08.09.24

ISSUE # 96

CIC Info Bytes 08/09/24

CIC Info Bytes are frequent, succinct updates providing educational and engagement opportunities that help your community thrive!  Please forward and share this newsletter with your peers, neighbors and colleagues so they can connect and join.  Our goal is to curate content that provides a robust basis for contextual understanding to support practical takeaways for you and your association.  Please consider following us on Twitter and Reddit. 

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WSCAI Miseducation - Part Three

• But wait, there’s MORE.  🤯 See below for a slide from a presentation by CAI business partner Kevin Davis of Kevin Davis insurance.  Kevin is apparently not an educated business partner.  Maybe that would make a difference? 

Declarant Control + Records Requests  = ☹️

• Charlotte, North Carolina: Why does it have to be so hard to obtain records?  Because North Carolina state law needs a lot of help.  Also see Issue #93.

Homeowners in Weddington Pointe have watched their annual dues increase by $500 annually since they moved into the newly constructed community in 2021. There’s not a whole lot of options for residents to fight against the rising costs though because their homeowner association is not under homeowner control.

“Since it was still under the developer’s control, we weren’t able to ask questions,” Weddington Pointe homeowner Natalie Brides told WBTV. “Really, it was just ‘this is the budget’ and that’s it.”

Brides, her neighbor Liz Skrypek and a couple other homeowners have started asking more detailed questions about the HOA’s finances, especially since a pool supposed to be completed years ago only recently started construction. Several other budget line items have increased dramatically from last year.  In total, their HOA budget for 2024 is $60,000 more than what was approved the year before. All of it is funded by HOA dues and fees…

Homeowners in Union County fighting for HOA bank records — David Hodges | WBTV | August 05, 2024

Florida Special Assessments Kick into High Gear

• Fort Lauderdale, Florida: “Crushing” is in the eye of the assessee.  More in Issue# 94.

South Florida condo residents, especially those in older buildings, are being hit with crushing special assessments. When they can’t pay, they face foreclosure. It’s why residents of one building turned to Help Me Howard with Patrick Fraser.

We met with six condo owners. But it could have been 600 or 6,000, all using the same words…

Crushing special assessment — Patrick Fraser and Daiana Rocha | WSVN | July 31, 2024

Raze the Roof

• Houston, Texas: Glenwood Village condominium association.

Annette Sealey and her husband Jerome have lived at the Glenwood Village condominiums on Leonora Street and Bellfort Street for over 20 years. They raised two daughters there and now have five grandchildren visit. However, those visits have stopped in the last few weeks.

When Hurricane Beryl hit the Texas coast on July 8th it caused significant damage in the Houston area. The Sealey’s home was no different. Their roof sustained significant damage.

The condo’s management company sent maintenance out to put tarps over it. But the company hasn’t done much since…

…KPRC 2 made repeated efforts reaching the homeowners association, the board members, and the management company but were unsuccessful…

VIDEO: ‘We feel like we don’t have no rights’: condo ignoring roofing issues leading to mold — Rilwan Balogun | KPRC | August 06, 2024

Condo Association vs. Developer Delinquencies

• San Jose, California: 24 condominium units (developed, but unsold) are delinquent in this saga pitting condominium association vs. developer.

New defaults for delinquent homeowners association dues have engulfed a troubled downtown San Jose housing tower that faces multiple legal entanglements.

Litigation and real estate woes have engulfed the western high-rise of a two-tower residential complex at 188 West St. James Street — an eye-catching addition to the San Jose skyline that commands a prime location  near bustling San Pedro Square, one of the Bay Area’s hottest spots for dining, drinking and nightlife.

In April, nine condominium units were auctioned for a jaw-dropping average price of $31,900 in an effort by a homeowner’s association to recoup unpaid maintenance fees.

An entity operating as FPP MB — affiliated with China-based real estate firm Z&L Properties — developed the housing towers, which together contain 600-plus units. Each tower has about 303 residential units. The condos in the tower beset by legal and delinquency woes are all being offered for sale…

…Typically, a buyer of one of the condos in the high-rise complex would be responsible for paying the dues. The developer is on the hook for the payments for condos that are completed but unsold….

More default notices jolt troubled San Jose residential highrise — George Avalos | The Mercury News | August 05, 2024

Water Bill Woes 💦

• Framingham, Massachusetts: A $259,000 water bill.  Challenges like this are what Boards face on a somewhat regular basis.  Sure, the system is far from perfect, but the time and energy Board members give to help rectify concerns like this deserves an incredible amount of credit. 

Condominium owners at a 200-unit complex off Edgell Road believe they've been unfairly penalized by the city, saying they weren't properly notified of changes to their water bills that have led to thousands of dollars in additional payments. 

Most of the residents at Windsor Green claim that ever since their water meter was replaced in December 2022, they have been tasked with paying higher water bills, with no prior notice from the city. The meter in question serves 194 of the 200 units in the complex; the remaining six units each have their own meters, which were not replaced and did not see a drastic change in their bills…

Framingham condominium owners are seeking $259,000 to cover 'enormous' water bill — Jesse Collings | Metrowest Daily News | July 08, 2024

Stop🛑 Blaming “Fees”: Owning Property is Expensive

• Assessments pay for property insurance, staff and so much else.  Going UP!

