Here’s the underlying problem when people move for the first time into a condominium, cooperative or even a homeowners association community: They never read the fine print. Heck, they never read any of the paperwork!
And they often end up confused and angry about what is expected of them and what limits are applied to the lifestyle.
It’s not that folks are lazy, but there is so much paperwork, why bother? When you enter into what is collectively called a shared ownership community, or SOC, you are given all sorts of documents, including declarations, covenants, conditions, restrictions, articles and bylaws.
You move into your dream condominium by the sea and expect a continuation of the American Dream.
This is your castle and you can do what you want — until you discover that your flat-screen TV with surround-sound is 10 decibels louder than your neighbor can tolerate, the smell of your cigar bothers the people living above you, the floor that you just had installed has to be ripped up because it didn’t meet architectural restrictions, and a special assessment is going to cost you thousands. You’re pissed off, and you are not going to take it anymore …
Well, you usually do put up with it unless you want to move away, which could mean bumping into a whole lot more condo rules that you weren’t aware of.
For all of you who’ve become disgruntled, perplexed, threatened or disappointed in your shared ownership community lifestyle, Gary Poliakoff and his son, Ryan Poliakoff, wrote a book for you: "New Neighborhoods: The Consumer’s Guide to Condominium, Co-op, and HOA Living."
"These 300,000 associations garner $41 billion in assessments, and if a poll of homeowners were taken today I'd bet not one of those dollars would be deemed wisely spent. Today, SOC residents are often dismayed and disgruntled ..."
A slight nod to son Ryan, who according to the book jacket is president of a condominium property in South Florida, but this book is really the handiwork of father Gary, an attorney, who after almost four decades in the SOC legal trenches has become one of the foremost authorities on community association law.
"When I entered the field, there were no statutory laws, very few appellate decisions and no real guidance in regard to the rules and regulations that would apply to SOCs," he tells me from his home in South Florida.
Now, the law books are so thick with rulings that one could write a book just on the subject of condominiums. Oh yeah, that book has already been written by Gary, and it’s called "The Law of Condominium Operations."
Going back 45 years, just about the time when Gary was still an undergraduate at the University of South Carolina, there were only about 1,000 SOCs in the U.S. Now, there are 300,000 SOC associations.
That’s nearly four times the number of municipal governments, and they are responsible for maintaining and operating homes that are occupied by 24 million families and 60 million individuals, and have a collective value of $4 trillion.
These 300,000 associations garner $41 billion in assessments, and if a poll of homeowners were taken today I’d bet not one of those dollars would be deemed wisely spent.
Today, SOC residents are often dismayed and disgruntled, which is why Gary and Ryan wrote "New Neighborhoods" — common folk who own SOC properties need some common-folk guidance.
"We wrote this book because there was no comparable book like it anywhere in the nation," Gary explains. "The few books that were out there, including my own, were really desktop legal manuals or legal books written for lawyers."
New Neighborhoods is different in that it is written for a lay audience, in conversational language.
"When we wrote it, we wanted to create a book that would be to shared ownership communities as ‘Robert’s Rules of Order’ is to parliamentary procedure," Gary exclaims.
"This would be something a volunteer on a board or a person buying into a shared ownership community could use. This is for someone who wants to understand exactly what their rights and responsibilities are without falling asleep reading legalese."
Here are some paragraphs addressing some of the more prevalent hot buttons that drive SOC owners slightly batty:
- Architectural review. "In many communities, any modifications made to limited common elements and sometimes even individual units must be presented to the association. It is quite legal for your (association) to require approval of these projects. However, there is a cardinal rule of law when assessing an architectural review committee’s scope of authority: the exercise of power by the ARC must be governed by the applicable covenants and guidelines and must be reasonably exercised, must be made in good faith and must not be arbitrary and capricious."
- Selling. "No association in any state can entirely prevent you from selling your unit. That said, associations can apply a few restrictions that may reduce your ability to alienate your property. Perhaps the most common is the right of first refusal."
- Outside management. "From the perspective of the board of directors, there are a lot of reasons why it might be in the best interest of the association to contract with a management company. A single harassment or discrimination lawsuit could quickly wipe out any savings that the association may have realized by going solo."
- Maintenance. "While all state laws provide some version of this rule, the Uniform Common Interest Ownership Act explicitly states that ‘the association is responsible for maintenance, repair, and replacement of the common elements.’ If damage is inflicted on the common element, the association, if it is responsible, is liable for the prompt repair thereof."
Gary’s primary residence is inland from the Florida Coast in a ranch-type community. However, he does own a beach condominium in South Florida’s coastal community of Bal Harbour, where he has no beef with current management or maintenance.
I ask Gary, considering all the upheaval in the condominium markets — especially South Florida: What’s the best way to approach an SOC purchase?
"The only safe bet today is to buy into a community that is built out," he says. "Even then you might still be buying into the potential pitfalls of bad debt, but the amenities are built and you can see what the community is. I would be very hesitant to buy into the promises of future development."
Steve Bergsman is a freelance writer in Arizona and author of several books, including "After the Fall: Opportunities and Strategies for Real Estate Investing in the Coming Decade."
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