit of 20% of the total units – of which that number has been met. Current owners will have difficulty renting until other units stop, and investors are blocked from buying because they are unable to rent the unit.

Third, three of the four units are priced above the Zillow Zestimate on average by 7%, indicating that compared to the surrounding area, the units may still be overpriced. The fourth is 15% above the Zestimate, but has been on the market for 304 days, and may have been set when prices could have been higher.

Fourth, Re/Max Results show 43 active listings in the building (remember, in a condominium of 165 units) – or more than 1/4 of the units are available for purchase. If you buy into The Cloud 9, there will still be one quarter of your neighbours trying to sell, and as such actively pushing the value of you condominium down.

I always indicate that when buying housing, you should always buy what you think best suits your life, in a price that you can afford – with some financial room in case of unexpected costs or job loss. Outside of that, little matters if you are buying a home, including the current price unless you hope to flip or sell in only a few years.

If the question is if The Cloud 9 represents a good deal – it might be, but not if you base that decision compared to its price 5 years ago. There are enough issues to show that the price was artificially inflated, that the excitement over an office conversion (with all the related baggage) has worn off, there are current bylaws which encourage downward pressure on the price of units, and more than 1/4 of the owners want to abandon and sell out from the building (raising the question of why).

Importantly, for a building with so many foreclosures – at least 1/3 historically – and so many currently on the market, you should look at the financial statements of the corporation closely. Check to see if the foreclosures or current sellers have led to the condominium carrying a deficit because of a lack of paid condominium fees. If there is a deficit, new owners will at some time have to pay for that deficit, so make sure the price of the condominium reflects a discount for any deficit carried by the condominium, and you have enough cash if the condominium issues a special assessment or raises monthly contributions.

Patriotism Is an Invalid Reason to Break Bylaws

The bylaws of condominiums, HOAs, and stratas exist to manage the common property related to the development – the hallways, walls, grounds, parkades and amenities. It’s a document that builds a simple and usable framework of rules that allows for multiple owners to make collective decisions on how to fund, manage, and maintain the infrastructures that isn’t exclusive to their use (like their unit).

In managing and maintaining the common property, bylaws also include some limitations on the activities and rights of the owners on how they can use these common elements. In particular – they limit owner expression on common property, and prevent owners from monopolizing any amenities.  You could imagine in a building of 200 that all the owners may not share the same political outlook, and instead of creating complex rules for displaying political messages on common property the bylaws simply restrict any political expression.

That’s why I always chaff at the use of patriotism as grounds to violate the bylaws. Patriotism, by nature, is a political expression. Even people who are equally patriotic can disagree on what is a fair or true expression of loving one’s country. As such, though patriotism is an emotion well worth holding, it is not grounds for violating bylaws.

Auburn Meadows Property Owners Association is currently facing media heat for requiring a sign reading “My Son is Army Strong” (with a link advertising a military website) to be taken down, as it is in violation of their signage bylaws.

More telling is Crystal Chilcote’s (the infringing owner, along with her husband Glen) reasoning for the sign:

[the war in Afghanistan] has just been going on for so long that people are totally disconnected unless they’re directly involved with their family members being gone.

a statement that clarifies the political call to action Crystal and Glen are making with the sign.

I would encourage the Auburn Meadows Property Owners Association to be “Community Strong” and support all their owners’ divergent political views by enforcing their bylaws, and ignore one owner from bullying them by claiming patriotism.

County Bans Smoking in All Multi-Unit Residences

Sonoma County, North California, banned all smoking in multi-unit residences. This includes not only common property (hallways, parkades, grounds, common rooms and laundries, and more) but private units as well.

It will be phased in over 16 months – with common areas falling under the smoking ban in 180 days, new units a bit later, and then already built private units on 12 January 2013.

I’m a committed non-smoker, but I still find this kind of blanket smoking ban on private residences heavy handed and intrusive. I’ve commented before (here and here) that this is something that should be done at the condominium or HOA level, but not at the municipal level. And even then I’ve been hesitant to support this at all.

It’s rhetorical and silly but I add “should they look at banning ethnic food or outdoor bbqs” – specifically where bbq smoke has been identified as carcinogenetic, and I’ve been well known to whip up a whole kick-ass cloud of that fatty black soot for my neighbours to inhale.

The ruling is good news for the 85% of non-smokers (according to Sonoma County), but I can not wonder if this action is too much an intrusion, and if exemptions can be granted for medial smoking (which is not indicated in the motion).

