Help reviewing condo documents.

[Chuckanut]

Look for restrictions on things that you might want to do, or not want others to do. For example, is there a limit on the number of pets each household can have? Can you replace an outdoor light fixture with one you prefer? Are there limits on washing your car on the street?

Know where the lines are drawn between property that is exclusively yours to use, and the common area. This can be a big one.

 

[Lewis Clark]

At least in Florida, reserve money can only be used for reserve items. So for example if you need to resurface the pool but don't have a reserve item for pool resurfacing or anything close to pool resurfacing then you can't use reserve money and would need to pay for it through operations (regular assessments) or a special assessment.

Thus is not quite correct. It in Florida, the association can have a general reserve account that can be used for any reserve item.

Or, the association can have separate accounts for each item. Or a combination.

 

[Lewis Clark]

I'll offer a contrarian view. A reserve study is nice to have, and if they have one get it and review it, but it isn't critical. The important thing is that the things that will require periodic replacement and to be reserved for are identified. The people who do reserve studies don't have any special insights on what your 5 year old roof will cost to replace in 15 years. If you talk to them they'll tell you that they use today's cost and adjust for 15 years of inflation. We had the information to do that simple calculation. The math of the reserve schedules is very simple.

Yes, the math is simple once you assume an average inflation rate.

Another key point is estimating the remaining useful life of each component.

 

[Jerry1]

Look for restrictions on things that you might want to do, or not want others to do. For example, is there a limit on the number of pets each household can have? Can you replace an outdoor light fixture with one you prefer? Are there limits on washing your car on the street?

Know where the lines are drawn between property that is exclusively yours to use, and the common area. This can be a big one.

Did look for that in my review. One cat or dog, no outside changes without approval and I can wash my car in the driveway. Everything I found was not a concern. There was one thing that did catch my attention. They were okay with grilling but, they didn’t forbid charcoal. Given that most condos in this facility have wooden or Trex decks and that where most people grill, I’m surprised and a bit concerned they allow the use of charcoal. I’m a good and safe grilled and even I would be concerned about use charcoal on my deck.

As for ownership, I basically would own from the paint in with the exception of the windows. Limited common area is basically my driveway. The association owned/maintains it but I have exclusive use of it, unlike general common area which anyone can use (like the street).

 

[Koolau]

Yes, the math is simple once you assume an average inflation rate.

Another key point is estimating the remaining useful life of each component.

Our building is 50 years old so we've pretty much determined how long a paint j*b (or even an elevator) will last.

 

[Jerry1]

Yes, the math is simple once you assume an average inflation rate.

Another key point is estimating the remaining useful life of each component.

I think the key, in my case, is that I’d like to see something that shows they know how to plan and prevent surprises.

 

[Koolau]

I think the key, in my case, is that I’d like to see something that shows they know how to plan and prevent surprises.

If any one can do that in their own life, I suppose we could expect it from a Condo Board.

So far (in 15 years) our big surprise was a deadly fire at another condo. Now, all condos must retrofit sprinklers or lose their insurance. Some things are so bizarre (long story on the condo fire) that there's no anticipating them and YMMV. But, a good board does look at the experience of other boards and plans accordingly. A bad board (like one of our neighbors) had to have a million dollar assessment to cover spalling repair. Our board had headed off the issue years before. It wasn't cheap, but it was a lot less than a Mil and it was in our reserves.

 

[pb4uski]

There are always surprises. When we replaced our roofs we found out that a couple years earlier a new requirement had been enacted that required us to remove 2' of roof decking along the edge of the roof to allow access to add a couple additional nails for each intersection where the roof joists met the wall and then of course, replace the roof decking. That added about 10% to the cost of the reroofing and was part of a special assessment for the reroofing. .

Also, in the course of reroofing you inevitably find rotted roof decking or fascia that needs to be replaced, but overall that was about what we expected that it would be.

