March 2017 Condo Association News

Happy March!  In like a lion, out like a lamb is what they say for the weather.  The March 2017 Condo Association News was similar, with some very interesting articles earlier in the month.  The hottest news item of the month is related to legislation in Miami-Dade that is aimed to crack down on the notorious issues Florida has in their Condo Associations.  Up north, Boston tries a Condo with no parking – at all.  And in Colorado, lawmakers struggle with the challenge of affordable housing.  Enjoy the March 2017 Condo Association News!

Miami-Dade lawmakers want criminal penalties for fraud and abuse by Condo directors

Brenda Medina and Erika Carrillo, Miami Herald, 3/11/17

You don’t want none of this.

Florida is well-known for its many challenges in its Condo market.  Rampant fraud, double-dealing Management companies and lawsuits are all things Condo Owners seem to experience in the region.  This is despite having a local government division which is supposed to police all of that.  Lawmakers are taking notice and proposing changes to how business is done, but the impacts are unclear.

Perhaps most noticeable of the changes is that falsification of documents in Condo Associations will be a felony crime as opposed to a misdemeanor.  This change is major, but the big question is how enforceable it is.  The standard of evidence in a criminal proceeding is “beyond reasonable doubt,” which is challenging to prove.  The document trails and oversight in Condos may make reaching such an evidentiary standard difficult, if not impossible.  You also will need local police and local prosecutors to devote resources to actual enforcement, which is its own challenge.

Other changes include more fiscal transparency, which is a good change, as financial documents can reveal fraud to Owners.  Yet another provision establishes term limits for Board directors to eight years.  This is a tougher issue.  While it may prevent people from entrenching, the real issue is that you need more people who are willing to run and get elected.  Kicking out people who have led for a period of time runs the risk of kicking out good members as much as bad.  Term-limit restrictions for federal U.S. officials are exclusive to the president – so it seems somewhat silly that you would limit Condo directors, but not, say, U.S. legislators.  

Overall, some of the changes are very positive, but the enforcement provisions seem like they may throw the baby out with the bathwater.  It is very challenging to recruit good Board directors.  If you start adding more barriers or possibilities of lawsuits, most reasonable people will simply choose not to get involved.  That will contribute to more apathy, and likely further amplify Florida’s problems.  

It’s a Boston experiment: a Condo building with no parking

Tim Logan, Boston Globe, 3/11/17

Perhaps one of the most hotly contested resources in a Condo Association is parking.  America is a car-happy place, and many families need two vehicles.  Many jurisdictions try to limit the number of spaces in newer construction to promote the use of mass transit.  Boston has taken this to a whole new level, opening a luxury property with 157 units –  ranging from $750K to $3M – and not a single parking space to be had.

This is an interesting experiment, although the use case is somewhat limited.  Everyone will, of course, be watching to see if property prices take a hit or if the property can survive despite the lack of parking.  What mitigates the issue is that there are many nearby garages with spaces to rent.  And with the pricetag for the units, the property is clearly targeted at people who have the wealth to rent their spots elsewhere  So while this is an interesting experiment, it will be important not to conclude too much from the results.  When middle-class Condos start foregoing parking, that’s when things will get interesting.  

Why Colorado lawmakers hope this is the year to solve the affordable Condo crisis

Marianne Goodland, The Colorado Independent, 3/22/17

This person lives in Denver.

Denver has struggled with the issue of affordable Condo housing within the city.  Rents have skyrocketed, and for some time, city elected officials have been struggling to figure out how to solve the problem.  Condo Developers claim the issue is because it’s too expensive to construct new Condos due to high legal costs. They claim that if Denver limits construction defect liability for builders, more affordable construction will go up.

Construction defects are a big deal and can often lead to special assessments for Associations when legal remedies fail.  There have been high-profile cases, like the DR Horton case, where Owners won substantial settlements due to substandard construction.  In Colorado, lawmakers are continuing to struggle to find a balance between enticing Developers to build more while also protecting homeowners who are very nervous about any changes.  

This article dives into very deep detail on the merits of both arguments and the challenges Denver faces.  It is worth a read for anyone who has dealt with or is dealing with the issue of construction defects.  

 

That’s all for the March 2017 Condo Association News! Did you know that you can get even more news articles by signing up for our mailing list?  Mailing list subscribers get monthly bonus news stories and analysis.  Join the list today!


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