Homeowners association fees keep rising. How are South Florida condo owners managing? — Rebecca San Juan | Miami Herald | August 01, 2024

Failing Condo Infrastructure

• Pembroke Pines, Florida: Lights out for Heron Pond Condominium Association.

People living in the Heron Pond condominium complex in Pembroke Pines have until Aug. 29 to find a new home after all 19 buildings were deemed unsafe.

Six buildings at the complex, located near Pines Boulevard and University Drive, were deemed unsafe last year and people living in them were ordered to leave.

Issues include large cracks in the buildings and steel supports that shore up the balconies on nearly all 19 buildings on the property, rotting wood found beneath stucco and patchwork in place of actual repairs.

Engineers recently notified the city of Pembroke Pines that the remaining structures needed to be evacuated, affecting about 170 units.

People living in the remaining units said Wednesday they don’t have much time to figure out where to go or what to do…

Residents given 1 month to leave after all units deemed unsafe at Pembroke Pines condo complex — Bridgette Matter| WPLG Local 10 | July 24, 2024

Florida Buy-Out Boon

• An optimistic opinion about buy-outs vs. paying for deferred maintenance.

As developers buy old Florida condos, at least owners don't have to pay for costly repairs — Palm Beach Post | August 02, 2024

Termination Overruled

• Miami, Florida: Edgewater neighborhood.  Biscayne 21 condominium.

A court decision worries developers eyeing Florida's aging condos — Greg Allen | NPR | July 29, 2024

…The original condo rules [declaration] stated that 100% of the residents had to agree to a condo termination. Two Roads amended those rules so they only needed 95%.

In some cases, a bulk buyer can build up a position over many years, eventually reaching a large enough critical mass to compel potential holdouts to go along and sell.

That was the case with Biscayne 21. In 2012, Bragi Sigurdsson, a local real-estate broker, began buying units in the building, he said. He and his partners bought units over a period of years, Sigurdsson said, “knowing that at one point or another this building would be gone after by a developer.”

In 2019, Sigurdsson held a meeting in the building’s penthouse where he revealed that he and his partners had acquired a large portion of the apartments. They were interested in acquiring the rest, he said…

'Zombie' Condos, Angry Residents and a Ruling That Stunned Miami's Developers — Deborah Acosta | Realtor.com reprint from WSJ | August 05, 2024

Another One Bites the Dust

•  West Palm Beach, Florida: Flagler House condominium owners face reality.

Michael Milillo thought his home in the Flagler House condominium in West Palm Beach would be his last...

...Milillo’s aging condominium — a three-story art deco artifact from the early 1960s — is one of an untold number of South Florida buildings developers are soliciting as they hunt for waterfront deals in the wake of new laws that followed the 2021 Surfside condominium collapse.

The new statutes, which were enacted to ensure the safety of condominiums and thwart future tragedy, include approaching deadlines for building inspections and the specter of costly fixes that associations won't be able to dodge.

For some condominium unit owners, buyout offers from developers are a lifeline from unaffordable inspection, repair and reserve fees that may have been mounting for years, or even decades. For others, it’s an unwanted petition, but one they may not be able to refuse.

"I love my unit and don't want to be thrown back into the real estate market and have to live out west," Millilo said. "Even though they are giving a sizable amount of money, it's not enough to replace what we have."...

Condo law after Surfside collapse forces sales as deadlines loom: The Flagler House saga — Kimberly Miller | Palm Beach Post | July 27, 2024

ALPRs Spreading to More HOAs

• Federal Way, Washington:  Automated license plate readers (ALPRs) are a hot topic.  See Issue #90 + Issue# 84.

Federal Way HOA deploys license plate reading cameras to deter criminals — Jeremy Harris | KOMO News | August 02, 2024

Condominium Fire Kills 3

• Houston, Texas: Multi-family residential fires are serious business.

3 ‘juveniles’ killed in southwest Houston condo fire, HFD chief says — Jhair Romero | Houston Chronicle | August 04, 2024

HOA Headache

• Ohio: A self-described elderly woman asks Eric for help.

My homeowner’s association is causing a headache — R. Eric Thomas | Cleveland.com | August 04 , 2024

Embrace HOAs?  Not Really.

• Embrace HOAs?  No.  Live with them?  We must.  This is an incredibly biased industry opinion piece.  Let’s go one-by-one.

  • Why is there so much angst about HOAs?  Because the system is broken!

  • HOAs are not designed to “promote a sense of community and belonging.”  To the contrary, many homeowners have been alienated by their HOAs.

  • HOAs have NOT been proven to “maintain property values.”

  • HOAs do NOT, in many cases, “facilitate effective governance and decision-making processes.”

  • HOAs do not “play a vital role in ensuring safety and security.”  Many governing documents (and court cases) refute the obligation to provide safety and security.

Opinion: That pesky HOA? Here's why you should embrace it — Eric Kohorn | Greenville News | August 04 , 2024

Getting Political

• Miami, Florida: PACs (political action committees) for HOAs!  In this case, HOAs have joined together with the Kendall Federation of Homeowner Associations.