 

[Koolau]

There are always surprises. When we replaced our roofs we found out that a couple years earlier a new requirement had been enacted that required us to remove 2' of roof decking along the edge of the roof to allow access to add a couple additional nails for each intersection where the roof joists met the wall and then of course, replace the roof decking. That added about 10% to the cost of the reroofing and was part of a special assessment for the reroofing. .

Also, in the course of reroofing you inevitably find rotted roof decking or fascia that needs to be replaced, but overall that was about what we expected that it would be.

Yeah, through 4 house rehabs, I learned to throw in a 30% contingency. I think it was enough - once.

 

[Lewis Clark]

Our building is 50 years old so we've pretty much determined how long a paint j*b (or even an elevator) will last.

Great if you have that information available. Most associations do not.

 

[pb4uski]

Thus is not quite correct. It in Florida, the association can have a general reserve account that can be used for any reserve item.

Or, the association can have separate accounts for each item. Or a combination.

No, what I wrote was totally correct.

In the first paragraph you are talking about pooled reserves. While pooled reserves can be used for any reserve item, it MUST be a reserve item. Even with pooled reserves you can't spend reserve money on an item that you don't reserve for. So let's say you reserve for roofs, painting and parking lot paving and suddenly need to resurface the pool. You cannot use reserve money for the pool resurfacing because you don't reserve for pool resurfacing and it doesn't fall under roofing, painting or parking lot paving. You can only use reserve money for roofing, painting or parking lot paving.

The second approach is component reserving, where each component stands alone, in this case a roofing component, a painting component and a parking lot paving component.

Also, with component reserving crossutilization is allowed if approved by more than 50% of the owners. We had a crossutilization ballot item each year. Crossutilization authorizes the Board to transfer reserves between components if necessary. So if you need money for roofing now and other components are down the road you can move money from those down the road components to roofing to avoid the need for a special assessment or to reduce the amount of a special assessment. Most years we never did any crossutilization even though we had the authority to do so from the owners. When we replaced the roofs we used crossutilization to reduce the special assessments to the owners for reroofing.

 

[livingalmostlarge]

What is the HOA now? In the docs do they show how much it's increased in the past 5 years? Does it show any special assessments in the past 5 years?

Reserves i'm curious how the insurance has gone up. When we had a condo our insurance went skyrocketing and caused our HOA to increased 2x because of it.

 

[Stormy Kromer]

Wow, I am impressed with the experience of this group.

DW and I have considered condos or HOA's for our future home when we can't manage our single family home ( a big old farm place).

After reading all the head aches that come with HOA's and Condos we have decided that we will simply rent an apartment for our last few years and let our home equity reside quietly in our Vanguard account after we sell our house.

I don't want to own any property that I don't have sole control over, and sole responsibility for.

 

[pb4uski]

Keep in mind that condos and HOAs are two different animals. In Florida there are different statutes for HOAs and condominiums. In my experience, HOAs are more for communities of single family homes that have amenities, like pools, clubhouses, pickleball courts, etc... like where we live now. While the HOA has limits on what we can do it our home, it is a single family home and we are responsible for maintaining inside and outside

In condos, typically you "own" the "unit".. the inside, often from the drywall on exterior and common walls in and doors and windows. You also have exclusive use to some common property outside the unit referred to as limited common elements like your driveway or a designated parking space, entryways, lanais, porches or decks, etc. All the rest are common elements and can be used by all owners. It gets real complicated real quick.

 

[Jerry1]

Keep in mind that condos and HOAs are two different animals.
[…]
In condos, typically you "own" the "unit".. the inside, often from the drywall on exterior and common walls in and doors and windows. You also have exclusive use to some common property outside the unit referred to as limited common elements like your driveway or a designated parking space, entryways, lanais, porches or decks, etc. All the rest are common elements and can be used by all owners. It gets real complicated real quick.

I’m buying a condo and it’s exactly as you state. We own from the paint in.

 

[Stormy Kromer]

I’m buying a condo and it’s exactly as you state. We own from the paint in.

I was an insurance guy....many associations and unit owners have no idea who is responsible for what when there is a fire in a condo or town home association. Many (damn near all) unit owners are underinsured and almost all associations don't know what their responsibility is until the fire trucks leave.

