Why you should not buy a condo
By: Nika Volt
Tags: Condos, Condominiums, Investing, Home, Real Estate

Why you should not buy a condo

I was HOA Board member for a few year and don’t recommend buying in a condominium building.

I bought a condo in San Francisco Bay Area few years ago. I was excited about this purchase in the beginning, because it was the only option I could afford at the moment. Our building had some problems, such as low reserve funds, deteriorating common areas and balconies that will need to be replaced in a few years. Since the price was cheaper than buying a house, I decided to take a chance and buy, instead of renting. Eventually I became a Board Member of our homeowners association (HOA), trying to resolve the issues of this building. However, after years of being on the board, I gave up my hope recently and I made a vow to never buy a condo again. I am selling mine soon and will look for a house.

Every Homeowners Association (HOA) has a Board which consist of a few homeowners (usually between three to five people), who make important decision on behalf of other owners. The Board hires HOA property management companies to help with paying the bills, maintaining accounting records and performing repairs. The problems begin when HOA doesn’t have good board members who truly care about the building, and when they hire bad property management company.

Problem 1. If your building is managed by a negligent HOA property management company, they are in the business only to get paid monthly management fee. These companies don’t care about long term goals for the building. I put a lot of effort to have the board make a decision to terminate contract with current property management company who wasn’t doing anything for our building. The company would simply collect the monthly fees and didn’t even pay bills for our building. When they left, there didn’t provide any accounting records to transfer to our new company. Second management company were also running contractor’s business. They would charge us higher than market value prices for their construction services, and sometime and even charged us twice for the same work.

If you think that HOA management company only receives their monthly fees, that’s just a tip of the iceberg. They usually receive some portion of money from the contractors they choose, or in some cases they are contractors themselves. Some HOA management companies drain association’s budget for small, easy and unnecessary repairs that will bring them fast cash. However, this leaves association’s budget empty when it’s time to do major repairs, such as roof, siding and common areas.

Problem 2. Negligent Board Members. Homeowners have different reasons for becoming Board members. Some of them truly want to improve the building and take care about ongoing problems, while others become board members only for financial opportunities. When you become a board member, you receive advanced notice about any special assessments comping up, or about any other units being foreclosed and sold less than market value. I knew some board members who wanted to be on the board solely due to this reason. Those board members didn’t participate in meetings and didn’t want to respond to emails. Other Board member can be unexperienced and don’t know how to read and interpret the CC&Rs (Covenants, Conditions and Restrictions rules which govern all board member decisions). This resulted in their inability to make necessary decisions. I witnessed how Board members didn’t reply to emails and phone calls for weeks when it was matter of urgent repair, or water leak on the property. All this negligence sooner or later leads to litigation, because frustrated owners are not able to resolve issues with the negligent Board.

Problem 3. Problem with cockroaches. This is the problem I encountered in this building and was not able to resolve it, even while being a Board member. It’s harder to get rid of cockroaches in multi-unit buildings, comparing with singe family residences. Even if one unit in multi-unit building has cockroach infestation, it can quickly spread to other units. As I’ve learned, some people have more tolerance and don’t care about roaches flooding their units. They don’t take timely measures to stop the insects invasion. This results in roaches quickly replicating and spreading to other units. No matter how hard you try to get rid of roaches in your unit, if any unit in the same building has them and doesn’t take measures to get rid of them, they will come to your unit. I’ve experienced some neighbors who didn’t want to take measures to get rid of roaches in their units, even with free treatment paid by the association. Those units were spreading roaches to other units in our building.

Problem 4. Aggressive dogs that you will not be able to do anything about. If any other homeowners in your building has an aggressive dog, you are out of luck. We have an aggressive German Shepherd who lives in one of the units of our building. The dog is taken for walks on the leash.. But this dog is so aggressive, it charges at people and tries to bit, and the leash would not stop it from biting someone if they are close enough.

The response I hear from Board members to my complaint: “Until this dog actually bites someone, we are not able to do anything about it”. So if the dog is taken for a walk and you are unlucky to be in the same common area at the same time, one has to walk away to a safe distance from a dog, in order to avoid aggressive attacks. In 2001 two dogs killed a woman in San Francisco condominium building. You would think some laws would have been passed to require some breeds to wear muzzles in common areas of multi-unit building. Wrong! After submitting multiple complaints to Animal Control, writing letters to the Board (signed by other people who are also scared of this dog), the response board members gave me was: “We will document the issue and continue monitoring”. Even when CC&Rs say the board can make a decision to get rid of the dog if it causes excessive nuisance (such as being aggressive to other homeowners), apparently it actually requires someone to be injured or even killed, before negligent board members will do anything about it (at least in our building).

These are the four major problems I’ve experienced. I’ve realized that no matter how hard you work, the problems in the HOA buildings will never stop. Having your own land and more control is priceless. I view condominiums as a temporary option, when there is nothing else you could afford at the moment. However, you need to be aware of the problems that could happen. Be prepared for unexpected special assessments that could be thousands and sometimes even tens of thousands of dollars. Be prepared there will be problems that board member or property management company will not be able to resolve for you.