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 made up of  several of the usual suspects that are well-known to local authorities and industry watchdogs.

The culprits were observed by the folks at the CRC REPORT® after they had descended on a group of eight (8) beleaguered condo owners, who found themselves living in a six year-old building which, as it turns out, was falling apart at the seams. At least if we are to believe the “story” that was crafted in order to justify the HOA filing lawsuit against the builders in an attempt to recover the cost of repairing the shoddily constructed building that was barely five years old at the time the suit was filed.

Skipping past the details of the lawsuit we find the Association with $300,000 in settlement proceeds after paying their attorneys, court costs and “litigation support” expenses, which is a fancy way of referring to the engineering consultants who are hired to document the sloppy workmanship which resulted in the deplorable condition of the building that houses the aforementioned eight condominiums barely five years after construction was completed.

Not surprisingly, the same technical experts who assisted the Association with this litigation support, were found to be hanging around sniffing at the bones of the carcass when it came time to undertake the renovation of the facility.

Now one might think that $300,000 would be enough money to repair the shoddily constructed exterior of a single, three-story building that measures roughly 100′ x 70′ but that would be an incorrect assumption on your part if you were to assume that this would be the case. As it turns out the cost to remediate all of this damage was more on the order of $600,000, which included almost $57,000 in consulting fees that were paid to the same consultant who provided the aforementioned “litigation support.”

Keep in mind that this consultant had very likely pocketed fees for their “litigation support services” that were equal to if not greater than the fees earned for overseeing the repair project that ensued once there was a pot full of insurance money to go along with the funds that the eight owners would ultimately have to cough up, but I digress…

The consultant’s fees for managing the repair work no doubt escalated as the project expanded into a six month ordeal after the consultant initially projected that the construction work would be completed in 28 days…Not 29 days or 27 days. Not a month or five weeks, but exactly 28 days!

Instead the project wrangled on from late January of 2016 until well into July resulting in no less than 25 weekly progress reports being prepared by the consultant. The last of these reports advised the HOA’s board of directors to increase the contingency budget for the project by $10,000 to cover the cost of additional work that the consultant would need to do to “wrap up the project.”

When it was all said and done these 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 (thank God for small miracles) this means that the cost of renovating the exterior of this building ended up being at least $75,500 per unit, “Wrapped up” in the final cost were no doubts some tidy profits for both the consultant and the contractor who performed the repair work.

Given that these condominiums had initially sold for less than $300,000 six years earlier when they were new, it raises the question of whether it is advisable to continue building condominiums that require 25% or more of the initial market value of the units to be spent repairing a building that shouldn’t need to be repaired at all after such a short period of time?

But alas, I once again digress….

Suffice it to say that the usual suspects continue to lurk in the shadows looking for their next victim. So if you are going to purchase a condominium or any home located in an HOA for that matter, then you must undertake proper due diligence because you really are buying more than a home when you purchase a home in an HOA!

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