Using Conflict of Interest to Generate Money and Prison Time

When I teach the 101 Board Education course for the Canadian Condominium Institute of South Alberta, I comment several times that board members should always avoid conflict of interest.

Conflict of interest for those who may not be clear on the term:

A conflict of interest occurs when an individual or organization is involved in multiple interests, one of which could possibly corrupt the motivation for an act in the other (Wikipedia).

Note that a conflict of interest doesn’t even need to a realized corruption, but just the possibility. For boards, common conflicts of interest include voting on contracts with bidders that include family, friends, and business partners. It also includes board members doing services for the condominium and receiving remuneration.

For a group in Las Vegas – they saw being in a conflict of interest as a process to profit. They hatched a scheme.

They recruited individuals who they gave money to buy units in condominiums. In return, the individuals were asked to run for the board and once on, direct legal and construction work for the condominium to companies designated by the group who fronted the cash. Just to make sure the scheme worked, board elections were rigged, and ballots were forged.

So far, one of the people fronted money – Steven Wark – will be facing a maximum sentence of 30 years for his participation in the scheme (and pay more than $94,000 in restition).  The reason: after he was elected to the Vistana homeowners board he took payments and voted “in a manner directed by and favorable to his co-conspirators.”

That would very much be a conflict of interest.

Condominium Can Not Limit Access to Pool Based On Age

I find some condominium boards draft by-laws that are pointlessly restrictive. These, to name a few, include (quoting from one of my own bylaws):

“No snake, spider, reptile, fowl or livestock will be approved [for residence]”

“use his balcony … flower pots planted with living plants (no silk, artificial or plastic plants except artificial cedars are allowed) … are permitted”

Regarding BBQs: “which if covered, must be covered with a suitable barbeque cover that is in good condition”

“All dogs and cats must be carried on Common Property”

I often wonder how these would be, or have been enforced – if ever. On both boards I’ve served on, we’ve never enforced or even attempted to determine if these, or similar, rules are contravened.  Some seem petty – blocking the ownership of a pet iguana – and more so, I don’t think even enforceable if a board tries to act upon it.

The rule for nothing artificial on balconies except “artificial cedars” seems suspect – it seems to be an attempt to allow Christians to have Christmas trees on their balconies and patios. Either that or the original drafter had a fetish for specifically shaped and coloured plastic flora.

The kicker to all this is the statement in the bylaws that the above and all the other (and there are a lot – just the “owner cannot” section appears to be more than 100 items including subsections) of bylaws have the following purpose (iii) to develop a sense of community.

Forcing neighbours to say hello to each other, hold the elevator doors, offer assistance with carrying groceries, and forcing them to volunteer on committees – that develops a sense of community. Creating arbitrary rules does not create community; it creates norms of behaviour which are completely different. As well, norms fail to allow change and growth in a community. Norms are awesome at attempting to create an environment that is only welcome to a single homogenous group.

Earlier this year, the Human Rights Tribunal of Ontario found two condominium corporations (who jointly manage a shared outdoor pool) had gone too far in their rules. At issue was (1) the blocking of children under 2, and those in diapers, from entering the pool, and (2) limited subset of the pool hours that those 16 and under were able to use the pool.

The tribunal found the rules were immediately unenforceable and to be stricken from the bylaws -the rules provided no bona fide safety improvements, nor were they reasonable. There was an additional $10,000 judgement against the corporations as well.

And that brings me back to creating a sense of community. Condominiums need to look at community as a two way street. Creating a long shopping list of rules can establish a framework of reasonable limitations – but that’s all. When the framework allows the owners to express, live, and share a common housing connection in non-harmful, non-evasive ways, the condominium is a much better place to live.

And had the corporations with the pool looked at their rules as a mechanism to build community, they would have long ago removed the age limitations and kept themselves out of trouble. And indeed, it is not just the board at fault for having those rules, but they are at fault for establishing and condoning an atmosphere that didn’t build community. The ruling mentions that the owners took a vote on changing the rules to make them more inclusive, and when they voted the changes down “the audience cheered.” It’s also noted the boards had a Summer BBQ, which specified “Adult Residents Only!”

That’s a failure of the boards to look at building community, inclusiveness, and positive common experience. They should start working on that. Pronto.

PS. Is my Hello-Kitty BBQ Cover “suitable”?

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.