Trace Lofts Still Doesn’t Have a Homeowners Assocation

I’ve been living at Trace Lofts for six months now and we still don’t have a home owners association. This has annoyed me but I work 60+ hours a week so its not like I have a lot of free time to read our 200 page public offering package to figure out what needs to happen.

Fortunately a resident more proactive than myself organized a get together a few weeks ago. We spent most of the time venting about issues around the building wishing they’d get fixed. Coming out of the meeting we resolved to meet with the developer (Ted) and Madrona, the management company, and figure out next steps.

Tonight we had an hour and a half meeting (the manager in me bristled at such a long inefficient meeting) which was well attended by residents (~25%) but proceeded without Ted. Madrona did a good job answering the many questions of residents (can we turn up the heat in the halls?) and I pushed and pushed for us to get on with figuring out forming a board but a number of residents seemed particularly concerned by what we’d lose if we formed a board. The main concern seemed to be that right now Ted was footing the bill for some things and that this would come to an end when the board was formed. Of course Ted isn’t paying for anything he doesn’t have to and Madrona is doing the bare minimum to keep our building’s lights on because they are receiving no guidance on what to do and can’t act without guidance.

The next step is to send a letter to someone to say we should form a board. I own this next step but can’t find the relevant section in the 200 pages describing exactly what needs to happen to form a board. Of course I’m finding this frustrating since at my last condo, The Meritage, the developer and management company (CWD) organized this meeting quickly and efficiently. Ted seems to be in no such hurry. Madrona describes Ted’s position as he doesn’t want a board to form so he can tell prospective buyers of unsold units that they still have the opportunity to sit on the board. Personally, I think he should start with some of the traditional incentives like closing cost credits or paid HOA dues.

Any advice or comments on homeowners associations for those of us new to condo management would be appreciated. I’m sure I’m not the only one wondering how this all works.

About Matt

Matt , Urbnlivn's publisher, has a love for lofts with industrial features and new construction condos that is only eclipsed by his passion for outdoor sports and urban living. Phrases such as “polished concrete” and “exposed brick” are music to his ears. You can also find Matt on Twitter or skiing.

  • http://www.yalnes.com yalnes

    Matt, election of the Board is usually governed by the Declaration (and WA Condo Act). Most of the provisions are in one section of the Declaration – usually titled “Declarant Control Period” – and typically says that at least one non-declarant Board member is to be elected upon sale of 25% of the units, and then once 50% of the units are sold off, at least 1/3 of the Board is to be elected by owners. There may be complications if your development is legally “phased”. Also, sometimes it just doesn’t make sense to do “staged” election of the Board as the developer still holds the majority vote on the Board. Paying of expenses on the other hand has nothing to do with Board election. Developers typically can CHOOSE to pay operating expenses for as long as they want whether or not a homeowner-Board is elected…

  • http://www.yalnes.com yalnes

    Matt, election of the Board is usually governed by the Declaration (and WA Condo Act). Most of the provisions are in one section of the Declaration – usually titled “Declarant Control Period” – and typically says that at least one non-declarant Board member is to be elected upon sale of 25% of the units, and then once 50% of the units are sold off, at least 1/3 of the Board is to be elected by owners. There may be complications if your development is legally “phased”. Also, sometimes it just doesn’t make sense to do “staged” election of the Board as the developer still holds the majority vote on the Board. Paying of expenses on the other hand has nothing to do with Board election. Developers typically can CHOOSE to pay operating expenses for as long as they want whether or not a homeowner-Board is elected…

  • http://www.vladcole.net vladcole

    Matt, I’ve dealt with similar issues.

    The book that will REALLY help inform you is here linked to below. It’s literally the bible for questions of this sort.

    Yes, it’s somewhat NYC-specific, but you won’t find a better primer on the topic.

    http://www.amazon.com/New-York-Co-op-Bible-Everything/dp/0312340753/ref=sr_1_1?ie=UTF8&s=books&qid=1204747071&sr=8-1

  • http://www.vladcole.net vladcole

    Matt, I’ve dealt with similar issues.

    The book that will REALLY help inform you is here linked to below. It’s literally the bible for questions of this sort.

    Yes, it’s somewhat NYC-specific, but you won’t find a better primer on the topic.

    http://www.amazon.com/New-York-Co-op-Bible-Everything/dp/0312340753/ref=sr_1_1?ie=UTF8&s=books&qid=1204747071&sr=8-1

  • Steve S.

    According to Washington State law:
    The transition date shall be no later than the earlier of:(a) 60 days after conveyance of 75% of the units to Owners other than the Declarant; (b) three years after the first conveyance of a unit; (c) two years after the last conveyance of a unit; or (d) the date on which the Declarant records an amendment to the Declaration pursuant to which the Declarant voluntarily surrenders the right to further appoint and remove officers and members of the Board.

