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Subject: D.O.A. HOA
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ErinO
(Illinois)

Posts:9


03/13/2019 4:59 PM  
This is truly the worst case scenario, no exaggeration.

The facts:

- 9 unit townhome community in IL. Built in 2005/6. All units connected, “condos” in HoA documents.
- One resident manages HoA. No volunteers, even after making consequences known.
- No management co. will take us on because of community’s small size.
- Brarebones minimums are met (probably?). Bank account, insurance, grounds maintenance. There is transparency.
- Meager reserves. Dues aren’t increased bc “we’re a democracy and not everyone supports the idea”.

The problem:

Discovered in October - Wood rot on the garage exterior, affecting 7 of 9 attached garages. **See picture**. HOA acknowledges repair responsibility.

[IMG]http://i66.tinypic.com/2py9wdc.jpg[/IMG]

An independently-hired, unlicensed (legally used) contractor worked on repairing our rotting exterior panels and discovered extensive damage - the wood frame located above the molded panel (see picture - red line) crumbled in his hands, at least one finger deep. Worst case: the rot is within the frame of the building, compromising structural Integrity.

It may be only be a superficial problem, but we won’t know until it’s investigated by removing a portion of the load-bearing wood beam framing the garage. Whatever the issue, it’ll need to be addressed immediately upon altering that beam because of it’s integral role.

Even if we could sell tomorrow, this wood rot issue may prohibit any sale until remedied. Heck, the whole building could be deemed unsafe for habitation. Who knows!

We have NO idea where to go from here. Help!

* The issues likely stem from proven negligent workmanship and inappropriate materials used. The statue of limitations has passed. At least one building permit was forged, so no recourse can be had. The contractor sued the village during construction and settled - all permit fees were waived. It’s likely there was minimal village oversight on the project.
MelissaP1
(Alabama)

Posts:8297


03/13/2019 5:32 PM  
What does your CC&R's say is the responsibility for the repairs? I am not sure if this is a HOA responsibility. Would have to know if the owner takes care of the "Walls in".

Remember when you ask the HOA to pay for something, it means ALL the owners pay for it. Well atleast with their dues. So if the HOA doesn't have a budget for such things, you can then expect a higher dues or a special assessment. Plus the rest of the members have to agree to take on the responsibility of the repair. That could take some time.

I don't believe a management won't take on your HOA. It's probably more like it it's not that cost effective for all involved to do so. Self-management serves your needs better because of the size.

Former HOA President
ErinO
(Illinois)

Posts:9


03/13/2019 6:13 PM  
Thank you for your reply. I will get back to you tomorrow about the CC&Rs. I’m aware of the cost being spread to everyone and know this is gonna hurt the wallet.

I was under the impression the HoA paid for property damages caused by “walls out” elements. More than a few issues have arisen thanks to improper roof pitch, improper/non-existent flashing, mis-sized window framing by the original installers, etc.

Re: management - all of the local management companies turned us away bc of cost effectiveness. We’d self-govern if we had people to do it. We don’t.
GeorgeS21
(Florida)

Posts:1243


03/13/2019 9:20 PM  
Erin,

Is there no Board of directors?

Are you volunteering with others to manage and govern per your CCRs and Bylaws?
ErinO
(Illinois)

Posts:9


03/13/2019 9:34 PM  
Like I said, one guy is begrudgingly acting as the entire board and he wants to move. We only have 9 units and have begged for others to volunteer, repeatedly. Owners occupy 7 of 9 units.

The consequences for a weak/non-existent board has been made clear. “Apathy” is an understatement.
ErinO
(Illinois)

Posts:9


03/13/2019 9:44 PM  
To answer your question about volunteering and governance, yes but typical HOA drama so two were running it. One moved and now there’s one.

Like I mentioned about rules - none are enforced. I’ve tried to make clear that disorganization and not following rules can depreciate our home value. It can prevent selling when potential buyers are denied loans because the HoA paperwork isn’t in compliance.

It’s infuriating.
GeorgeS21
(Florida)

Posts:1243


03/13/2019 9:47 PM  
Being mad is useless.

