Flee multi family housing?

It looks like owning a condo means sharing unpaid debts of many
deadbeat neighbors, and I suppose even renting one may reflect the
cost of that in time. Get-tough measures used in the past to protect
"good neighbors" are being derided or outlawed according to
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I wonder if any multifamily kind of housing with common fees willbe safe as assessments pile up unpaid.
What are the hidden pitfalls or cheap alternatives? Maybe if an
apartment complex is owned as a whole instead of in pieces, a resident
can firewall themselves from most of the costs of others who don't
keep up.
Reply to
dumbstruck
In regard to protection against "deadbeat neighbors", co-ops offer a couple of significant advantages. One is that they can screen applicants to significantly increase the likelihood that the owner will (a) be financially capable of paying assessments, and (b) not have a history of shirking debts.
What the article you cited fails to say about foreclosures is that in a condo (at least in NY), the bank holding a unit's mortgage has first claim on foreclosure proceeds. So foreclosure is often pointless for a condo board. In contrast, a co-op board has first claim on foreclosure proceeds, so the co-op is more likely to have this real alternative to recoup unpaid assessments.
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(NYTimes: The Downside for Condos in a Downturn)
Reply to
Mark Freeland
to
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so I wonder if any multifamily kind of housing with common fees will> be safe as assessments pile up unpaid. The usual practice is for an Association to place a lien on the home of those who are delinquent, all per set terms. The association's governing documents set the terms for placing such a lien and further collecting assessments owed. The lien is meaningful. When the home is sold, the lien must be paid off. In my experience the assessments do not necessarily pile up.
If one has not great wealth, then one may buy into a slum without a HOA, start a volunteer neighborhood movement (with no governing documents and hence no legal force for doing so), form neighborhood watch groups, and turn the neighborhood around.
Alternatively those buying into a HOA should know that 30% delinquency rates are pretty common and learn to live with this reality. Though again, it is not like the past due assessments are never collected. Those buying into a HOA should understand that volunteers are still needed to run the Association (administering budgets, overseeing contractors, and so on). But unlike volunteers in a non-HOA neighborhood, the HOA has much support in law.
Anyone who is a capitalist should love the HOA. It has made possible highly profitable land development throughout the United States. Profitable to both the developer and home buyers alike.
My understanding is that HOA communities preserve property values better than non-HOA communities. For the greater part, I would call the HOA, "a terrible system but I cannot think of a better one." From time immemorial people have fought being governed. Today's HOA dissidents are fairly uneducated folks who do not understand that 'pitching in' together, and generally being bound to do so by some law and some government, ensures the most harmony in communities. Even so, HOA dissidents who do feel treated unfairly can and do bring a legal claim in the courts. Sometimes they win. When they do, they might recognize that it is the very system of laws many of them profane that ensures their rights are protected.
Reply to
Elle
The problem is that fair-play has gone out the window. Populist laws have been recently passed and are being devised to limit what condo associations can collect under foreclosures, bankruptcies, etc. Some of this is on a state level, but such state law changes are being pushed at a national level by activist groups.
I may have the terminology wrong, but am personally aware of new legal arrangements that are making debts by condo dwellers increasingly uncollectable even by lien. This is starting a non-virtuous cycle of increasing the burden on condo associations, requiring unaffordable fees or assessments that by their size in turn drag more owners into trouble.
Reply to
dumbstruck
You are entitled to your opinion.
Do you have an example? A link to an article or something?
Liens as a legal mechanism for collecting debt owed are not going to go away. If they did, economies would stop functioning. Association covenants, which typically explicitly allow the use of liens and foreclosure to collect assessments, have long had the force of law.
What I have noticed, all at the state level but in many states indeed, is the development of specific legislation targeting HOAs so they are run more rigorously. But by-and-large the legislation does not seem to me to be intended to do away with HOAs. It is more to compel its volunteer directors to get with it. I think many volunteer directors are woefully inept at understanding their obligations. At times a member suing the Board is arguably appropriate. To me the more honorable and useful response is either (1) to get on the Board one's self; or (2) once one realizes HOA life is not for him or her, move.
Reply to
Elle
There are new caps that prevent you adding certain large amounts to a lien. The whole chain of responsibility is being raided in the spirit of Robin Hood leveling (or for political correctness, like you cannot prevent neighbors electric cars from pirating your electricity) The links I have at hand would be too revealing of my privacy and I'm not inclined to rediscover more general ones that I have seen. It is enough that you have been warned what to look for. This looks hard to escape.
Reply to
dumbstruck
I suppose some state legislatures may have some proposals under consideration to deal with people being upside-down with their mortgages and in heavy debt to whomever. But even the first link you provided seems to lean heavily in favor of preserving HOAs' right to collect assessments.
Where I am (with a HOA), it has been a history lesson on land development, capitalism, militia extremists, etc. The anti-HOA crowd seems to argue they want less government regulation and more freedom. But this is confusing, since this crowd is thus also trying to take away people's right to contract to form neighborhoods with certain standards. To me their reasoning does not add up.
On the third hand I have been overheard to say lately, "I do not want to live in a HOA again." Which means, as noted earlier, either one has a lot of money to buy where neighbors can afford to take care of the exterior of their homes, or a low income neighborhood where how the exterior of homes is kept up is more a roll of the dice.
Here is an interesting, perhaps related point: I see on the net that HOA members suing directors often must do so as shareholders suing in a "derivative action." HOA members are seen in the same light as stockholders who sue corporate directors. "Derivative actions" have certain requirements. It tends to make frivolous suits harder.
If you're interested, a review of the evolution of HOA legislation in California may be worthwhile. I think California is ahead of everyone else. See especially California's 1985 Davis-Stirling Act.
Otherwise, I am happy to agree to disagree on the direction HOAs seem to be going.
Reply to
Elle
I framed this as a condo issue in original post. Laws have already been passed and the impact is just starting to hit condo managers, as their late collectables start to turn into never-collectables. Condo assoc budgets already at breaking point will need more fees and assessments, which will break the ability of fixed incomers to pay, and reinforce the cycle just as the article said.
I am not concerned with separate unit HOA, because it is a smaller step for them to switch their investment into non HOA equivilents. And Coops are statistically a drop in the bucket. I'm talking about the huge ocean of multifamily shoebox condos such as line the coast of Florida or various inland cities and provide needed affordability over individual houses, yet a step above mass rentals. They may be covering for their departed neighbors, and new buyers may not pick up the bill like before. Even hotels are migrating toward the condo ownership mode, so attention is needed to see who picks up uncollected bills and what unexpected person it gets passed on to.
Reply to
dumbstruck

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