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Old 01-01-2011, 07:37 PM   #21
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You could post the delinquent owners name in the lobby. Like this guy did in Fla.

Housing Distress Pits Neighbor Against Neighbor - WSJ.com

They had some facilities they could lock out the past due HOs
We published our list of delinquent property owners in the HOA newsletter... And restricted access to community facilties to those members in good standing, if you're behind on your HOA dues you can't use the aviation facilities, clubhouse, etc.

No backlash so far.
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Old 01-02-2011, 12:23 AM   #22
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The only twist that I would put on this is that in some states unpaid condo fees that are liened do in fact take priority over a mortgage. So, I would check to see if this is the case in your state. Anyone who owns a condo in a building with unpaid assessments should find out the law in their state regarding priority. I am very disinclined to buy a condo these days unless HOA liens are super liens.

If the mortgage has priority, then I would push the collection hard to get the condo into foreclosure by the bank. Once the bank owns the condo they are at least responsible for fees from that date forward.

No matter what, in this climate condo associations need to be very aggressive with unpaid HOA fees. Do not let up on your association.

.
I am considering downsizing and moving into a Condo. One of my biggest concerns has always been the Condo fees which are often pretty hefty in Hawaii. These articles add yet another wrinkle to the decision.

How would I go about even determining if Condo fees have a priority in my state. Googling "condo fees hawaii bankruptcy" didn't produce any obvious answer.

Second does anybody have advice as to what one are warning signs for a Condo association in financial trouble. Does a potential investor have the right to look at associations books?
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Old 01-02-2011, 10:00 AM   #23
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I am considering downsizing and moving into a Condo. One of my biggest concerns has always been the Condo fees which are often pretty hefty in Hawaii. These articles add yet another wrinkle to the decision.

How would I go about even determining if Condo fees have a priority in my state. Googling "condo fees hawaii bankruptcy" didn't produce any obvious answer.

Second does anybody have advice as to what one are warning signs for a Condo association in financial trouble. Does a potential investor have the right to look at associations books?
A quick look shows me that Hawaii revised statutes chapters 514A and 514B govern condos and liens for assessments. Without giving any advice, my scan of the law looks like there is no superpriority lien. It looks like at least at one time there was priority given for up to $1800 in unpaid fees and assessments but it looks like this was a temporary law that likely has expired. The more I poke around the more it looks like such superpriority is rare. Lobby of the lenders I guess. Please don't rely on this, I know nothing about Hawaii law and there may be amendments or separate temporary laws or something else that may govern.


Bankruptcy is another issue. Most liens survive bankruptcy. It is just the personal liability that gets discharged. The real issue is what happens in a foreclosure by the lender. At least the lender should be liable for fees and assessment arising after they take title.
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Old 01-02-2011, 11:01 AM   #24
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One of my biggest concerns has always been the Condo fees which are often pretty hefty in Hawaii.
The lack of value in condo fees drives me nuts. It's turned me off the whole condo concept.

As a buyer you're entitled to HOA info, which would include delinquencies & liens. Those are also somehow available to the lenders, but I don't know whether that's legal filings (definitely for liens but not so easy for delinquencies) or the coconut wireless. But if you didn't buy with a mortgage then you might not find out about the problem until the special assessments start rolling in.

I'd say that delinquency/lien info should be a realtor's/seller's disclosure item and subject to litigation if it later turns out to be a problem.
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Old 01-02-2011, 11:22 AM   #25
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Very timely article for me. My daughter who is 23 just signed paperwork to buy a 1,300 square foot condo in Va. Beach Va. I am standing on my head as my experience with condos makes me very leary of them. She won't listen to me. I'm not saying the situation will be similar to the one my mother had ...whose condo ended up in her trust...for me to handle at her death but...it certainly opened my eyes. The builder built these condos with stucco...on the bay. Years later balconies were deemed not structually sound and there were moisture problems with the stucco. HOA voted a special assessment per owner of $25,000 to redo all balconies and resurface all condos with hardy plank. This may have been a worst case scenario...but in dealing with condos one has to think about worst case.
My daughter knows all of this and is still proceeding. She is a teacher on a teachers salary ...has some investment income and K1 income...so she can afford it...but what she may not be able to afford is getting a whack from the HOA.
Two red flags: First...while the builder is reputable ....this set of condos is getting wrapped up in the HOA that is for another development across the street. So..as a unit owner she will also be responsible for whatever happens with that development....including common ground expenses and upkeep voted on by the board ...and her set of condos may not be the beneficiary of said decisions.
Second...the builder gave her $10K off the sales price for a December purchase incentive and also "gave her" (tongue in cheek), $10K for upgrades. She only got those when she signed that she would use their mortgage company. The interest rate quoted for a conventional 30 year loan...is 1/2% higher than the national average and 1/2% higher than my own bank quoted here locally. I think there must be some breach of Fair Lending Laws by mandating that she use their mortgage company. They must have gotten around that by "giving" the incentives...in return. Don't know. Need to do some research.
This is her deal....and I don't want to intrude but so much ..or embarrassing her by creating a stink. I have gone so far as to read some of the By-Laws, pointing out where it can bite her in the behind, giving her the amortization schedule which shows how little equity she is paying into each month...pointing out that she is financially better off...letting her money grow on the side and renting a nice apartment...but as I said...Ive gotten no where.
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Old 01-02-2011, 11:28 AM   #26
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When one buys a condo....is it wise to get an inspection (not an appraisal) or is it a waste of money. This development has been selling condos for about 2 years. The building my daughter is buying into was completed a month ago. I realize they could not be built or on the market if they had not passed all building codes...and that a lot of what we would like to know...is already behind walls.
Also...can she waived the Title Insurance Fee of $850.00 at closing? AFter all...with new condos...the title should not be a problem. Would you guys recommend she waive it?
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Old 01-02-2011, 11:42 AM   #27
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When one buys a condo....is it wise to get an inspection (not an appraisal) or is it a waste of money. This development has been selling condos for about 2 years. The building my daughter is buying into was completed a month ago. I realize they could not be built or on the market if they had not passed all building codes...and that a lot of what we would like to know...is already behind walls.
Also...can she waived the Title Insurance Fee of $850.00 at closing? AFter all...with new condos...the title should not be a problem. Would you guys recommend she waive it?
Nord's last paragraph in post #24 explains why I wouldn't want to waive title insurance- if there are problems with liens,etc. that show up on the unit after closing, the Title Insurance Company will have to sort them out if they issued an insurance policy guaranteeing you a clear title to the property- they aren't going to do that unless they have researched public records, filings, etc. and satisfied themselves that the title is clear and that issuing the policy is a sound business decision. At $850, it's a false economy NOT to have a title insurance policy, especially in a multi-unit condo, and especially in today's RE market.
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Old 01-02-2011, 11:52 AM   #28
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Oh...good point Westernskies! I had not thought about liens against the builders from subcontractors on "condos" since it is a regional reputable builder...but as you basically said..."better safe than sorry". Thank you.
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Old 01-02-2011, 12:16 PM   #29
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Cliff, you are lucky in that Hawaii condo laws are quite strict. HOAs are required to have a 20 year plan and the funds to do all the work required in that 20 year plan. Before you finalise your purchase you are entitled to see the financials and the minutes of the HOA. The place we purchased in Honolulu, there had only been one owner that was delinquent in the past 12 months, that is he was 15 days late paying one month. There were no units in foreclosure and no fees outstanding. They did have a solid plan for doing all the additional works over the next 20 years with appropriate costings so we knew what we were in for.

