Wednesday, April 21, 2010

A Wakeup Call

      Failed balcony railing causes near-fatal injuries
     Can we ever take the condition of a building for granted? Do we? The building occupants, to get in and out of their units on second and higher stories, use components like balconies and staircases every day. Do we really know if they are safe? As property managers or board members of community associations, how can you be sure? When was the last time someone took a professional, in depth look at those parts of your buildings?

     We know from reading dozens of expert investigations that quite often some of the most insidious problems are hidden from view—for example, weaknesses in structural components that are used every day. This is especially true in older apartment complexes that have been converted to condominiums. Years of neglect by the apartment owners are passed on to the condominium buyers with no warnings or disclosures.
     Now we find a similar situation that almost turned to tragedy:

            KRON TV News, April 1, 2010
ANTIOCH (BCN) -- Building inspectors found evidence of dry rot at an apartment complex in Antioch where three people fell from a second-floor balcony Thursday morning after a wooden railing gave way, Antioch code enforcement manager Ryan Graham said.  As a result, he said, the residents of three units at the complex will have to be temporarily relocated. The fall occurred at about 7:30 a.m. at the Twin Creek Apartments at 1111 James Donlan Blvd.  Contra Costa County Fire Protection District Battalion Chief Alan Hartford said the victims are two women and a young girl about 8 or 9 years old.            
            "They were leaning against a railing and the railing gave way," Hartford said. The three fell about 15 feet to the ground below, an area with dirt and bushes, he said. One woman, who may have briefly lost consciousness, appeared to have suffered head, neck and back injuries and was airlifted to John Muir Medical Center in Walnut Creek, Hartford said. The second woman and the girl were taken to hospitals by ground ambulance. The victims are all expected to survive, Hartford said. He said the little girl was the least injured.
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Saturday, April 10, 2010

The Great Foreclosure Debate, Part III

The article below was sent to us by Mark Benson, a community association expert in Florida. His thoughts provide additional perspective on the continuing debate over assessment foreclosures and the effect of non-foreclosure policies on the remaining owners.

Unintended Consequences for Community Associations in Florida and Nationwide

Again we hear about the largess of the government putting a moratorium on foreclosures of the first mortgage.

On the surface, this sounds benevolent.  Now let's look at the realities.

1.  If the home is in a condominium, homeowner association or co-op, they are probably also not paying maintenance fees.  This means the other owners must continue to subsidize the mandatory expenses of the association.  

2.  The moratorium of mortgage foreclosures creates an ongoing obligation to the association that continues to increase with interest, late fees and legal fees.  These are extinguished when the mortgagee finally takes title. The condominium association will get reimbursed 6 months of maintenance fees or 1% of the mortgage amount, whichever is less.  A homeowner association will get reimbursed 12 months maintenance fees or 1% of the mortgage amount, whichever is less.

3.  This will increase the delinquent amount for each month’s payment missed plus interest and penalties to the extent it will be impossible for the homeowner to recover.

Typically, this is a minimal amount compared to what is owed and is compounded by delays in foreclosures.

An association may institute foreclosure and take title to the unit but the mortgage still has priority.  Therefore, if the association takes title and rents out the unit they may get the rent but the mortgagee will eventually foreclose against the association.

In order to accomplish this the association may also incur thousands of dollars of fees and costs that may not be recoverable. 

4.  There is no incentive for an under-water owner to make any mortgage, tax or maintenance fee payments since it may be years before they are foreclosed out of the property.

5. There is no incentive for a mortgagee to foreclose and incur attorney fees and then be stuck with a property worth only 50% of the outstanding balance due.  They have a huge backlog of property now and the courts are still jammed with pending cases.

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