Contemplating $10M condo repair

Q: I bought a condo from an agent and she gave me the packet of disclosures and told me to read everything, which I did. I saw that there was a special assessment for $7,000 coming up, and she gave me some notes that basically state that the board does not anticipate any increases in dues.

Needless to say, since I moved here the dues have gone up from $350 to $460! At the last board meeting I found out that there is a $10 million repair project slated for 2028. The board sued the builder over the costly problem and settled out of court for $1 million. Why the board didn't fix it then I do not know. They decided to wait 30 years to fix it when, due to inflation, it will cost $10 million! (The board has only $2.5 million in reserves right now.)

When I asked my agent about it she said that agents have nothing to do with the disclosures -- the seller was responsible for giving me this information in the minutes. She was my friend and I feel betrayed that she did not take more care. What went wrong? What should I do? Should I call her broker or hire an attorney?

A: I'm aware that people choose to buy condos often out of a desire to have less ongoing responsibility than a house would require: no lawn-mowing, no roof repairs, etc. It does seem like a low-hassle experience. However, the surprising reality is that both the initial process of purchasing a condo and the ongoing experience of condo ownership are often much more challenging, because of the element of communal living and that intimidating body: the homeowners association (HOA).

There's nothing inherently evil about an HOA or the board of directors that manages it. But as with everything in life, there are tradeoffs. In exchange for essentially pitching in your lot with a bunch of your neighbors so that no single one of you is responsible if the pipes break in the wall, all condo owners subject themselves to the monthly HOA dues that fund the maintenance and repair of the building and improvements to the community, in both the short and long term.

All owners also subject themselves to the possibility that HOA dues will increase over time. Actually, because management, maintenance and repair costs, as you've noted, unavoidably increase over time, it is not just possible but actually probable that dues will go up over time in almost every case.

The trick part is to try, during the buying process, to predict whether your dues will go up $100 over the next five years or five months. And there's no fail-safe way to predict that with 100 percent certainty, unless the board meeting minutes or HOA newsletters that you receive as part of your disclosure package reflect a dues increase that is already planned or being discussed.

So, what went wrong in your situation? I get the sense that you feel bitter and betrayed because you felt that you did everything right -- asked the right questions, read all the HOA disclosures, etc. -- and still got burned. That is prompting you to look for someone to blame and hold responsible for the unexpected expense of the increased HOA dues that you're now on the hook for. ...CONTINUED

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