2009 Jun 23rd

When You Buy a Hoboken Condo You Buy More Than Just the Condo.

What is a Condominium?

condominium, or condo, is the form of ownership of real property.  When you own a condo in a residentail building, typically you exclusively own your particular unit from the walls in.  The ownership of the common elements such as hallways, heating system, elevators, exterior areas, the basement and the roof is jointly owned by all of the unit owners and controlled by the condo association.  The condo association is made up of all the unit owners.  

The association elects a condo board that governs the association and runs the building.  Unit owners typically have voting rights that correspond to their unit ownership.  Sometimes is it one vote per unit, other buildings allocate voting based on percentage.  The percentage is determined by the square footage of the unit so people with the biggest units have a bigger vote.  Sometimes the condo board will hire a management company to assist in running the day-to-day affairs of the condo, like collecting the monthly maintenance fee from the unit owners and doing the banking, paying the utility bills, arranging for cleaning of the hallways and shoveling of snow.  The management company should not make major decisions that affect the unit owners – that is the job of the condo board.  After all, the board was elected by the unit owners.  So major expenditures like deciding to replace the roof or repair the boiler, and financial matters such as whether to increase the maintenance fees, whether to allow pets are all up to the condo board.  If there is no management company the board or other unit owners have to take care of everything in their spare time.  

Why Does The Condo Association Matter?

When buyers shop for a unit, very often they are very focused on features of the unit itself and don’t pay much attention to the association.  It is crucially important for the buyer to recognize that they are not buying just the condo unit.  When you purchase a condo, you are also buying into the condo association.  A well-run condo association has made provisions so that it has money in the bank for future maintenance and repairs.  That is why you, as a unit owner, pay monthly maintenance.  Your maintenance is used to build up the reserve fund gradually over time so that when repairs are needed the association has the funds to pay for them.  If a condo does not have sufficient reserves, the board will often decide to impose a “special assessment” on the current unit owners.  Since most of us like to know what our monthly expenses will be, getting his with a special assessment is not a welcome event.  This is especially important in older buildings – and many Hoboken condos are in buildings that were constructed 100 years ago.  If a building has not been well maintained over the years, the chances of problems arising are even greater than in a brand new building.

What Is the Hoboken Condo Buyer To Do?

When you are shopping for a condo you should focus on more than just the physical condo unit.  While it is your lawyer’s job to find out certain information during the attorney review period, after you’ve made an offer, it’s been accepted, you’ve agreed on a price and hired a lawyer, there is nothing that prevents you from asking some important questions of the seller  much earlier in the process while you are still shopping.  Some things you might want to know are:

I’m not suggesting that you put the cart before the horse and demand to see all the condo documents and financial statements before you make an offer (although in New York City that is quite common).  There is no reason a seller should object to answering these basic questions.  If they do, that just may be a red flag and you might want to consider other options.  With so many properties on the market in Hoboken today, there is no need to settle on buying a condo in a mismanaged building or one that is in financial trouble.

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  1. Kimberly

    There are benefits to being with a small, self-maintained association, however I wish I had examined the reserve fund more when I was buying. With the current economic situation, our building of six units has 2 units delinquent and one of them more than a year and facing foreclosure. It is much like getting blood from a stone! When things are tight, the association seems to be the one to be stiffed.

    As a member of that board, we can only place a lien against the unit and try to recover monies via small claims. That costs more money and we are struggling to make basic payments. Does anyone have any suggestions?

  2. Tiger

    Kimberly, sorry to hear. I’m no expert, but I think you are also one of the parties involved in foreclosures, once it is finalized, I think the bank has to pay:
    1- Any due taxes
    2- Any due condo fees
    3- Any auction fees

    Could be mistaken. I seem to recall hearing something like that by one of the board members in one of our condo meetings.

  3. rob

    what would be considered standard legal fees to be paid to the RE attorney? what would be considered a reasonable range?

  4. Bill

    $1500

  5. rob

    i am more thinking in 800-1000 plus fedex and stuff..

  6. Tiger

    Typical Hoboken lawyer rate is $1200.

  7. Andy

    Thats very unfortunate regarding the units that are delinquent. I know from personal experience that you can pay a little extra in terms of homeowners insurance to protect yourself against special assessments. I think its a minimal yearly charge and it covers almost 16k in special assessments. so if you and your association need to cover the $$ to maintain your building in the meantime it might be a viable solution for the owners that continue to pay at least worth looking into.

  8. Lori Turoff

    Andy
    That’s very interesting. What kind of insurance policy and through whom? (I.e., chubb, allstate). I’ve had many homeowners policies and have never heard of that but I’d love to research it further. Thanks for the info.

