guest blog by Nila Ridings
Forget the permit. In this new Soho condominium building in Lower Manhattan, the parking space comes with a hefty price tag of $1,000,000,00. Certain restrictions apply.
If you sell your condo you must also sell your parking space. Actually, you don’t own the parking space. It’s on a 99 year lease, but you must find a buyer anyway. Ah, yes the HOA trickery is already present in the sales process. But since you pay one million for the parking space the HOA does not charge a monthly fee.
Let’s say you get behind on your $10,000 monthly HOA fees. (That would be the amount if you lived in a cheaper unit) Will the HOA be able to repo your car because it’s parked in a space that you don’t have title to? Or since you don’t pay monthly dues on your parking space can you just go live in your car?
Will this parking space offering start a new trend in HOA and Co-op insanity? From the contents of this article it looks like it’s headed in that direction.
What will the developers think of next?
(link to New York Times article on parking spot)
Ward, Similar to the Parking Space, I encountered much the same situation with a boat slip, which has unfortunately culminated in litigation. In 2004, I contracted to buy a condominium where the developer was going to build a marina and “sell” boat slips to the homeowners. Twenty-one of us signed a “Purchase and Sale Agreement” for a $150,000 boat slip in conjunction with our condo contract. There were to be 85 slips but only 45 were constructed.
At one point, prior to the completion of the project in Oct 2006, the sales office showed all 45 slips contracted, but that was not the case. During construction, a number of us who had contracted to “buy” slips queried the developer on whether the marina was being excavated to the intended depth of 6 feet, which we were assured it was. Upon completion and closing, however, we discovered that in many locations, to include within the slips, the water depth was as shallow as 3 feet, making it impossible to bring in any vessel suitable for the 50 foot slips we had paid for. Additionally, we discovered that we had not actually bought a slip, but simply bought a right of us, much like the parking space lease.
Throughout 2007-2009 we expressed to the developer that he, at a minimum, dredge the marina to accommodate boats suited for the size slips he had sold. He insisted that it would be addressed during the construction of “Phase 2” of the project, 40 additional slips and a second condo building of 56 units. Due to the economy, Phase 2 never materialized, and in late 2009, foreclosure action was taken against the developer on his outstanding loan on the balance of the property. Those few of us who had slips met and discussed legal action along with insisting that the developer relinquish control of the board, since no construction activity had occurred in 3 years.
In August of 2010, the developer held an open meeting, where he relinquished control, but appointed a condo resident as President and allowed the owners to nominate and appoint two others. The latter two immediately began meeting with an attorney to discuss options regarding a remedy to the marina. Many owners in the condo complex did not possess slips, some being friends with the developer, and saw any legal expenses to pursue remediation of the marina to be a waste of association funds.
Subsequently, in March of 2011, the latter two members were recalled from the board by a petition distributed among the condo owners. No slip owner signed or was aware that this petition had been circulated, and at the meeting to hold the recall, I had some stern remarks for the president and the new board members she was appointing, since they had no fiduciary interest in the marina. Having now removed the two board members, the president, due to my objection, began to focus her attention on me. I received a letter from an attorney saying that I should cease and desist from any discourse or dialogue regarding the marina unless I presented it only at an annual meeting. The dues for the development by now had doubled, and we had no functioning marina for any boat with a draft of greater than 3 feet. I had only bought the condo for the marina, but at this point, simply gave up in any attempt to resolve the matter, as a number of our group had begun to short sell and leave. Many lost their slips, and as such their $150,000, because the transfer agreement for the slip is very strict, and if not transferred in the sale, it reverts to the HOA. Additionally, the attorney we had spoken with regarding filing suit wanted a $50,000 retainer, which many were not willing to stomach.
Having not forgotten my stern admonishing of the board in March of 2011, two letters were sent out to the community in January of 2012 stating that I was a “Dangerous Boater” and if anyone should see me “Harassing” anyone, to call the Police. I had not spoken to these people in 9 months… The letters were apparently the result of a complaint by a new tenant resident who had a boat in the marina and stating that I had come in one night and left a wake, which was completely untrue. I am a licensed Merchant Mariner and Former Naval Officer and make my living in the marine industry. With no investigation and not contacting me, these two letters were sent out by the board to all of the residents in the community and followed that up with a open board meeting wherein I was fined $500. I had an attorney attend and videotape it, it is humiliating to watch. No one ever contacted me personally, and I was simply sent a bill. I studied the CCR’s and Condo Statutes and spent five months sending letters to the management company that what the board had done was a violation of state condo statutes and the By-Laws. I never received a response, just a demand for $500. I contacted an attorney and he filed suit in June 2012. My case has a trial date of January 26, 2015. I left the condo on January 28, 2012 and haven’t been back since.