Know your docs, call for special election and get involved.
MelissaP1
(Alabama)

Posts:8297


03/13/2019 9:59 PM  
A HOA does NOT effect home value. (Yes others will argue). It effects the Attractiveness of your home to potential sellers. Home values are based on REAL #'s based on what similar homes sell for within a few mile radius. Enforcement of rules purpose is to keep the property in neat and operational order.

Former HOA President
ErinO
(Illinois)

Posts:9


03/13/2019 10:28 PM  
How about we go back to the issue of structural integrity impacting nearly all units, and how to get the HOA to address the problem. It’s going on 6 months of inaction.
—————-

But for those focusing on the HOA...

- They all have said that rules are formalities. “We’re a small community and can wing it.”

- Also said; “We’re a democracy and not every person wants to do [insert unpleasant business here]. Our hands are tied.” An actual quote re: no increase in dues for 10 years. They’re $150/mo.

- most serious violator: recent domestic violence history with assault convictions. No one wants to call him out.
- the other is a human brick wall, blocking anything from moving forward.
- End tally: 3 of 9 unit owners are able and willing to follow rules, none of them want to volunteer for reasons detailed above.

So pardon me if i’m upset.
MelissaP1
(Alabama)

Posts:8297


03/14/2019 4:04 AM  
So is HOA life... What is stopping you from taking up the challenge instead of putting it on others? Some of us here took up the torch and made the changes we wanted. Pulled up the boot straps and got to work.

Former HOA President
LetA
(Nevada)

Posts:712


03/14/2019 5:26 AM  
I am surprised that you're not under receivership already. Question Number 1!!! Does you HOA have D&O Insurance?

Here is what needs to happen..You hire a licensed, insured and boned contractor to inspect the problem areas

Get 3 bids to fix the problem.

Sounds like you are gong to need to have a special assessment.

Warn others that don't want to be board members what receivership entails.
CathyA3
(Ohio)

Posts:299


03/14/2019 5:53 AM  
And by the by, an HOA is *not* a democracy. It's a corporation, governed by a board of directors in accordance with your bylaws and the laws of your state. The members are financial partners whether they like it or not, and they'll thrive or they'll hang together depending on how they rise - or fail to rise - to the challenges posed by the HOA's legal and physical structure.
RoyalP


Posts:0


03/14/2019 6:00 AM  
Posted By LetA on 03/14/2019 5:26 AM
I am surprised that you're not under receivership already. Question Number 1!!! Does you HOA have D&O Insurance?

Here is what needs to happen..You hire a licensed, insured and bon{d}ed contractor to inspect the problem areas

Get 3 bids to fix the problem.

Sounds like you are gong to need to have a special assessment.

Warn others that don't want to be board members what receivership entails.





Receivership is expensive

but

the court appointed receiver WILL/SHOULD/PROBABLY get the repairs made.

The extra expense involves the payment of the receiver, who will answer DIRECTLY to the court.

however

At this point y'all NEED a republic as your democracy has failed.



BEST OF LUCK

and next time: CAVEAT EMPTOR
TimB4
(Virginia)

Posts:16382


03/14/2019 6:31 AM  
Posted By ErinO on 03/13/2019 4:59 PM

- One resident manages HoA. No volunteers, even after making consequences known.




So, why aren't you serving?
Or, are you the one person?


Posted By ErinO on 03/13/2019 4:59 PM

- No management co. will take us on because of community’s small size.




Not an issue.
You still need a board of Directors and nobody is willing serve.


Posted By ErinO on 03/13/2019 4:59 PM

- Meager reserves. Dues aren’t increased bc “we’re a democracy and not everyone supports the idea”.




Be prepared for special assessments.


Posted By ErinO on 03/13/2019 4:59 PM

The problem:

Discovered in October - Wood rot on the garage exterior, affecting 7 of 9 attached garages. **See picture**. HOA acknowledges repair responsibility.


An independently-hired, unlicensed (legally used) contractor worked on repairing our rotting exterior panels and discovered extensive damage - the wood frame located above the molded panel (see picture - red line) crumbled in his hands, at least one finger deep. Worst case: the rot is within the frame of the building, compromising structural Integrity.