Kendall homeowners association PAC backs James Reyes for Sheriff — Jesse Scheckner | Florida Politics | July 23, 2024

Be Careful with your Contracts

• This debacle is not a community association concern, but is a great reminder to vet the party on the other end of your contract before signing on the dotted line.

A dozen immaculate townhouses remain uninhabited three years after most were sold or double sold, triple sold and, in one case, quadruple sold to buyers duped by developer Doug Cox into believing they were weeks away from closing on their dream homes. From outside, the houses appear hollow. But all 12 are saturated with deceit, consternation and heartbreak. They are for sale in Coconut Grove, one of the most desirable real estate markets in the country. Someone will buy. Just not the people who were on the threshold of moving in. 

In a recent settlement of fraud accusations against Cox, 32 parties who are owed $34 million by the self-styled “King of Coconut Grove” have agreed to sign quitclaim deeds, relinquish any liens on the properties and surrender their goal of ownership. They might recover 40 to 50 percent of the money they gave Cox if the 3,000- to 4,000-square-foot townhouses sell at their listed prices of $2.6 to $3.5 million. “We lost, and the wrong people won,” said Kevin Ware, a Chicago transplant who expected to move into 2992 Coconut Ave. with his family in 2021 after putting down a $433,750 deposit on the $1.7 million townhouse…

'We lost.' Settlement in case against 'King of Coconut Grove' angers buyers of townhouses — Linda Robertson | Miami Herald | July 23, 2024

The Cost of Net Zero

Data centers are guzzling electricity faster than clean energy can keep up.

In 2010, as the country still reeled from the worst economic crisis since the Great Depression, tech companies, real estate developers and rural lobbyists went to the state Capitol in Olympia, Washington, to press for a tax break for data centers.

Turning it down, supporters argued, would mean rejecting high-paying, long-term and environmentally friendly jobs in distressed parts of rural Washington. Owners of data centers — gargantuan facilities filled with computer servers that power the internet — were scouting Washington and other states for new homes…

…State lawmakers nearly unanimously passed the special exemption and have kept the benefits flowing to the industry ever since. But the tax break has strayed from its original promises, and the state failed to fully scrutinize whether the sacrifices were worth it, a deep examination of legislative archives, public tax disclosures and utility data by The Seattle Times and ProPublica revealed.

The data center industry’s demand for electricity is growing so much that it could threaten Washington’s efforts to transition to a carbon-free power grid…

How a Washington Tax Break for Data Centers Snowballed Into One of the State's Biggest Corporate Giveaways 

— Lulu Ramadan + Sydney Brownstone | Seattle Times + ProPublica | August 04, 2024

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…In 2019, the Legislature passed a measure to make Washington’s utilities carbon-neutral by 2030. At the same time, in the name of bringing jobs to rural areas, lawmakers encouraged the explosive growth of the data center industry through a massive tax break.

Remarkably, Washington in recent years has gotten a smaller share of its electricity from renewable sources than it did two decades ago, according to the most recent state data. That’s despite the fact the state produces a quarter of the nation’s hydropower.

“Our existing hydro system is pretty much tapped out,” said Randall Hardy, an energy consultant and former administrator of Bonneville Power Administration, the federal agency that owns Washington’s largest dam. “So you’ve got a dilemma of how you’ll meet this additional load from data centers with clean resources or, frankly, with any resources.”...

Data centers guzzle power, threatening WA’s clean energy push — Lulu Ramadan and Sydney Brownstone | Seattle Times | July 28, 2024

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Elastocaloric materials are the latest in our quest for the most efficient way to heat and cool.

…The efficiency of elastocaloric materials is more than ten times greater than that of current air conditioning systems or refrigerators. The US Department of Energy and the EU Commission have declared the cooling technology developed in Saarbrücken to be the most promising alternative to the existing processes. It can extract heat from  large spaces and supply heat to those spaces using superelastic wires...

...To transport heat, the researchers use the special ‘superpower’ of the artificial muscles made of nitinol, which is a combination of nickel and titanium in approximately equal proportions. It is currently used mostly in medical procedures Wires made of this alloy remember their original shape and revert to it after they have been deformed or stretched. Like muscles flexing, they can become long and then short again, and are also able to tense and relax. The reason for this lies deep inside the nitinol, which has two crystal lattices — two phases that can transform into each other. Unlike water, whose phases are solid, liquid, and gas, the two phases of nitinol are both solid. During these phase transitions of the crystalline structure, the wires absorb heat and release it again.

“The shape-memory material releases heat when it is stretched in a super-elastic state and absorbs heat when it is released,” explains Professor Paul Motzki, who holds a cross-institutional professorship at Saarland University and ZeMa, where he heads the Smart Material Systems research group. The effect is intensified when numerous wires are bundled together. Because of their larger surface area, they absorb and release more heat....

Elastocaloric Heating & Cooling More Efficient Than Heat Pumps — Steve Hanley | CleanTechnica | July 22, 2024

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Read more about battery-powered cooktops and ovens in Issue# 87.

What if everything in your life had its own battery—not just your phone, but your stove, house, and neighborhood?

