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.

Condominium Corporation Forecloses on $4.70 Outstanding (Plus $3000 Lawyer Bill)

In 2009, Geeta Ramcharitar of the Venetian Village condominium, in Melbourne Florida, had a $4.70 outstanding sum owed to the corporation. It’s not clear why the sum was outstanding, or why the board simply didn’t write off less than a fiver in debt, but the debt existed.

Instead of resolving the issue – the corporation requested their law firm to start a collection process. By the middle of 2010 the law firm had billed about $3000 to collect this fiver. The corporation was then able to retain a court hearing to foreclose on the unit to collect outstanding amount, interest, fines and lawyer fees. The good news is the judge threw out the foreclosure and the amount owning.

The board of the condominium should literally be slapped. Multiple times. In order to collect on $4.70 they wasted a huge amount of people’s time – including mediation and court time – and a lot of people’s money. In essence, the board made a very very stupid decision (they are there to make decisions in the best interest of the condominium) – and should have written off the amount a long time ago. For good measure the lawyer should be slapped too – for padding her income on such a frivolous request.

Does Vancouver Hate Art

It seems that Vancouver has a hate on for public art installations.  In 2008 they booted the “upside down church” (actually named Device to Root Out Evil) from their waterfront. A 6 meter (compared to the 200m condominiums) upside down house with a spire was considered too obstructive to their scenic view. Forbid that there might be trees on the waterfront, a small hill, or another condo. Eghads! I’ve personally seen the sculpture – it was moved here to Calgary. It’s very nice.

Now, West Pender Place Condominium in Vancouver has recently completed and the light wall is receiving complaints. See this link for a video. Now, I may be wrong, but the amount of light being created from the installation seems significantly lower than the surrounding street lights and normal business lighting. Already the condo corporation has changed the running from 24 hours to “dusk to 10 pm.”

It’s a positive step that a condominium can be built attempting to better the cultural landmark, and not just exist as a towering concrete and glass monolith. Adding character to each condominium high-rise creates a distinct, unique, and positive benefit to the community. More attempts to add culture to developments should be encouraged.

So I wonder if Vancouver simply hates installation art. Maybe they need the crawling babies of the Zhizhkov TV Tower to metaphorically represent their mood.

Toronto and Singapore Experience the Shoebox Condo

Some trends cover the world, but the underlying reasons may be different. For example, Singapore and Toronto both are experiencing a surge in shoebox condos (500 sqf or less) but for significantly different reasons.

With Singapore, prices on condominiums are averaging $1185USD/sqf – putting the price of anything lager than shoebox well outside the financial means of most local residents.

In Toronto, price is not nearly as sensitive (running about $630USD/sqf), but tax legislation is pushing units to list at $390k or less or suffer, and one bedroom condominiums now make up almost 60% of new construction. This forces smaller shoebox units to be built in order help create consumer choice in a market that prefers one bedroom condominiums.

In both cases though – Singapore and Toronto are both seeing massive preconstruction sales to investors and foreign buyers. This is likely a strong incentive to build shoebox condominiums, as they become more “affordable investments” and require smaller capital down. If that’s the case, shoebox condominiums are creating a new form of downtown transient population – encouraging renters to populate the cores of each city.

I live in an 1150 sqf 2 bedroom condo – with wife and 2 cats. At 500 sqf, one of those would have to go! (I love you hunny!)

Bats Protected From Condominium Evection

Now, just like there are senior’s condominiums, storage condominiums, and business condominiums – there are definitely bat condominiums. These are wood structures specifically designed with all the amenities that those cute little mammals could want. If I’m not mistaken, they come with no condominium or HOA fees as well!

What’s not necessarily expected is when bats take residence in the walls of condominiums designated for humans.  Indeed, if I found a bat hanging upside down from my bathroom door frame (which Miles Nures and Jennifer Plomt experienced), I would – with bylaws in hand – visit my condo board and have them remove those uninvited tenants too-sweet!