Don't count on association assessments to cover it either. It is confusing stuff that gets taken way too lightly until something happens.

For example. Who pays the fire department for a smoke alarm to your unit ? Who pays for smoke damage to the paint on the walls inside your unit ? Who owns the fixtures outside the paint on the walls (kitchen cabinets, carpet, toilet, sink.....) Who insures the carpet that you installed ? Any improvements that you made beyond the paint on the wall? How much insurance do you carry for the stuff outside of the paint ? Kitchen cabinets, plumbing fixtures, hardwood floors, built in appliances add up to many, many thousands of dollars. Who insures the $10,000 Cambria countertop you installed ? Who insures the jacuzzi tub ? It is installed, but who insures the fixtures ? How about the $10,000 bill to get the trees cleaned up in the common area after a thunderstorm ? What if the sewer backs up and ruins the flooring (who owns it and who has insurance to cover it) I'll bet 99.9.5% of condo unit owners, associations and their insurers don't know or take it into consideration until after a loss. Unit owners buy the place and take out a HO-6 for their personal belongings which only provides an extra 10% for their interest in their ownership of the unit. That is never enough......

Unit owners don't forget, associations that cover the commons have deductibles on the association policy and you may (will) be assessed for that portion of the loss too.

Don't wait until after a loss to find out what is your responsibility. This goes for liability insurance too. Don't blame your agent if you don't have enough coverage.

 

[zangbao]

This thread is making me rethink on buying a condo and instead maybe just rent forever.

 

[Stormy Kromer]

This thread is making me rethink on buying a condo and instead maybe just rent forever.

I'm going to rent.

 

[pb4uski]

I was an insurance guy....many associations and unit owners have no idea who is responsible for what when there is a fire in a condo or town home association. Many (damn near all) unit owners are underinsured and almost all associations don't know what their responsibility is until the fire trucks leave.

Don't count on association assessments to cover it either. It is confusing stuff that gets taken way too lightly until something happens.

For example. Who pays the fire department for a smoke alarm to your unit ? Who pays for smoke damage to the paint on the walls inside your unit ? Who owns the fixtures outside the paint on the walls (kitchen cabinets, carpet, toilet, sink.....) Who insures the carpet that you installed ? Any improvements that you made beyond the paint on the wall? How much insurance do you carry for the stuff outside of the paint ? Kitchen cabinets, plumbing fixtures, hardwood floors, built in appliances add up to many, many thousands of dollars. Who insures the $10,000 Cambria countertop you installed ? Who insures the jacuzzi tub ? It is installed, but who insures the fixtures ? How about the $10,000 bill to get the trees cleaned up in the common area after a thunderstorm ? What if the sewer backs up and ruins the flooring (who owns it and who has insurance to cover it) I'll bet 99.9.5% of condo unit owners, associations and their insurers don't know or take it into consideration until after a loss. Unit owners buy the place and take out a HO-6 for their personal belongings which only provides an extra 10% for their interest in their ownership of the unit. That is never enough......

Unit owners don't forget, associations that cover the commons have deductibles on the association policy and you may (will) be assessed for that portion of the loss too.

Don't wait until after a loss to find out what is your responsibility. This goes for liability insurance too. Don't blame your agent if you don't have enough coverage.

Wow. No one that I know took out insurance for only their personal belongings as you suggest. My policy covered not only belongings but also everything in the unit. My coverage limit was intended to cover replacing everything in the unit.

Where there is a question on coverage, my insurer and the association insurer would figure out who is responsible for what.

 

[Koolau]

Great if you have that information available. Most associations do not.

A good association "steals shamelessly" from other associations. I'm sure there is a loose relationship among the Condos. We always have a general idea of what's going on in other buildings in our area and across the Island. (We have nick-names for other buildings as well.)

There are over 1500 Condo associations on Oahu, so the general experiences of Condos get around.

 

[Lewis Clark]

A good association "steals shamelessly" from other associations. I'm sure there is a loose relationship among the Condos. We always have a general idea of what's going on in other buildings in our area and across the Island. (We have nick-names for other buildings as well.)

