HOA Litigation Against Builders
By Charles TurnerLitigation between the HOA and the builder appears to be becoming the rule, not the exception. In Forest Heights, most of the townhouse and condo developments are either in or past litigation with the developer of their units or have issues that the owners have been left to fend for on their own.
For the most part, it seems that the material is not defective, the installation is.
As an HOA member, even if your unit is fine, you go down with the ship if massive repairs are needed. In the case of the Riverpark Condominiums in Sellwood, the settlement with the builder actually put some money in the pockets of the owners once the repairs were completed and the building was better than new. They did live inside a tent for nearly a year though!
The HOA board president that I spoke with today hoped their settlement would cover 80% of the $55,000 average per unit repair estimate!
As an owner, you should keep everything that you HOA sends out. Buyers will typically ask for six months of HOA documentation and the latest budget and reserves to determine the health of the HOA. Management companies will often charge to reproduce what you have already received.
I attended an HOA meeting last night. Total attendance was three board members, one additional owner and the property manager. There are 33 units. The Board makes decisions that affect the livability of your home? Don’t you want to know what is going on?
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I’m the HOA president of a townhome community in Forest Heights. What I hear from many of my Board member contacts at various other HOA communities in Forest Heights and elsewhere around Portland is that it is very hard to get a community interested in attending meetings and being a part of the process. The best a volunteer Board can do is to regularly send out newsletters/minutes and be as open and accessible to their community as possible. Homeowners tend to want to purchase a condo/townhome because they are sold on the idea that it is easy, no worry living. However, even with professional property management, it is important to volunteer and be an active part of the HOA as it has significant importance to what is likely one’s largest asset/investment. Unfortunately, it seems most owners only want to get involved after a problem arises and tend to want to complain rather than being part of the solution. When purchasing a condo/townhome, reviewing the status of an HOA, how it conducts business, the status of reserves, etc. is very important. A well run HOA with strong reserves can add significant value to a property, whereas a poorly run HOA with terrible reserves can significantly reduce the value of a property. For this reason alone, more HOA community members should really make an effort to be an active participant in community affairs.
Would meetings be better attended in a more inviting or social space? Both Jennifer and I are on Boards and when they meet in a pure meeting space, they seem to be painful, poorly attended and dull. There are only eight chairs in room that we met in at the Forest Height Asscociation office.
With a social aspect, people seem to look forward to them, they get more done (even with added background noise and they are well attended. Maybe just wine and cheese half and hour before the scheduled meeting. All that said, owners should take a proactive roll in their HOA without being induced to show!
Here in California suits agains builders by HOA’s are now a guaranteed part of life. So much so that builders now factor in their litigation costs into the cost of goods sold for their projects.
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Years ago, I bought my first house from what everyone claimed was the best builder around. Not long after I closed, I read about a lawsuit against them for poor installation of roof trusses. With Naples Florida Real Estate, it is very important to see that the home can withstand hurricanes. The builders were drilling large holes in the roof trusses to put electrical wires through since the crawlspaces were often not big enough. That’s a huge violation and that same year, the company was out of business.
I am sure it has happened in Portland but everyone that I have talked to doesn’t know of an occaison where the HOA has lost or failed to settle with a builder or their insurance company. I don’t know of any case law on the matter (but then I am not an attorney).