That’s the idea behind a crop of startups that use batteries to tackle a surprising variety of challenges: upgrading appliances, deploying fast-charging stations for electric vehicles, keeping homes running during power outages, and making the U.S. power grid more robust.

What’s inspiring these companies is the growing view that electricity is the best way to power everything from cooking to driving, and that America’s infrastructure is inadequate to distribute that electricity—all the way down to the wiring in the walls of our homes and businesses. 

The Tesla of Stoves Comes With a Battery to Power Your Whole House — Christopher Mims | WSJ | July 19, 2024

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If your power goes out, a new induction stove can keep cooking for more than a day—or as long as five days if you’re only cooking dinner.

The range, called Charlie, has a battery inside. That helps solve multiple challenges for people who want to make the switch from gas stoves to electric. First, it makes the equipment easier to install. Right now, replacing a gas stove typically means rewiring your kitchen (and tearing down drywall to make that happen). If you have an old house, the process is even more complicated.

“If your house was built before the ’80s, chances are you’re also going to have to upgrade the total amount of electricity coming into your home,” says Sam Calisch, cofounder of Channing Street Copper Company, also known as Copper, the startup that makes the new stove.

Why this new induction stove has a battery inside—and old-fashioned knobs instead of a touchscreen — Adele Peters| Fast Company | July 19, 2024

Environment

• Essential and non-essential PFAS:

…“No one is expecting an overnight [replacement] of something that penetrated our life and came, like, very, very invasive over eight decades,” he added.

Instead, Ibrahim called on industry to maintain — and consumers to demand — a focus on distinguishing between places where PFAS can be easily replaced, and the minority of places where it still serves irreplaceable industrial use.

In the “possibly essential” category, there is the microchip industry, for which PFAS offers a critical tool for keeping products stable at high temperatures in the midst of caustic chemicals. 

Under “probably nonessential” are products like stain-resistant carpets, waterproof jackets and nonstick pans. 

“There’s a difference between how easy it is to tolerate, say, getting your eggs stuck in a pan and having to switch to a different material — versus something where, if you take [PFAS] out, a national security application is impacted,” Ibrahim said…

Ditching PFAS chemicals requires reality check, scientists argue — Saul Elbein | The Hill | July 18, 2024

• Property insurance premiums are going UP, UP, UP! ⬆️📈🆙

Florida's largest insurer has requested a 13.5 percent rate hike but says it needs a nearly 93 percent increase to match the competitive market.

Citizens Property Insurance Corp. is currently requesting a more modest hike from the Florida Office of Insurance Regulation (OIR) because state regulations cap the amount rates can increase annually.

Brian Donovan, Citizens' chief actuary, said in a hearing last week that this would increase the average price of homeowners multi-peril policies, the insurer's most common type of policy, from $3,560 to $4,041.  Other types of policies would also see increases in varying amounts in the double digits.

But he added that rates for Citizens' personal multi-peril policies would need to increase by 92.8 percent to be non-competitive.  Citizens President and CEO Tim Cerio said that the double-digit rate increase was necessary to reduce the insurer's financial risk and that the decision wasn't made "lightly."

Florida's Biggest Insurer Says It Needs to Increase Rates by 93 Percent — Alia Shoaib | Newsweek | August 06, 2024

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Sliding into a new policy in Florida is extremely expensive.

Bill Marchant of Satellite Beach, a customer of state-owned Citizens Property Insurance Corp., was surprised when his agent called him last October with an offer from a private insurance company to take over his policy...

...Marchant was far from the only Citizens policyholder who received a confusingly high renewal offer from Slide last year as part of Citizens’ aggressive effort to reduce its policy count.

As the largest participant in Citizens’ depopulation program, Slide sent hundreds of thousands of letters that Citizens policyholders could have easily overlooked among piles of junk mail. Ignoring those letters — and crucial deadlines to respond — put them in jeopardy of being automatically transferred to Slide, where many faced renewal premiums far higher than what they were paying Citizens....

…Proposed renewal premiums averaging 40% to 832% higher than Citizens' premiums were sent for the three takeouts to policyholders in 759 out of 992 Florida ZIP codes.

Slide estimated average premium increases of at least twice as much as Citizens' premiums across 518 ZIP codes for its August and November takeouts, the analysis showed....

New insurer offered Citizens customers steep premium hikes. Then the state stepped in. — Ron Hurtibise | South Florida Sun Sentinel | July 28, 2024

Catastrophic losses, building costs, lack of available insurers and more is driving a butterfly effect in property insurance premiums.

As the owner of a condominium unit in Emeryville, Fran Quittel has been anxiously watching her insurance rates soar “astronomically” amid a documented pullout of personal home insurance providers from California. They’re citing unprecedented and escalating costs from factors such as inflation and increasing risk due to wildfire. 

But Quittel’s condo building, the Watergate complex at the Emeryville Marina, does not sit in a fire-prone area. It stands on a finger of land pointing into the bay, surrounded by water and far from the scorching summer temperatures that can dry out brush and heighten fire danger.  “I don’t live in a wildfire zone, so why is that?” Quittel said. “This insurance issue affects every single person in the state.”