Now, many US states and Canadian provinces have grated bats protected status. This usually means that bats, once they have claimed a nest, cannot killed, exterminated, nor disturbed during the raising of newborns – usually from early summer through early fall.

That means, though unwanted as tenants, the Condominium cannot evict those winged bug eating stomachs (bats eat LOTS of bugs). They have the right to reside!

Now, the moment they leave, it is clearly the condominiums duty to repair and fill in all holes in the roof and siding so that their return can never, ever, happen again. Indeed, the fact that bats could reside in a condominium’s walls is a strong indication that the board is failing to perform their duties and maintain the common property correctly.

Improving the Resale Price of Your Condominium Association’s Units

Earlier this year I consulted with a condominium association that felt their units were selling at well below market value. We did a review of the grounds, the prices, and the resent selling prices and confirmed their feelings with actual numbers. Their units were selling for well less than value.

The problem comes from two main problems – realtors price units in comparison with the local area, and realtors are really lazy. Ok, maybe not intentionally lazy, but their compensation is based on selling as many units with as little time spent selling each unit. As such, realtors are motivated on encouraging the seller to accept the lowest price possible to list. Owners that balk at the suggested price have a huge uphill battle to convince the realtor to spend time on actively selling a unit at a higher price – they still will list it, but if it takes too much effort to sell then they focus on their portfolio of “easier sales.”

The property is truly unique for the area – a community that is still 15 minutes from the downtown core (non-rush hour) and includes two fully sized ponds (and ponds understates the water immensely), they have large residences for the area, and have an excessively proactive grounds and building maintenance program.

We sat down and talked about a few things with their Resale Committee. It included a variety of initiatives including an aggressive marketing campaign to owners encouraging them to seek their condo board before a realtor, the board building a sales profile for the units – effectively doing the realtor’s job for them, and coaching to owners on how to talk to their realtor and convince them that a higher price for these condos will be as easy to sell as a lower priced unit somewhere else.

One really important factor is to build a large photo and video repository of the water works – with the numerous bunnies, squirrels, and baby ducks that sit amongst the reeds (seriously, it’s a water habitat oasis in Calgary) – and build a portfolio of all the seasons.

The suggestion that the board or other residents be accessible for potential purchasers to meet was also highly encouraged. While in person is best, I noticed a residence in New Jersey has interviews with four of their owners posted positive experiences to YouTube. This is a phenomenal way to show the pride owners have and convey to new purchasers. It will also help make the case to a realtor that these properties will sell at higher costs.

In total, through the consultation, we developed several activities that should add over 8.5 million dollars to the value of all the units in the corporation (adding over 100k/unit) over the next 2 to 3 years. This will bring the units in line with their true value.

Mortgages Are Not a Right

There’s a growing trend to complain at the stricter requirements financial institutions are requiring for new mortgages. USA Today has a whole article filled with people who feel that getting a mortgage is too hard, too long, and too difficult. Everybody claims their mortgage risk would be non-existent.

It seems so long ago, but even qualified loans (those to individuals that should be completely safe) had delinquency rates (at the extreme) of 40% in 2007 for people who put down 5% on the mortgage. The delinquency rates for people who put down 30% or more was still a staggering 2.4% that year.

Just to clarify, even qualified loans where the new owners were putting down a third of the mortgage themselves resulted in 1 in 42 loans being delinquent. That’s huge. For those putting down 10% that number jumps to one in 4.2 being delinquent loans.

Because of failed loans, banks are still looking to repossess 800,000 homes in 2011.

No mortgage is without risk to the lender, and they have all the right they need to run you through a grinder of forms and checks to ensure you’re a good risk. As it is possible to get loans in the US with as little as 3.5% down, it might be time for that minimum to be raised. All numbers show that the less a purchaser puts down, the higher the rate of delinquency. Hence, if you’re putting very little down, the tougher the fiscal review.

If you are really wanting to finance a home, it is substantially easier to get a mortgage the more you put down on the property. Saving more before purchase, or buying a cheaper residence, will both go a long way in securing a loan with less hassle.

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).