Chuck, if I were in your situation, I would Google Florida HOA lawsuits, go to the CCFJ (Cyber Citizens for Justice) website and read about all the different kinds of Condo and HOA lawsuits. You are now sailing toward a long, dangerous, and costly trip with sharks circling you the entire way (puns intended). Even if you believe in the Florida legal system, and you receive some of your fees back, no one is truly going to win this fight, except for the attorneys. Sell your condo and the boat slip. If you have to take a loss, it may end up a smaller loss than the attorneys fees and emotional toll it will take on you. Make sure you read Ward’s book and also HOA Warrior. The homeowner who won the case about parking his truck in the HOA was not awarded his entire legal fees and I’ve seen media reports where over $300,000 was spent to preserve his right to park his car. Of course, he moved out of that neighborhood as soon as he could.
Unfortunately, I’m 2 1/2 years into this and the jury trial begins January 26. A Hearing to Amend for Punitive Damages is Oct 28 and it was shown that Discovery was intentionally withheld from the court by the Defense. A hearing to Sanction the Defendants on that Failure is November 19. At this point, I’m in it until January. The place is on the market.
Hi Chuck. Sadly, intentionally withholding Discovery is massively common. In my own case, we obtained a few interesting documents that had been intentionally withheld. The wilder event was that the HOA attorneys ‘discovered’ they had ‘lost’ two full years worth of records they were required to give me under Discovery. My attorney raised a stink, the HOA attorneys apologized to the Judge, and that was the end of it. I lost my trial based on the missing Discovery materials. Corruption among HOA attorneys is even more rampant than among board members and managers. Just be aware of what might happen to you in November.
Ward, You might find it interesting to learn that some of the Players in my story include Mitt Romney (who I got introduced to and a great picture with), Charlie Crist and the largest GOP PAC fundraiser in the State of Florida… This is a great story, and I’ve only provided a portion of it.
I only bring this up because that PAC fundraiser, who was also the developer of the property and a former Ambassador, emailed me today requesting a $3,000 campaign contribution for Gov. Rick Scott. I guess he figures he can sell me Anything!
Holly,
Are you referring to the A.J. Vizzi case by chance?
http://wardlucas.wordpress.com/tag/a-j-vizzi/
No need to be concerned about the 99-year lease. The building is probably planned for obsoloscence in 20-40 years anyway.
Chuck,
I’m curious as to grounds of your lawsuit. Breach of contract? Violation of consumer protection laws? Fraud? Property endangerment? It sounds like you can pretty much throw the book at these idiots.
I would love to hear the thoughts of Ward, Deborah, George, Shu, Dave Russell and any others on this one.
Nila, The Claim on the boat slips and Marina needed to be filed no later than December of 2011 due to the fact that the Statute of Limitations on any action was 5 years from the Certificate of Occupancy in 2006, so the Developer is off the hook. This is why 2011 was so contentious with the removal of the two board members who wanted to take action in the interest of the marina. My case is Case Number 16-2012-CA-006870 in the Fourth Judicial Circuit, Duval County, Florida, which I filed in June of 2012. It includes some of the counts you mention.
The Defendants are the Association, Management Company and the President that the Developer appointed in 2010, who is still serving and now lives in his former penthouse on a purchase money mortgage
Chuck,
Unfortunately, your story epitomizes just about every pitfall, financial risk, and social problem that occurs in HOAs.
Let’s make a list:
Developer misrepresents the product at time of sale (right of use) and fails to deliver what was promised (number of boat slips)
Construction defects, in the form of boat slips that are too shallow
Developer controls Board either directly or retains de facto control through the Board after turnover. This is how developers often shield themselves from liability for construction defects or breach of contract.
Your neighbors have disparate interests that do not coincide with those who have rights to use boat slips. You have not stated it in your summary, but are most of these neighbors owners of condos that they lease to tenants?
The legal system is expensive and costly, and stacked against HOA owners, heavily in favor of the HOA corporation (often controlled by developers, affiliates, or real estate investors who hold majority of voting rights)
Neighbors who start off as concerned and willing to stand up for their rights are often targeted, ignored, and manipulated such that the HOA Board wears them down to the point that they must go away.
The election and recall system is often corrupt in HOAs.
Due process does not exist in HOAs, and is easily abused, used as a tool to punish owners that don’t “fit in” or that dare to challenge the authority of the Board and/or Manager
Thank you Deborah
I am aware of HOAs in FL where:
The developer promised an additional golf course and clubhouse that never materialized due to a slow economy.
Developer of another golf community went bankrupt, sold to a new Developer. New Developer did not want to own the golf course and other amenities, and intimidated owners into buying them for the HOA. He even arranged a loan for them. How generous. Now their assessments have more than doubled, and the facilities are about to undergo an expensive renovation that will increase assessments even more.