Since 2022, seven of the top 12 insurance companies, which collectively cover 85% of California’s homeowners market, have paused or restricted new business, despite rate increases that are approved or pending, according to the California Department of Insurance…

Bay Area condo owners can't find affordable insurance policies: 'We're all screwed' — Laura Waxmann | San Francisco Chronicle | July 27, 2024

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More data about why insurance premiums are rising and property values are changing.  Also see Issue #94.

VIDEO: The Interconnection of Climate, Insurance, and Property Values — First Street | July 25, 2024

Slide Deck: The Interconnection of Climate, Insurance, and Property Values

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Property insurance got you down?  Have you spoken with your insurance commissioner lately?  Read more about rule-making power controlled by the state insurance commissioner’s office in Issue# 92.

Candidates vie for Washington insurance commissioner job — Jayati Ramakrishnan | The Seattle Times | July 29, 2024

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Millions of US homes are underinsured because their premiums don’t reflect the risk of climate-fueled catastrophes…

A $1 Trillion Time Bomb Is Ticking in the Housing Market — Mark Gongloff | Bloomberg | August 02, 2024

• Mortgage rate relief.

US 30-year mortgage rates plunged last week by the most in two years, sparking a surge in refinancing applications. The contract rate on a 30-year fixed mortgage declined to 6.55% in the week ended Aug. 2. The rate on a five-year adjustable mortgage plummeted to 5.91%, the lowest this year. The drop “should set the stage for a modest recovery in transactions the rest of the year,” Thomas Ryan, North America economist at Capital Economics, said in a note. “This marks a turning point for the housing market, which has been frozen for a while now.”

— David Rovella | Bloomberg Evening Briefing | August 07, 2024

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One of San Francisco’s most infamous pieces of real estate is suddenly much, much cheaper.  

At the beleaguered Millennium Tower, which has made headlines across the country ever since the public found out it was sinking in 2016, a condominium was recently listed for $649,000 — a precipitous 41% drop from its $1.1 million sale price a decade ago. It’s not the only condo that’s seen a significant drop in valuation, either: A two-bedroom unit that sold for $1.5 million in 2015 is now on the market for $800,000, a 47% drop, Zillow listings show. 

But James Testa, a real estate agent in San Francisco, is optimistic about the tower’s future, and says that the luxury condos won’t be this affordable forever…

Condo prices at beleaguered Millennium Tower drop to as low as $649,000 — Ariana Bindman | SF Gate | July 18, 2024

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Surge in South Florida condo listings?  Why YES.  See why in Issue# 94.

Christy Rojas has lived in the same condo unit in Southwest Miami-Dade for about 20 years. She pays over $600 a month in HOA dues and a special assessment, double her mortgage amount, she said.

“There’s always a special assessment,” she said. “You either pay for it, or you sell and leave.”  But leaving for some may not be as easy.  Since the Surfside tragedy, lawmakers in Tallahassee have passed a series of reforms aimed at making buildings safer. Those reforms include requiring that condo associations have enough reserves on hand by the end of this year. That requirement may lead some associations to impose special assessments.

“They are six figures and they’re growing,” said Craig Studnicky, CEO and broker at ISG World. “I’ve heard as high as $350,000 per unit to fix the structural imperfections in these older buildings, basically rendering that inventory unsellable at the moment. It’s even hard to get a mortgage lender to want to lend on any of those units because of the threat of the special assessments.”

ISG World’s recent analysis of active listings in Palm Beach, Broward and Miami-Dade counties found a surge in the number of condos up for sale, from 8,353 in the second quarter of last year, to over 20,293 a year later. Nearly 90% or 17,796 of those units are in buildings that are over 30 years old.

“I’m very concerned,” Studnicky said. “A lot of these folks that live in these buildings are older, most are retired. They’re on fixed income.  They do not want to write those checks for special assessments. They’re hoping that somebody’s going to come in and buy them, but there’s nobody out there that wants to take that risk right now.”...

Real estate experts warn about surge of South Florida condo listings — NBC Miami | August 03, 2024

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A new study conducted by a Toronto-based real estate research group found that the Greater Toronto Hamilton Area (GTHA) saw condo sales drop to a 27-year low in the first half of 2024...

...The GTHA new condominium market reported just 1,688 sales in Q2-2024, down 66 per cent year-over-year and falling 70 per cent below the 20-year average. 

New condo sales in the first half of 2024 totalled just 3,159 units, a 57 per cent decline from a year ago and 72 per cent below the 10-year average. The real estate firm says the first half of 2024 was the slowest for new condo sales in the region since 1997. 

The drop in sales during the second quarter also pushed the total unsold inventory to a record high of 25,893 units, a level that was roughly 10,000 units higher than both the 10-year and 20-year averages…

Toronto condo market in turmoil as sales plummet to 27-year low — Kimia Afshar Mehrabi | blogTO | July 19, 2024

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Florida's housing market is facing a wave of "nightmare scenarios," with a growing number of home deals falling through as buyers get cold feet.

In key metros like Orlando, Florida, and Tampa, around 21% of home-purchase agreements were canceled in June, according to data from Redfin. Those cities have the highest pace of home-purchase cancellations in the nation, handily outpacing the national average of 15% last month, the real-estate-listings site said.

The trend appears to be driven by housing-affordability concerns across the nation, according to Rafael Corrales, a Redfin agent based in Miami.

