Making the condo jump
Original post made on Oct 25, 2013
Read the full story here Web Link posted Tuesday, October 15, 2013, 4:49 PM
on Oct 25, 2013 at 8:52 pm
The article says, "She said it's best to look for homeowners associations with impeccable reputations and plenty of reserves for the inevitable fix-it projects that will come down the road."
From what I see, most, if not all, Palo Alto condo associations have paltry reserves.
When I asked my condo association's management company they said we were 20% to 30% funded and a $6000 to $7000 per unit special assessment was coming soon.
Q: Is your association's reserves fully funded?
on Oct 26, 2013 at 12:40 pm
> they also add another layer of complexity to the already perplexing
> process of buying and owning a home.
Homeowners Associations can be a major pain in the neck. They often have almost dictatorial control over the way people live. The Associations can mandate the kinds of door decorations that you might want to put up, how your balcony is maintained, whether or not you can smoke in your own home, and whether you can display any political literature on the outside of your apartment/unit.
Courts have been generally unwilling to side with the Condo owner--making life in a Condo complex that ends up in the hands of control freaks a living hell.
Best to check to see if any court cases have been filed against the Homeowners Association, and talk to some of the residents, to see if there is anything about living in this building/complex that might affect your sense of how you want to live your life.
Some Condo Associations have actually sued unit owners for payment of fees/assessments--and some (depending on location) have begun to seize property for to obtain money owed them:
More homeowners associations seizing property and rent when dues fall behind:
All-in-all, this invisible government can make Condo living unpleasant.
on Oct 26, 2013 at 5:24 pm
When we began our search for a starter home, in 1994, several real estate agents at that time counseled us against investing in one: there are hidden costs, such as HOA fees that, when added to your mortgage payment, make condos more expensive on a monthly basis than a single family detached home; the appreciate very, very slowly due to the fact that they have such tiny lots; they are usually poorly constructed; more of them are purchased as investment properties to be rented out monthly, rather than as a primary residence,eventually turning the neighborhood into an undesirable one; the undesirable neighborhood it turns into makes it very hard to unload later.
Nonetheless, we settled on a high-end condo with a small patio, and put down a deposit. We checked in with our insurance agent to find out the cost of homeowner's insurance. Surprisingly, he cited all the same cons as the real estate agents, adding an ever-increasing crime rate as a condo development ages ( and original owners move and/or rent the property out for income). He also showed us some insurance industry charts showing that high-density developments, whether rented or owned by the inhabitant tend toward more violent and non-violent crime than single family detached homes.
That info was so off-putting that we asked for our deposit on the condo to be returned to us. The developer's agent refused, again and again. We went to mediation, where the developer refused to even go 50-50 with us on the deposit return. Finally, we went to court, where, after a year of waiting, a judge heard our case and informed the developer that non-refundable deposits were illegal in California. We won, but we were never able to get more than one installment of the money owed us.
However a Pyrrhic victory it was, at least we were not stuck living all these years since in a condo we could not sell. We checked on the condo neighborhood in 2004, and it was not as well-maintained as it should have been, the street it is on has since become a very busy, noisy one, and a gate with a code had to be installed to lock out intruders. There is currently a condo there that has been on the market for over 18 months, with a price tag of slightly under a million dollars, seemingly a bargain for anywhere in Palo Alto. Apparently, there have been no takers in all this time, though we don't know the full story.
So glad we did not buy there!