It may be only be a superficial problem, but we won’t know until it’s investigated by removing a portion of the load-bearing wood beam framing the garage. Whatever the issue, it’ll need to be addressed immediately upon altering that beam because of it’s integral role.




This doesn't sound like a problem.
The Association accepts responsibility and the repair work appears to be in process.



Posted By ErinO on 03/13/2019 4:59 PM

Even if we could sell tomorrow, this wood rot issue may prohibit any sale until remedied. Heck, the whole building could be deemed unsafe for habitation. Who knows!




This is (in my opinion) the real problem you allude to.
You want to sell and now, due to minimum reserves, may need to pay a special assessment to have the repairs done in order to sell.


Posted By ErinO on 03/13/2019 4:59 PM

We have NO idea where to go from here. Help!




In my opinion, VOLUNTEER TO SERVE.

This is likely too big of a job for one person to oversee along with running the Association and doing their day/night job. Much less enjoy the family.

Get involved and offer to help where you can.
This way, you can directly keep the process moving and possibly sell when you desire.





GeorgeS21
(Florida)

Posts:1243


03/14/2019 6:58 AM  
BTw, Erin, this is a “positive” site for HOA questions ... most on here are pretty darn savvy about HOA matters and have seen and heard a lot - both from here, but especially from their volunteering on HOAs as board members and officers.

The advice to get involved and serve is consistent - it is necessary - otherwise, everyone simply complains and nothing gets done.

I can’t let Melissa’s comment re HOA not affecting home values pass - in this she is a staunch believer, but wrong.

Let us know how your research goes - once you fully understand your governing documents and state statutes, perhaps we can provide more.
JeffT2
(Iowa)

Posts:476


03/14/2019 9:22 AM  
Posted By ErinO on 03/13/2019 4:59 PM


* The issues likely stem from proven negligent workmanship and inappropriate materials used. The statue of limitations has passed.



The clock on statute of limitations starts ticking either on the "date of discovery" of the harm or on the date on which the plaintiff "should have discovered" the harm. It sounds like the damage was covered over and only discovered six months, so you may have a case. Many lawyers give a free initial consultation, so this is something you can look into.
ErinO
(Illinois)

Posts:9


03/14/2019 12:26 PM  
I was very active, doing paper work and leg work. Taking minutes, outrach. You name it. I’m called crazy and overdramatic when I warn them of consequences and management necessities. Even if I took it over, which was the case at one point, there was minimal compliance with things like special assessmen collection.

So I’m the “bad guy” and “power hungry”. I ccan only do so much. I’m probably going to have to be the bad guy again and have the court take this over. There seems to be any other way.

TL;DR: I was very active but couldn’t get anything done. Maybe the courts can.
ErinO
(Illinois)

Posts:9


03/14/2019 12:29 PM  
Thank you so much, Jeff! Your knowledge is EXTREMELY helpful. I’m taking that to the “board“ today. He can contact our attorney to hear it right from her mouth.
JeffT2
(Iowa)

Posts:476


03/14/2019 1:52 PM  
Posted By ErinO on 03/14/2019 12:29 PM
Thank you so much, Jeff! Your knowledge is EXTREMELY helpful. I’m taking that to the “board“ today. He can contact our attorney to hear it right from her mouth.



If you are talking about the original construction, the time may or may not be limited by your documents or law, but yes, the lawyer can advise.
JeffT2
(Iowa)

Posts:476


03/14/2019 1:54 PM  
One way to make big policy choices and end deadlocks, is to take a non-binding preference vote of all the owners. Then the board (or whoever is left) can know what direction y'all want, since you voted on it. You only have nine units, so it is not that hard to distribute a ballot to each.
JeffT2
(Iowa)

Posts:476


03/15/2019 9:02 AM  
Posted By ErinO on 03/13/2019 6:13 PM
I was under the impression the HoA paid for property damages caused by “walls out” elements. More than a few issues have arisen thanks to improper roof pitch, improper/non-existent flashing, mis-sized window framing by the original installers, etc.