"We're seeing nightmare scenarios where deals are getting cancelled at the least minute for the most minute reasons," Corrales said in a statement. "Buyers often back out during the inspection period because they find something they don't like, but affordability is really the underlying issue."

Florida housing: 'nightmare scenarios' as buyers back out due to affordability concerns… — Jennifer Sor | Business Insider | July 26, 2024

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Big cities' jobs are changed.  Forever?  Pandemic Shifted US Jobs Out of Big Cities Into Smaller Metros — Jonnelle Marte | Bloomberg | August 07, 2024

Inflation and Monetary Policy

• Consensus points to the FOMC cutting rates in September.

US Federal Reserve officials held interest rates steady but signaled they are moving closer to lowering borrowing costs amid easing inflation and a cooling labor market. The Federal Open Market Committee voted unanimously to leave the benchmark federal funds rate in a range of 5.25% to 5.5%, a level they have maintained since last July. Officials also tempered their assessment of the labor market, noting job gains had moderated and the unemployment rate has moved up, but is still low. They said inflation has eased over the past year but remains “somewhat elevated.” With September cuts now conventional wisdom and a soft landing potentially on the horizon, markets reacted gleefully.

Bloomberg Evening Briefing: September Rate Cut Looks More Likely Than Ever — David Rovella | Bloomberg | July 31, 2024

Rates have significantly declined in the past 30 to 60 days in anticipation of a dovish FOMC policy shift. 

Don’t get too excited about the prospect of a jumbo Fed rate cut. A large majority of economists surveyed by Bloomberg see only a 25 basis point decrease coming in September.

Fed Seen Rejecting Calls for Jumbo Rate Cut in Economist Survey — Steve Matthews and Dana Morgan | Bloomberg | August 09, 2024

Cashing In

• Recognizing bad debt isn’t quite what it seems.

After the last major financial crisis, when scores of banks failed or took government bailouts while sporting seemingly pristine balance sheets, America’s accounting rule makers got working on a new system for reporting credit losses that was supposed to make lenders recognize them more quickly.

That new set of rules has been in place for a little over four years. Investors could be forgiven for wondering if it is working any better than the former one.

The old system was called the incurred-loss model. To book a loss, a lender had to conclude it was “probable” that one had already happened. The term “probable” wasn’t defined numerically, but the bar was widely interpreted to be very high—perhaps a 70% or greater likelihood. Bankers used to explain, conveniently, that they would have booked more loan losses, if only the rules would have let them.

Under the new system, in place at most large companies since 2020, lenders from day one are supposed to continuously estimate their credit losses over the life of a given instrument, be it a loan or bond. The threshold for recording losses is supposed to be much lower—when they are “expected,” rather than waiting until losses probably happened. This was supposed to lead to more aggressive, and more timely, loss recognition…

Are Banks Sweeping Dud Property Loans Under the Rug? — Jonathan Weil | WSJ | August 05, 2024

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A reminder about the law of averages and the success of index investing.

In theory, active fund managers, who try to pick the best investments and avoid the worst, should excel when some stocks zig as others zag and when the gap between the winners and losers is wide.

By some measures, that’s the kind of market we’re in right now. An index of implied correlation from Cboe, the Chicago-based exchange, suggests that the extent to which stocks move up and down in unison is near record lows.

Meanwhile, as my colleague James Mackintosh recently reported, dispersion—a measure of how widely the returns of individual stocks differ from the average—is abnormally high.

If stocks are moving up and down together much less than usual, and the winners and losers are even farther apart than normal, that should be ideal for stock pickers. 

Instead, active funds are struggling. That pokes a hole in one of Wall Street’s most cherished narratives—namely, that it’s worth paying a premium for active management and that stock pickers are sure to do better at some times than at others. The funds’ travails are a reminder of a basic rule: The asset-management industry depends more on marketing than on markets...

Why Your Fund Manager Can’t Beat Today’s Stock Market — Jason Zweig | WSJ | July 05, 2024

Lawsuit to Remove the Board

• Atlanta, Georgia: A lawsuit has been filed to have the court remove the current Board.

…For months, 11Alive Investigates has tracked one community getting creative to regain control.  In March, investigative reporter Rebecca Lindstrom was there when a fight broke out between the president of the Peyton Place Condo Association and a homeowner, Michael Shepherd.

By July, that feud had turned into a plea agreement in which the president, Clare Cherry, agreed to do 20 hours of community service and take an anger management class.  However, several condo owners say the ruling did nothing to solve the actual problems at Peyton Place, a community in southwest Atlanta just off MLK Jr. Drive…

Georgia lawmakers agree to look into HOAs. Meantime, communities fight fines and neglect

— Rebecca Lindstrom and Mike Nicolas | 11 Alive WXIA | August 01, 2024

AVOID Overreach on Fines and Late Fees

• Great questions EVERY community association (co-op, condo and HOA) should ask:

  • Do we have the authority?

  • Is the rule enforceable?

  • Is the penalty reasonable?

GOOD TO KNOW: While co-op and condo boards function similarly in many ways, fines are treated very differently. In condominiums, because the board does not own (and only has limited control over) the apartment units themselves, they do not have the power, as co-op boards do, to evict a misbehaving owner from the building.

