SF: Condos: Heaven or Hell?

buildingsandhouses2.gifMany of us regard the condo as an ideal way to start in the housing market, or to retire from it. Condos are simple: the maintence and exterior are managed and paid for by your HOA. If you’re lucky, a set monthly fee (additional to your mortgage) may cover utilities, insurance, upkeep of the grounds and pool/spa/gym, as well as security and a savings for future expenses. 

This all sounds quite organized, and if you budget right, you should be able to know exactly what your monthly expenses will be, which is certainly more than you can say about maintaining a single-family home. But what happens if your HOA fee, the one you so carefully budgeted, goes up- a lot?

Such a phenomenon is frighteningly common. Ask Marjorie Murray, who has moved to form the Center for Homeowner Association Law, a nonprofit agency dedicated to helping people caught in HOA hell. According to the San Francisco Chronicle, Murray is offering a much needed service:

Murray said one recent call was from a San Francisco couple whose special assessments during the past three years have exceeded $100,000. Another came from a woman in Pasadena whose voluntary homeowners association had suddenly been declared mandatory and the monthly dues raised from $50 a month to $350. This, says Murray, is a surprisingly common phenomenon as a few homeowners attempt to resuscitate a dormant association or make membership mandatory so they can get the group to pay for work affecting their own property.

Is this legal? Yes. “California laws governing condos allow associations to raise monthly fees as much as 20 percent a year without a vote from the residents and to levy special and emergency assessments for up to 5 percent of the total annual budget for the building without a vote.” Further, the HOA can legally “levy assessments beyond these limits with a vote in which more than half the residents agree to assessments beyond 20 percent for monthly dues and beyond 5 percent of the budget for special assessments.”

What would such numbers mean? If an HOA fee starts at $415 and goes up 20% each year, in 15 years the fee will reach $5,400.  Can you afford that, on top of your mortgage? Or even if you had no mortgage at all?

Columnist Carol Lloyd points out however that ”there’s an important control in all of this: The homeowners association board is made up of residents and those residents must pay those monthly fees and special assessments as well. ” The problem is that for those board members with “a special interest in getting work done or raising property values, the higher fees may seem like a reasonable trade-off.”

Things get worse before they get better here, since if a  homeowner doesn’t pay the assessments levied against them, “the association can place a lien on the home and force a sale.”

What can you do to protect yourself? Well, for one thing, make note of Marjorie Murray’s Association. But in the short term, becoming an active member of your HOA seems a good idea. You might also, when searching to buy, look for condos that have had recent comprehensive assessments already levied and paid for by the seller.

In the meantime, if you’re feeling brave, here are some current condos on the market.

237 Arguello Blvd. #16, SF. Studio condo for $399,900.

2001 McAllister St. #213, SF. 1 bed/1 bath condo for $589,000.

185 7th Ave., SF. 2 bed/2 bath condo for $699,000.