This is a common misconception. The association is usually not responsible for damage that results from the common elements.

The way it usually works is that each unit owner repairs and pays for damage to their unit, and the association repairs the common elements, unless your documents say otherwise.

One exception is when the association is negligent, in which case the association should pay for all damages. If the association knows that there is a leak from the common elements, and fails to fix the problem, then the association would be liable for those damages that resulted after the discovery of the damage, but not for the initial damage (in most cases).

Another exception is the association's insurance coverage for the units, which is required by the IL Condominium Act (although insurance does not usually cover slow leak damage, but may cover sudden and accidental damage to units).

I think many boards don't know these things and blindly pay for all damages that come from the common elements.

You (or someone in your association) really need to know the boundaries of the units, the garage units, the common elements and the limited common elements, as well as the maintenance responsibilities for each of those areas. Having a good grasp on these basics, which will be in your governing documents, is a starting point for these problems.
CathyA3
(Ohio)

Posts:299


03/15/2019 9:34 AM  
Posted By JeffT2 on 03/15/2019 9:02 AM
Posted By ErinO on 03/13/2019 6:13 PM
I was under the impression the HoA paid for property damages caused by “walls out” elements. More than a few issues have arisen thanks to improper roof pitch, improper/non-existent flashing, mis-sized window framing by the original installers, etc.

...
One exception is when the association is negligent, in which case the association should pay for all damages. If the association knows that there is a leak from the common elements, and fails to fix the problem, then the association would be liable for those damages that resulted after the discovery of the damage, but not for the initial damage (in most cases).
...





According to my association's insurance agent, negligence does not factor in when deciding a on claim - it's strictly "who pays for what" according to the policy and the governing documents. As Jeff noted, associations sometimes wrongly pay for something based on what they feel is the right thing to do rather than what the governing docs state. It doesn't matter whether damages originate in the common elements (eg. a leaking roof leads to mold in the interior of a home) - the unit owner is still responsible for the interior of the home since damage of this sort falls under the header of routine maintenance. The exception is when you're dealing with an insurable loss and the association carries what's called an "all included" policy. But insurable events are by definition *sudden and unpredictable*, such as storm damage, burst water pipes, etc. Negligence is not an issue in cases like this since the event could not have been avoided.

Of course an individual owner can decide that the association ought to pay because of construction defects, hire an attorney and let the lawyers fight it out. That's a good way to pay top dollar for whatever repairs will eventually be made. And as Melissa is fond of saying, you'd be suing yourselves and your neighbors (who are as much victims of poor construction as you are). Sometimes the cheapest option is simply to do what you have to do and cut your losses.
JeffT2
(Iowa)

Posts:476


03/16/2019 8:54 AM  
Posted By CathyA3 on 03/15/2019 9:34 AM
Posted By JeffT2 on 03/15/2019 9:02 AM
Posted By ErinO on 03/13/2019 6:13 PM
I was under the impression the HoA paid for property damages caused by “walls out” elements. More than a few issues have arisen thanks to improper roof pitch, improper/non-existent flashing, mis-sized window framing by the original installers, etc.

...
One exception is when the association is negligent, in which case the association should pay for all damages. If the association knows that there is a leak from the common elements, and fails to fix the problem, then the association would be liable for those damages that resulted after the discovery of the damage, but not for the initial damage (in most cases).
...





According to my association's insurance agent, negligence does not factor in when deciding a on claim - it's strictly "who pays for what" according to the policy and the governing documents. As Jeff noted, associations sometimes wrongly pay for something based on what they feel is the right thing to do rather than what the governing docs state. It doesn't matter whether damages originate in the common elements (eg. a leaking roof leads to mold in the interior of a home) - the unit owner is still responsible for the interior of the home since damage of this sort falls under the header of routine maintenance. The exception is when you're dealing with an insurable loss and the association carries what's called an "all included" policy. But insurable events are by definition *sudden and unpredictable*, such as storm damage, burst water pipes, etc. Negligence is not an issue in cases like this since the event could not have been avoided.