Another Developer created multiple retention ponds in a planned community, and sold adjacent lots as “water view” lots at a premium. It was later discovered that several ponds were being used to irrigate the golf courses and that others were mysteriously losing great volumes of water in dry seasons, turning into unsightly and foul-smelling shallow eyesores with algae, mosquitoes, and invasive vegetation. Shoreline erosion was a problem, but the HOA insisted it was the owners’ responsibility to make repairs even though the ponds were a component of the common areas. The Board refused to investigate the causes of problems, and did only superficial bandaid maintenance.
Another development has roads that were not properly constructed, and that are wearing out in half the time allotted in the reserve study. Special assessments are inevitable.
Water front property owners in FL HOAs have also complained of under excavated waterways, bridges that do not allow passage underneath (too low and no drawbridge), crumbling sea walls and boat docks. Pollution and environmental contamination are also issues in some locations.
So even if you are fortunate enough to have the means to purchase “luxury” property, there is no guarantee of a sound investment. That’s because there is no accountability for those responsible for ripping off the consumer and/or violating the rights of HOA residents – including citizens and taxpayers.
As I read the story and then the comments I was more convinced than ever that one is a fool to purchase anything to do with a home owners association. It is clear that nothing good will result in 99 percent of them. I know someone will step forward and tell me the love story with theirs but i met very few who do not want to spit when they discuss their hoa. The risk of abuse by the hoa members is clear and the fact that they answer to no one. I have yet to hear anyone with a real win when dealing with them. Apparently even the disability authorities either do not get involved or they know they cannot win. It is sad but to me the only answer is avoid them.
Tom, I Believe it Definitely Falls under the Category of “Fool Me Once…”. I Hope We Are Passing these Hard Lessons onto the Younger Generation.
Chuck,
I’ve spent considerable time talking to the younger generations about HOAs. Every single one of them without a doubt will never think of buying into one.
They have either experienced the nightmares through their parents or grandparents that made the mistake of buying into one or some actually have friends that have purchased a condo or loft and have shared the nightmares. The younger generations are different because they are not afraid to speak up and stand up for what they believe in and their method of communication is social media. Spreading the word about a party, concert, happy hour or an HOA takes them seconds to spread the word. They may not know how to write or spell like the older generations but they have a handle on how to spread the word.
Twenty years from now, I won’t be surprised of all these HOAs and COAs aren’t boarded up and look like ghost towns. The younger generation folks I have spoken with has zero interest in being tied down with real estate, feel they are money pits, and want to be free to enjoy life. Many want their abode to be on wheels and able to go where they go. That explains why the Tiny House Movement is growing by leaps and bounds. They don’t want to own a bunch of “stuff” and don’t want to inherit anything but cash. They want to eat GMO-free foods, drink clean water, and live their dreams.
If a documentary about HOAs was shown around the college campuses the HOA industry would be on life support immediately. I’m convinced of it.
Great idea, Nila! I agree.
The other market of potential HOA and Condo buyers are retirees or about to retire, especially in destination states such as FL, AZ, CO, NV, NC, SC, TN and a few others.
Here in FL, any market slack from US buyers is being absorbed by foreign buyers from Canada, South America, Europe, and China. Some of these buyers do not come from home countries with Democratic government, so HOA authoritarian leadership styles might not bother them as much. However, the financial risks are still a concern for any buyer.
Of course, a large percentage of foreign buyers rarely if ever occupy their units. For them, it is more of an investment or vacation home. And there are plenty of internationally-based investors owning multiple units.
I think it would help immensely if states would zone a LIMITED number of developments (condos or villas) as “investment property/businesses,” completely separate from Residential Zones.
Scrap the HOA governance for Residential Zones.
Oddly enough Deborah, we have people from all around the world living in my HOA right here in Kansas. Some escaped their countries with the shirts on their backs and others had family members already living in America and they wanted to join them. When I see them in their native clothing I often wonder if they truly understood what they bought into when they signed that contract for purchase. Some don’t speak English. Some do, and they understand somewhat, while others just don’t pay the dues.
We had one man from Africa that struggled with the language barrier but he was very intelligent. He quickly figured out that when water was pouring into his house and soaking his carpeting from the holes in the rotted siding that he wasn’t getting what he was paying for in the way of maintenance. And he showed up at every board meeting to beg for help. The board ignored him like he was invisible.
Every time he saw me out on the street trying to educate my neighbors a.k.a. my non-profit corporation business partners, he would thank me profusely for all I was doing. Rather ironic that he was able to understand what was going on better than 99% of the other homeowners. He finally sold.
His son told me his possessions were in a cargo container heading back to Africa. Something tells me no matter what his living conditions are today he’s still thankful and happy to be out of this crazy and dishonest HOA!