Thus, fines, to the extent they are able to be imposed, take on an outsized importance for condo boards and, leaving aside an injunction granted under RPL §339-j, are probably the most potent tool in the board’s arsenal to compel obedience with building rules. Condos literally cannot afford to do without the ability to issue fines, and almost every set of condo by-laws will grant condo boards express authority to issue fines and late fees…

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…In Board of Managers of the Westbury Terrace Condominium v. Roberts, the court noted that late fees of $100 per month, plus 9% interest and attorneys’ fees, “seem[ed] excessive,” and directed that further hearings take place to determine whether the board would be entitled to them…

Fines, Late Fees and Limits on Co-op and Condo Board Authority — William McCracken | New York Law Journal | June 21, 2024

Legal considerations for co-op and condo boards imposing fines and late fees — William McCracken | Habitat Magazine Excerpted from above | July 19, 2024

Order, Supreme Court, New York County (Geoffrey D.S. Wright, J.), entered on or about August 22, 2014, which denied plaintiffs tenants' motion for summary judgment, granted defendant condominium board's cross motion for summary judgment dismissing the complaint, and invalidated the $500/day fines imposed, unanimously modified, on the law, to grant plaintiffs' motion on the third and fourth causes of action and declare that the $500/day fines imposed are invalid, and to grant a permanent injunction enjoining the board from imposing such fines…

Although the Board's authority to impose fines is within its power to implement rules and regulations as provided in the bylaws (see Board of Mgrs. of Plymouth Vil. Condominium v Mahaney, 272 AD2d 283 [2d Dept 2000]), the imposition of fines in the amount of $500 per day for violations of the guest policy is confiscatory in nature (see Sandra's Jewel Box v 401 Hotel, 273 AD2d 1, 3 [1st Dept 2000]). The Board cites no persuasive authority to support the imposition of such a hefty fine. The cases it cites are distinguishable since they involve the imposition of administrative fees and nominal fines for a resident's noncompliance with certain [*2]rules (see e.g. Gillman v Pebble Cove Home Owners Assn., 154 AD2d 508 [2d Dept 1989]).

NY Supreme Court: Gabriel v. Board of Managers of Gallery House Condominium (Casetext)

…the court invalidated a condo board’s master plan to upgrade and replace all of the 100-year-old building’s windows, because in this situation the declaration and by-laws made clear that the unit owners, not the board, owned those windows. Once the replacement plan was struck down, the fines for noncompliance with the plan went as well.

NY Supreme Court: Mangold v. Board of Managers of Meadow Court Condominium

…the board passed a rule, enforced by a $50 fine, prohibiting owners from walking their pets in the grassy areas of the common areas, but the court struck down the rule because the by-laws expressly permitted homeowners to walk their pets throughout the common areas.

NY Court of Appeals: Yusin v Saddle Lakes Home Owners Assn., Inc.

…the board unilaterally adopted a house rule giving itself the power to issue late fees for delinquent maintenance payments rather than trying to amend the proprietary lease (which required supermajority approval of the shareholders).

The court found that without a “specific provision” in the proprietary lease granting the power to issue late fees, the board “exceeded its authority in attempting to change the type of penalty by the procedure of adopting a house rule rather than amending the proprietary lease,” and thus invalidated the late fee.

City Court of Yonkers: North Broadway Estates v. Schmoldt

Enforceability of Board-Adopted Fines and Fees, Revisited — Richard Siegler and Eva Talel | New York Law Journal | March 02, 2016

Pre-Existing Landscaping Ignites Lawsuit

•  Cedar City, Utah: I’ll bet this owner wishes he was in Colorado where state law (CRS 38-33.3-123) specifically prohibits this kind of concern.

Gordon Hodnett's house sits nestled above the city toward the top of the Canyon Ridge Homeowners Association's planned urban development.

One can see miles upon miles of sagebrush, rabbitbrush, Utah junipers and Pinyon pine trees galore.

So when Hodnett moved to the community and bought the house constructed four years previous to his purchase, he was under the assumption the sellers had been approved for the waterwise landscape features the home came with.

"There is a working sprinkler system with plants that can live without much water — I really liked that it was natural landscaping," Hodnett said. "There was nothing stating the landscape plan had not been completed. Nothing about the property having a continuing violation was included on the HOA disclosure at the title signing."

A few months after moving in he received a notice from the homeowners association stating that he needed to submit a plan to be approved for landscaping in his yard…

HOA places lien on property over rabbitbrush… — Haven Scott | St. George News | July 19, 2024

Penthouse Destruction Causes Millions in Damage

• New York, New York: There’s no magic happening here.

Famed magician David Copperfield is a negligent neighbor who left his ritzy Midtown penthouse in shambles — and the mess is so ridiculously bad that it threatens the building’s structural integrity, his condo board claims in a new $2.5 million lawsuit.

The Galleria condominium board attributed much of the damage to Copperfield’s own neglect — such as when “illegal and ineffective” plastic plumbing led his rooftop pool to burst in 2015, sending destructive torrents of water into homes 30 stories below.

