Some Truths About Condominiums
By William Decker, CRI, CPI, CMI
Please Note: I live and work in the Chicagoland area. My comments are based upon that although many of the issues are the same all over the country. Different states and municipalities have different conditions, laws and building codes.
Condominium living has a certain appeal to some people, based upon their financial situation, lifestyle and point in life. I joke, with some basis in truth, that condominiums are like halfway houses. If you live in a rental property, your landlord is supposed to take care of all maintenance and repairs. If you live in a house, you alone are responsible to care for the property. If you live in a condominium, you usually only own and are responsible for the area inside the unit’s drywall. You also “own” a percentage of the common areas, the exterior, roof, common hallways and stairs.
Given the recent collapse of the Champlain Towers South, the 12-story condominium tower in Surfside, Florida, I felt that I should write this article from my perspective as a state licensed home inspector. I have done over a thousand inspections of condominium buildings, ranging is size from 2 duplexes to 40 units. These inspections were usually done to evaluate problems related to water intrusion (water damage, mold growth, rotted floor and roof trusses, etc.) Along the line, I have run into the same problems in every building. It is not a problem related to poor construction, although that problem persists, it is a problem with people.
What happened in Florida is very indicative, from a condominium owners point-of-view, of these type of properties. Thankfully, we in Chicago have not suffered from such a catastrophic event in our area, but there have been several ‘mini-collapses’, where some floor or roof joists come loose, and other problems mainly related to poor construction, lax code inspections and poor building design on the part of the Architects. But I would posit that a large share of the blame, if we can call it that, for these situations falls on the individual condominium unit owner.
Condominium associations are usually a legal corporation with each owner owning a share. They own their own unit as well as a portion of the building’s common areas. Like other corporations, the owners elect people from he membership to serve as the corporate board. They form the “condo board”, the people who handle administration of the building. They schedule and contract for maintenance, both day-to-day such as shoveling snow, and repairs. They are usually good people who want to serve. But… they are almost always people who don’t know anything about managing and maintaining a large, commercial type building. It’s not just a large house, it’s a huge property with special requirements and needs.
Some condominium associations will hire a management company and endow them with various levels of responsibility. Some management companies handle everything, collection of assessment fees, trash removal, maintenance, snow removal, repair, taxes and paying the bills. Other arrangements are more limited, with the condo board or individual condominium officers retaining powers such as check writing authority (always a good idea, in my opinion) and dealing with the other owners.
I have worked with many such associations. Most of them are small 3 or 4 unit buildings and the owners are, most times, younger people owning property for the first time. They feel that they can handle things all by themselves and don’t want the added expense of paying a management company. They feel that they can all just be friends, like back when they lived in the dorm at college. And, no slam intended, they have no idea what they are doing.
The Big Disconnect:
Condominium board members have to understand that they have a fiduciary responsibility to the other owners. They are legally responsible for the value and condition of the property. They can be personally sued and held liable if there are problems. If the property deteriorates, they can be held legally responsible. Yet, they usually have no experience or expertise to do what they are legally required to do. Many times, the unit owners will elect a Real Estate agent or an Architect to be the board president. They do this in the mistaken belief that these people have more proficiency with managing a building, but they are almost always mistaken. Just because you sell condominiums does not mean that you know anything about taking care of them. Architects, one would think, would know about building maintenance, but the people that design a huge building really know very little about the nuts and bolts of daily operation.
In other words, amateurs (Condo board) should not be making the repair and maintenance decisions for a large, commercial sized building. And such decisions should not be made based upon the votes of an even larger group of uninformed people (the unit owners) who are more concerned about keeping their assessment payments low than they are in maintaining the value of the property. Statistics show that the average condo owner lives in the unit for 4 – 5 years. They, usually, have no long term interest in the preservation and upkeep of the building.
The story of the Florida condominium is a common one, and one that I see almost weekly in my profession. The condominium board is the responsible authority, but they rely on experts. But they can only rely on experts if they call actual experts. I regularly see problems that are significant and long standing that were not addressed in a timely manner.
For one 8 unit building, I have done 4 different inspections for water intrusion problems, writing a comprehensive report on what the problems, giving suggestions on how these problems should be addressed and even recommending licensed, qualified and professional contractors who specialize in this type of work. After the first inspection, 6 years ago, I detailed the issues and even attended a meeting of the entire condo association to explain the issues.
A year later, I received a call from the new condo board President requesting another inspection. To my surprise, the inspection revealed that no repair work had been done in the past year.
The board took their time, consulted “experts”. Not licensed and qualified professionals but the proverbial ‘two guys in a white panel van from over by dare’ as we say in Chicago. They received quotes that differed by as much as 400% and the work that they quoted had very little to do with the actual work needed. As they say, when your
only took is a hammer, you approach each problem as a nail. I remember one building where there were some water leaks originating from defects in the parapet wall metal coping. The copings needed to be re-caulked. The work that the condo board finally had done, 19 moths later, was a new roof. And… the affected owner still had leaks in their unit.
If you are in a condo building, make sure that your board has a reserve study done, every 10 years. This is a special type of inspection that evaluates the building’s common areas with an eye towards two questions; What is the remaining service life (roof, masonry, metal rear porch, etc) and how much will it reasonably cost to repair when that time comes (allowing for reasonable, professional workman and inflation). The reserve study allows the condo board to set the assessments reasonable and avoid the surprise of ‘special assessments’. And, since the monies have already been collected, there is little complaints from the condo members. Such complaints only delay the work and allow the the problems to get worse.
So, make sure that your condo board does their job. Get a reserve study every 10 years. When work is required, have it done promptly and by licensed and qualified professionals. Many certified, professional home inspectors can perform reserve studies and develop a plan for proper maintenance as well as helping to set realistic assessment fees.
As was the case in Florida, your very life could depend on it.