The HOA Blotter: June 11, 2017

Dateline: Portland, OR – Just when you started to think it might be safe to go back in the water the HOA Detective spots a flock of buzzards feasting on another fresh HOA carcass…In this case the “carcass” was yet another hapless condominium association that had fallen victim to a cabal of the usual suspects.

The culprits were spotted after they had descended on a group of eight beleaguered condo owners who found themselves living in a six year-old building that was falling apart at the seams. At least that’s the story that led the HOA filing lawsuit against the builder to recover the cost of repairing a building that was barely five years old at the time the suit was filed.

Skipping past the litigation details we find the Association with $300,000 in settlement proceeds after paying the attorneys fees and litigation expenses, which doesn’t sound like a lot of money but keep in mind we are talking about one, eight unit building. You might think $300,000 would be enough to repair the exterior of a three-story building that measures roughly 100′ x 70′ but not in this case. As it turns out the cost to correct the defective construction was closer to $600,000 including all of the consulting fees that are typical in these situations.

 

When it was all said and done the eight owners were required to dip into their own pockets to the tune of at least $38,000 each. Combined with the $300,000 in settlement proceeds means that remediation the construction defects ended costing at least $75,000 per unit.

A bit of digging by the HOA Detective has confirmed that these condominiumsĀ  initially sold for less than $300,000 per unit six years before the lawsuit was settled which means the remediation costs were 25% of the price of the condominiums when they were new.

Here at the HOA Detective editorial desk we refer to this as the “construction defect premium,” which is an entirely unnecessary expense that could easily be avoided with proper regulatory and project management oversight during the initial construction process.

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