Category Archive

Condos and Issues Part 2

There was a fire in downtown Lake Oswego’s First Addition in May where the owner, unfortunately, died.  It reminded me of some more things people need to think about when purchasing a condo and what to look for in the CC&R’s and By-Laws of a condominium project.  One question I feel buyers should ask is:  What do the CC&Rs or By-Laws say about the eventuality of a fire?  What amount of fire coverage are owners and the HOA required to have?  Ask for a copy of the HOA Fire Insurance Policy.

For example, in the First Addition Rowhouse, the condo rules state that the owner needs to carry an insurance policy that would replace the interior of the unit in its previous structural condition and that the HOA is required to also carry an insurance policy covering exterior replacement with an inflationary clause.  It has no time-line for rebuilding the structure, however. 

There is a condo I know of that burned in Tigard.  It took years to rebuild.  In the meantime, resale values of each condo were affected and the remaining owners weren’t able to sell.  No one wanted to buy in a project where there was a burned-out unit.  The delay happened because the owners of the burned unit filed a lawsuit against the fire insurance company and it took 3 years to settle.

In another example I know of, there was a dollar amount of coverage that had to be maintained by the HOA, but the By-Laws hadn’t been updated in 20 years and there was no clause to cover inflation nor was there a rebuilding deadline.  At what point did the HOA plan to increase their fire insurance coverage? Keep in mind that you might want to sell your condo, perhaps the neighbors condo burned, you are now sitting and waiting for that to be rebuilt so that you can sell yours.  It would be a good idea if you asked what the time-frame is that a unit must be rebuilt. 

(For more local and national real estate news, click on my monthly newsletter - JUNG’S JOURNAL - on my website www.bettyjung.com).

This is Part 1 of a 4-part series entitled “Condos and Issues”. 

First of all, I want to add a disclaimer to the beginning of this post that I am not against condos and feel there is a segment of the market they suit perfectly. Some buyers want this lifestyle or their financial situation limits them from buying a house. Buying a condo makes “sense” for a lot of people.

However, some condo projects have had “issues”. In one case in Lake Oswego, I know of a death because of rotted decking, a lawsuit and a huge assessment against the condo owners to replace all the decks in the project. Another project in Lake Oswego had to replace all the asphalt roads and again had an assessment of close to $10,000 that each owner had to pay. Currently, there’s a Portland project where the building is basically falling apart. Last I heard it was estimated there will be a $30-40,000 assessment (final assessment hasn’t even been determined as yet and could go higher) against the homeowners to repair all the damage. How long it will take to make these repairs is another question and; in the meantime, no units can be sold, no financing can be obtained thereby putting each homeowner’s life on hold not to mention the huge expense they will have to incur. I’ve also heard of large amounts of chemicals found in some of those warehouses that have been converted to lofts. Recently I heard of a high-end condo project in a very popular part of Portland where the sellers have already been assessed $25,000 for roof replacements and are now being assessed an additional $25,000. There are other projects I know of that have had problems, but since I don’t know the specifics, I don’t want to relay incorrect information.

It’s always important to ask about present or pending assessments when buying a condo and checking to see if there are any further “issues” with the project itself.

(For more local and national real estate news, click on my monthly newsletter - JUNG’S JOURNAL - on my website www.bettyjung.com).