There are over 1500 Condo associations on Oahu, so the general experiences of Condos get around.

I agree that much information is available as you imply and that good associations can probably find it if they look. Not every association is good enough to find it or even knows enough to look for it. There may be loose relationships among Oahu condos to share information and that's great. There should be more of that everywhere.

I created a networking group for Treasurers in my community in 2020 and attended meetings of the Community Associations Institute for two years. I know from personal experience that there are many condos and HOAs in other areas that are not good associations, do not have such relationships, and do not want to develop those relationships.

The Florida statutes for HOAs and condos were amended in 2024 and now require all Board members to complete both initial training and annual continuing education. Hopefully this will eventually reduce the number of bad associations.

 

[FLSUnFIRE]

Keep in mind that condos and HOAs are two different animals. In Florida there are different statutes for HOAs and condominiums. In my experience, HOAs are more for communities of single family homes that have amenities, like pools, clubhouses, pickleball courts, etc... like where we live now. While the HOA has limits on what we can do it our home, it is a single family home and we are responsible for maintaining inside and outside

In condos, typically you "own" the "unit".. the inside, often from the drywall on exterior and common walls in and doors and windows. You also have exclusive use to some common property outside the unit referred to as limited common elements like your driveway or a designated parking space, entryways, lanais, porches or decks, etc. All the rest are common elements and can be used by all owners. It gets real complicated real quick.

I'm in FL. I have an "HOA" but it operates like a condo association. I have a fee simple title to my townhouse and own the dirt under it so it is not a condo but the HOA maintains the building shell, paving, landscaping, and insurance as would a true condo. The masonry "party walls" between units are the joint responsibility of the shared owners but would be very odd to have an issue with them. It is complicated but fortunately our property is pretty simple. Roofing and painting are the big structural items and paving/stormwater management are the other potential issues. I like that I'm fee simple so I can't have my community converted by an investor -especially in a high demand area. (13 story tower about to be built next door on the same block).

ETA: I'd rather have the party walls extending above the roofline and have simpler HOA for trash and shared property maintenance only. It's the one thing I don't like about my place and the only reason I'd consider selling -mostly because we are a very small community so it's hard/impossible to get anyone to serve on the board and/or do anything. We are too reliant on our PM firm.

 

[Cognito]

When I bought my condo the surprise came when my agent ask for the latest minutes that are may not reflected in the doc. There was a special assessment added that month. I was able to get the seller to pay those SA for the next 2 years.

 

[Jerry1]

For example. Who pays the fire department for a smoke alarm to your unit ? Who pays for smoke damage to the paint on the walls inside your unit ? Who owns the fixtures outside the paint on the walls (kitchen cabinets, carpet, toilet, sink.....) Who insures the carpet that you installed ? Any improvements that you made beyond the paint on the wall? How much insurance do you carry for the stuff outside of the paint ? Kitchen cabinets, plumbing fixtures, hardwood floors, built in appliances add up to many, many thousands of dollars.

​

@Stormy Kromer - We ran into this very problem when we just recently got an insurance quote. Beyond the type of person who’s not aware of the issue, my issue is how to determine the insurance amount. I took a guess at $250K but I really have no good idea of how much it would cost to rebuild the interior of the unit. I took a stab by saying $20K for each bathroom (2) and $50K for the kitchen. Added another $20K for flooring and came to $110K. That seemed too light so I doubled it and rounded to $250K. Not very scientific to say the least. How does one go about getting a good estimate for that type of insurance. I don’t mind paying up for proper insurance, but I don’t want to blindly pay more than I have to either.

 

[simple girl]

I would check:

1) how often can an owner rent out their unit?
2) is there a limit on the % of units that can be owned by investors (I.e. only set up as rentals)
3) what percent of the owners is required to amend your covenants? Our percentage is set so high that we have been unable to amend our covenants to allow more restrictions on rentals. This is leading to our community slowing becoming more and more investors with renters who have less committment to keeping the community looking great.