Of course an individual owner can decide that the association ought to pay because of construction defects, hire an attorney and let the lawyers fight it out. That's a good way to pay top dollar for whatever repairs will eventually be made. And as Melissa is fond of saying, you'd be suing yourselves and your neighbors (who are as much victims of poor construction as you are). Sometimes the cheapest option is simply to do what you have to do and cut your losses.


Good point for some situations (but not all situations). Insurance will cover some types of damage due to negligence, but will have exclusions for some other types of negligence.

Insurance is not going to pay for subsequent damage after the discovery of leaks.

In this case, it looks like insurance may not cover any damage, since it was not "sudden and unpredictable" as you note.

So without insurance, we are back to what a court would decide, with negligence being a prime consideration. So I'm sticking with my statement "If the association knows that there is a leak from the common elements, and fails to fix the problem, then the association would be liable for those damages that resulted after the discovery of the damage, but not for the initial damage (in most cases)."
TimB4
(Virginia)

Posts:16382


03/16/2019 12:09 PM  
Posted By ErinO on 03/14/2019 12:26 PM

I’m probably going to have to be the bad guy again and have the court take this over. There seems to be any other way.




Prior to doing that, put out a newsletter with an explanation of what receivership is and that that is the only option if nobody will step forward and volunteer.

Make sure to include that if the Association goes into receivership, assessments will go up to pay the receiver (as this will be ordered by the court). My guess, $50,000/yr salary divided by 20, about 2,500 per year. Additionally, the receiver will likely increase assessments to make sure reserves are adequate and may create special assessments to make any repairs or perform any maintenance they deem are needed and receive the courts blessing on.

Explain, this is not the option you want to take but is the only option available if nobody steps forward.

Good luck.
CathyA3
(Ohio)

Posts:299


03/16/2019 1:20 PM  
Posted By TimB4 on 03/16/2019 12:09 PM
Posted By ErinO on 03/14/2019 12:26 PM

I’m probably going to have to be the bad guy again and have the court take this over. There seems to be any other way.




Prior to doing that, put out a newsletter with an explanation of what receivership is and that that is the only option if nobody will step forward and volunteer.

Make sure to include that if the Association goes into receivership, assessments will go up to pay the receiver (as this will be ordered by the court). My guess, $50,000/yr salary divided by 20, about 2,500 per year. Additionally, the receiver will likely increase assessments to make sure reserves are adequate and may create special assessments to make any repairs or perform any maintenance they deem are needed and receive the courts blessing on.

Explain, this is not the option you want to take but is the only option available if nobody steps forward.

Good luck.




I second the idea of letting people know exactly what they are in for. Receivers can make more per hour than an attorney, according to information from my association's attorneys, and assessments often rise dramatically. In addition, receivers report to the courts and run things as they see fit - they are not answerable to homeowners. The good news is that homeowners tend to see the error of their ways in fairly short order.
RoyalP


Posts:0


03/17/2019 7:15 AM  
Posted By CathyA3 on 03/16/2019 1:20 PM
Posted By TimB4 on 03/16/2019 12:09 PM
Posted By ErinO on 03/14/2019 12:26 PM

I’m probably going to have to be the bad guy again and have the court take this over. There seems to be any other way.




Prior to doing that, put out a newsletter with an explanation of what receivership is and that that is the only option if nobody will step forward and volunteer.

Make sure to include that if the Association goes into receivership, assessments will go up to pay the receiver (as this will be ordered by the court). My guess, $50,000/yr salary divided by 20, about 2,500 per year. Additionally, the receiver will likely increase assessments to make sure reserves are adequate and may create special assessments to make any repairs or perform any maintenance they deem are needed and receive the courts blessing on.

Explain, this is not the option you want to take but is the only option available if nobody steps forward.

Good luck.




I second the idea of letting people know exactly what they are in for. Receivers can make more per hour than an attorney, according to information from my association's attorneys, and assessments often rise dramatically. In addition, receivers report to the courts and run things as they see fit - they are not answerable to homeowners. The good news is that homeowners tend to see the error of their ways in fairly short order.




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