Or when a valve failed in the then-abandoned unit last December, sending another deluge into the elevator shafts, hallways and other condos, the Manhattan Supreme Court suit filed Tuesday alleges.

The twin incidents — and lingering damage — may have even compromised the structural integrity of the 55-story luxury complex on East 57th Street, which Copperfield abruptly deserted in 2018…

Magician David Copperfield sued by NYC condo board for trashing, neglecting $7M Manhattan penthouse — Steve Janoski | New York Post | August 07, 2024

David Copperfield disappeared, but apartment disaster was no illusion: lawsuit — Sheridan Wall | The RealDeal | August 07, 2024

Slip-pery Nuisance?

• Wilmington, North Carolina: Boat slip bummer.

In a September 2023 complaint, Riverwalk Condominiums of Wilmington Homeowners Association requested the removal of boats near the community’s dock, arguing it violates the HOA’s rules and causes a nuisance for residents. It included an 85-foot yacht owned by Rob Pickett of Picket Investments LLC.

According to the lawsuit, Martin Gallan owns three of the condominium’s units, and has the right to all eight of Riverwalk’s boat slips. Doug Springer of Wilmington Water Tours has operated his business out of one of the condo’s units since 2011 and leases two dock slips from Gallan. 

Wilmington Water Tours gives tours of the Cape Fear River, but also runs water taxis between the downtown Riverwalk and Battleship North Carolina.

Gallan leased a slip to Pickett — who once owned downtown’s Dudley Mansion — from April 2022 for his yacht. Springer told PCD, after two years of sparring with the HOA, Pickett moved his yacht in the last few weeks but did not know where it was relocated.

The HOA argues Gallan violated rules by leasing the boat slips to Pickett and Springer. It also claims Springer is operating his business without approval from its board of directors and that the yacht creates a light and noise nuisance for HOA members. The lawsuit states Gallan leased the dock with the intention of harming the HOA by blocking the view of the Cape Fear River. 

Wilmington HOA invokes CAMA permit in effort to stop boat leases for downtown riverfront — Peter Castagno | Port City Daily | July 02 , 2024

Dune: Condo Edition

• Berkeley, New Jersey: They fought to keep their dunes.

The state Department of Environmental Protection has been ordered by an Ocean County jury to pay the Midway Beach Condominium Association in Berkeley $4.7 million for seizing property there for a dune construction project.

Midway Beach Condominium Association in Berkeley wins sand dune suit against NJ — Peter Ackerman | Asbury Park Press | August 01, 2024

Rapid Board Turnover

•  Clearwater, Florida: Don’t let threats and violence ruin your community association.

The entire 5 member Board resigned and then another 3 new directors resigned, but there’s a full Board of 5 directors again.

In a matter of weeks, the HOA Board at On Top of the World Retirement Community has flipped. Five members quit in May, followed by eight more members at a meeting on July 15…

VIDEO: Florida retirement community in turmoil after nearly all board members call it quits — ABC Action News | July 19, 2024

Canine Victory

• Aspen, Colorado: ESAs are all the rage.  Learn more on our Fair Housing page.

An emotional support animal can stay with its owner at a downtown Aspen condominium property that bans pets after a judge determined there is sufficient evidence showing she will continue to suffer from anxiety without its companionship.

District Court Judge Elise Myer granted the owner a preliminary injunction allowing her to keep the dog — a 6 ½-pound hypoallergenic maltipoo named “Aspen” — on the property so long as it is not unattended.

The ruling was a win for the plaintiff, a Louisiana resident who owns a fractional deed that gives her five weeks a year at Aspen Mountain Residences, formerly the Grand Hyatt Aspen and located on East Dean Street looking down at Rubey Park Transit Center on Durant Avenue. 

Court sides with dog owner over condo association — Rick Carroll | Aspen Daily News | July 23, 2024

Know the Law?  There’s a LOT to It (in some states)

• Florida statutes 718 and 720 are replete with requirements.  Get to know ‘em!

In a matter of weeks, the HOA Board at On Top of the World Retirement Community has flipped. Five members quit in May, followed by eight more members at a meeting on July 15…

Mandate Under s. 720.303(2)(e), Florida Statutes Requires HOA Boards to Consider MRTA at First Regular Board Meeting Each Year

— Shumaker for JD Supra | July 02, 2024

Opinions on Statutory Ambiguity and Over-Regulation

• Below are two op-eds (the first from an attorney and the second from a CAI staffer) that share a theme in their distaste for state regulation of condos and HOAs.  While we agree that statutes should be reasonably precise (but not create a “tax code” situation), what could be more banal than a CAI senior media relations manager regurgitating CAI doctrine?

Florida Opinion: Well-intentioned Legislature creates headaches for condos and HOAs — Matthew Zifrony | South Florida Sun Sentinel | July 30, 2024

Maryland OPINION: Maryland must not overregulate homeowner groups — Blaine Tobin | The Baltimore Sun | July 17, 2024

Tree Trouble

• This particular matter is not a community association concern, but it is an excellent reminder about local ordinances and municipal codes.  Also see Issue #88 and our ordinance and muni-code examples.

NYC property owner hit with $230K fine for chopping down his own tree… — Peter Senzamici | NY Post | August 02, 2024