In Hawaii many of the HOAs are really expensive. However you need to delve deeper to find out what is included. Some I looked at (Allure) included basic cable TV and basic telephone service, plus the usual water, trash and other maintenance. Others included just the basics of R&M, water and trash.

The biggie for me in Hawaii is check the HOA to see what they allow in terms of rental. For example, our property says a minimum rental period of 6 months. This works for us, because I think if you have a lot of holiday rentals in a complex you will have a different type of environment. You won't get to know your neighbours, plus I would imagine there would be more wear and tear on the property.

If there is any particular property you are considering let me know as I pretty looked at everything from Diamond Head thru to Ala Moana.
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Old 01-02-2011, 01:21 PM   #30
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When one buys a condo....is it wise to get an inspection (not an appraisal) or is it a waste of money. This development has been selling condos for about 2 years. The building my daughter is buying into was completed a month ago. I realize they could not be built or on the market if they had not passed all building codes...and that a lot of what we would like to know...is already behind walls.
I would not waive an inspection. The city building inspector may have missed something that another inspector will find. It's been my observation that the little things that get missed by the government inspector will come back to haunt you later. It is worth the few $$$ you spend on this -- as long as the inspector she hires is working for her, and not the real estate agent's transaction.

By that I mean, her agent should give her names of 2-3 inspectors. She should interview them and select one she has confidence in, based on his/her years of experience in inspections.

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Old 01-02-2011, 05:26 PM   #31
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Martha, Nords, Dangermouse thanks very much for the help. I am pleasantly surprised to hear that Hawaii has pretty strict condo laws and require 20 year plans. I still have to convince myself that condo fees are good value. Unlike Nords I am not handy around the house so I'll be paying for maintenance either way.
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Old 01-02-2011, 06:20 PM   #32
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I'd say an inspection is even more urgent for a brand-new home than for one that's had the developer lawsuits kinks worked out of it over the last 10 years or so. Everyone fantasizes about moving into a brand-new fully-furnished home carrying just your toothbrush, but those are the owners who are going to learn about every one of the little problems that "escaped" the developer's attention.

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Also...can she waived the Title Insurance Fee of $850.00 at closing? AFter all...with new condos...the title should not be a problem. Would you guys recommend she waive it?
I don't think the mortgage lender wants her to waive the lender's title insurance.

Another issue is who's owned the land before the developer-- a Native American tribe may be able to tie the litigation up for years, let alone make a legitimate claim.
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Old 01-02-2011, 09:42 PM   #33
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Inspection: remember that all the building inspector can only address life-safety code issues. S/he does not inspect the quality of the instillation of the siding underlayment, whether or not the fake stucco siding is appropriate for the climate (let alone whether or not it has drainage mats), whether or not the windows were flashed correctly, or whether the mechanical ventilation system is appropriately sized. Code is a MINIMUM standard. I have high regard for electrical inspectors but even they cannot stray from what is permitted, otherwise that aluminum wiring permitted in the past would never have been installed. My husband is an architect who 'observed' many a project, even caught one working on a weekend as he scooted underlayment as he applied siding - thought no one would notice. On a former neighbor's house the contractor applied siding inside out because he liked the look, no matter that it put the drip edge inside. That is not within the building inspector's purview.

Need I say more.

Find your own inspector who truly knows construction in all of it's aspects and who knows what goes wrong in your community. If the seller has a copy of the original building permit some of the old-timers know from the builder's name what to look for.
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Old 01-02-2011, 09:58 PM   #34
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Thanks Gotadimple, Nords and Brat...good points all. Now I just have to make sure she follows thru with it.
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