The Stuff Has Hit The Fan...

I ventured to my Homeowners meeting the other night. The HOA had brought in a lawyer experienced in the dissolution of condominium associations. That process is multi-faceted and governed by State law and has nothing to do with the condominium rules or articles of condominium which established my community in 1983.

To hire the attorney to undertake dissolution, it would cost $20,000 or so. The process can take several months. Before it is undertaken, an appraisal of the property is recommended to give owners and the board a better idea about whether they should go ahead with dissolution. When given the estimated cost for repairs divided by the number of present owners, each owner would face a sixty thousand dollar assessment per unit if the property fails to attract a buyer. Additionally, the process of dissolution of our association must be started and an appraisal completed prior to negotiating with potential buyers. Should eighty percent of the owners fail to agree to the dissolution, the association would ask for sixty thousand per unit for needed repairs.

The average price for these units currently is seventy thousand dollars, according to real estate websites and that is below other properties in this area. They are one bedroom or efficiency and were originally constructed in the mid-seventies as a rental apartments which became a condo in the eighties. While there are 52 units and two outbuildings, the number of owners has dwindled to less than twenty, meaning that a lot of people own multiple units and rent them out and at least a handful do not live on site.

When asked if he could guarantee a buyer, the attorney said that he could not. He was simply there to navigate through the process and do all of the paperwork required by the State. Part of this also involves presenting a list of problems to a judge when petitioning for dissolution. The State can reject the condominium association's petition for dissolution, so the attorney and the appraisal are important, as are any recommendations from contractors, inspectors and appraisers.

The fact that this property sits on a sinkhole as of 2006 and is considered distressed and noted on any deed as such has a direct bearing on fair market value which any buyer is expected to provide. An important point, however, is that though the buildings have been remediated and piers and concrete used to stabilize them, the ground beneath still contains a sinkhole and any developer would be prudent to undertake studies of the area in order to determine the feasibility for commercial development. Our board is taking a big gamble and at this point, there are no certainties.

Any payout from the sale of the property includes not only what the buyer offers for fair market value of units and land but any monies from the association's coffers to which I am entitled at the time of dissolution.

Worried much? You betcha... Happy Sunday.