  9. Andy

    I have Allstate(the guys down at Hudson place) and i think it was sold thru Tower companies? Not sure. But I remember them pitching it to me as if the condo board gives you a special assessment for buiding repairs it entitles you to claim your insurance for the cost of repairs upto like 16k. I also have a feature that if something happens to my unit and its covered by the insurance they will put me up in a similar residence for like 2-3 months or something to that effect until repairs can be done on my unit. I think my total bill is only like 360$ for the year if I’m not mistaken. I can go home and check the paperwork.

  10. Kimberly

    Thanks everyone! I am going to investigate the additional insurance for myself, and hope that we could maybe find a policy that would cover our association as well.

    I have recently become the President, and am trying to find our way out of this mess. We currently have a $2K payment due and it will bring us to an uncomfortable point. The units that are delinquent owe us more than $3K to date.

    I see no other way than to raise our dues or do another one time assessment, which seems so unfair to all of us who pay on time and in full.

    I am amazed by the lack of support given to Condo Associations in the legal process. Filing a lien can only do so much in the grand scheme of things, especially when those who owe are usually in much more deep water elsewhere… the building is really the least of their concerns.

  11. Recent Buyer

    Lori: Why are all the wrap-ups gone from the website?

  12. HobokenBound?

    I think because of all the trouble that the MLS is giving her. We might have to wait until the dust settles and see where this leads us in term of transparency. Wish her the best of luck.

  13. Lori Turoff

    We will persevere and continue to provide open and honest information – which has always been my only goal.
    We’ll be back in action as soon as possible.
    – Lori & Howie

  14. K8

    What kind of power does the condo association have over the condo owners? We just moved in and one of our neighbors doesn’t like the way we keep our storage in our deeded garage spot. He made a big stink at the meeting. Now the board gave us 4 days to reorganize or they will get the management company “involved”. (We won’t be able to reorg by then since we are going away). Can they do anything to us and if so, what?

  15. Bill

    they can fine you and put a lien against your condo if you don’t pay…..but they probably won’t bother.

    Just tell them you are going away and you will fix it when you get back

  16. Tiger

    K8, to be fair, a parking spot is meant to take a car, no? I don’t have parking with my building, but wouldn’t be very happy if I had one, and there are storage boxes and stuff right in the middle of the parking lot. So I would imagine why someone would be upset about it.

    Here’s a suggestion: Why not rent out your parking spot (if you don’t use it) and rent a storage room? You will probably end up making money out of it :-)

  17. Bill

    Tiger, if its not interfering with your ability to park….why would you care?

    This is why I would never live in a big building…people all up in your business..

  18. jc

    I wouldn’t care as long as it doesn’t interfere with others ability to park and move safely throughout the lot. However it may be a liability concern for the association, not sure.

  19. Lori

    In many condos with indoor garages people use the area in front of their car for storage. Some condo associations allow it, others don’t. Technically, I wonder if the Hoboken Fire Dept. would have an issue with it?

    Many people with a parking spot have the Rubbermaid “full double door storage closets” (see rubbermaid.com – about $200) rather than a bunch of miscellaneous junk. Using may keep everyone in your building much happier – they are also more secure for your items. There ARE thefts from Hoboken garages – don’t kid yourself.

    As for what can your condo association do, they can prohibit you (but then they probably must prohibit everyone) from placing ANY items in the spot other than a car. Nobody is going to want that! Beyond that, it depends on your condo by-laws & rules and regulations. They may be able to impose a fine.

    The management company really can’t do squat. They may send you a nasty letter but they work for the association and are hired by the board so it’s really up to the condo board. They don’t have ‘punitive’ powers although they often act as if they do.

    So before you go away for the weekend, why don’t you just go by a storage closet???? If you don’t have time, send the board a nice letter apologizing profusely and explain the situation and promise to do it as soon as you get back. You don’t want to move into a building and start off with problems, do you?

    PS – I heard the dumbest thing yesterday. There is a lovely building in town with balconies. Someone in the building made a fuss and now they don’t allow gas grills on any of the balconies, only down below in the common yard. What a waste! Now you have to trek through the building with your burgers rather than just walking outside from your own living room.

    PPS – In my opinion, every condo assn. with room in the garage for it should invest in a bike rack. This improves your property value as owners can lock their bikes safely rather than keeping them in front of cars or in units. The Columbus has one as do a few other buildings and it’s a great idea!

  20. Tiger

    I agree guys that if it’s not unsightly, and does not affect ability to park, it should be allowed. However, my experience in my own building and other buildings with spots is that they **barely** fit a car; meaning that when you pull out you really need to have very good line of vision on both sides. Unless the storage is really three to four feet off the ground, you will be really limiting line of vision for your neighbors.

    I think Lori’s suggestion is great, get a nice closet and push it all the way in, probably no one is going to complain.

    Remember, safety first!

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