    The good part is, until the association is turned over you don’t pay HOA dues.

  • Steve S.

    According to Washington State law:
    The transition date shall be no later than the earlier of:(a) 60 days after conveyance of 75% of the units to Owners other than the Declarant; (b) three years after the first conveyance of a unit; (c) two years after the last conveyance of a unit; or (d) the date on which the Declarant records an amendment to the Declaration pursuant to which the Declarant voluntarily surrenders the right to further appoint and remove officers and members of the Board.

    The good part is, until the association is turned over you don’t pay HOA dues.

  • Trevor

    We’ve been paying $298 dues for 7 months now…does this mean all residents who moved in last September are entitled to a $1,400 refund?

  • Trevor

    We’ve been paying $298 dues for 7 months now…does this mean all residents who moved in last September are entitled to a $1,400 refund?

  • http://twitter.com/mattgoyer mattgoyer

    Steve, is that part of Washington State Law or just a common practice? Currently everyone at Trace, residents and the developer for the unsold units are paying into the condo reserves even though the HOA hasn’t been formed yet.

  • http://blog.mattgoyer.com Matt

    Steve, is that part of Washington State Law or just a common practice? Currently everyone at Trace, residents and the developer for the unsold units are paying into the condo reserves even though the HOA hasn’t been formed yet.

  • Peckham

    There are two funds you pay into:

    Operating fund and Reserve fund. You need to be paying into both, unless God is paying for your water, sewer, garbage, utilities, insurance, taxes, etc.

    I am sort of stunned that you don’t know more about the place you live. But hey, it’s not like you work in the real estate business or anything. ;)

  • Peckham

    There are two funds you pay into:

    Operating fund and Reserve fund. You need to be paying into both, unless God is paying for your water, sewer, garbage, utilities, insurance, taxes, etc.

    I am sort of stunned that you don’t know more about the place you live. But hey, it’s not like you work in the real estate business or anything. ;)

  • richard

    Sounds like you’re living in a poorly managed apartment building rather than a condo.

  • richard

    Sounds like you’re living in a poorly managed apartment building rather than a condo.

  • http://www.vladcole.net vladcole

    We knew that this was poorly managed from the get go, with the flat condo dues. No condo sets flat dues irregardless of the size of the unit. That was an indication that something wasn’t quite right with the way they’d planned for accounting. Guaranteed: long, drama-filled discussions about the need to adjust that rate.

  • http://www.vladcole.net vladcole

    We knew that this was poorly managed from the get go, with the flat condo dues. No condo sets flat dues irregardless of the size of the unit. That was an indication that something wasn’t quite right with the way they’d planned for accounting. Guaranteed: long, drama-filled discussions about the need to adjust that rate.

  • MIke

    Call Phillips Property Management and tell them you need help. They’re great.

  • MIke

    Call Phillips Property Management and tell them you need help. They’re great.

  • Mike

    Matt, if you have a half million dollar condo, you DO have time to watch out for that investment by being on the board. Its an hour a month tops and you make sure your biggest investment is being maintained.

  • Mike

    Matt, if you have a half million dollar condo, you DO have time to watch out for that investment by being on the board. Its an hour a month tops and you make sure your biggest investment is being maintained.

  • Peckham

    “Guaranteed: long, drama-filled discussions about the need to adjust that rate.”

    Oh yeah. Not only more equitably, but upwards. Those dues are not in line with the future needs of the building, nor are they going to account for increases in operating costs.

  • Peckham

    “Guaranteed: long, drama-filled discussions about the need to adjust that rate.”

    Oh yeah. Not only more equitably, but upwards. Those dues are not in line with the future needs of the building, nor are they going to account for increases in operating costs.

  • Mike

    Way to avoid drama. Call a meeting together, elect a board, hire a management company, call for a financial meeting at which more than half the owners must vote DOWN the decision by the board to set reasonable dues that will build up money to avoid special assessments. More than half of the people will never show up, dues increase automatically passes, the building is saved.

  • Mike

    Way to avoid drama. Call a meeting together, elect a board, hire a management company, call for a financial meeting at which more than half the owners must vote DOWN the decision by the board to set reasonable dues that will build up money to avoid special assessments. More than half of the people will never show up, dues increase automatically passes, the building is saved.

  • jcricket

    To be fair to Matt, I think he actually has TWO half-million dollar condos to manage. One as a landlord and own as an occupant/owner. And a real estate industry to revolutionize or something.

    He’s got no time for silly things like considering his financial future :-)

  • jcricket

    To be fair to Matt, I think he actually has TWO half-million dollar condos to manage. One as a landlord and own as an occupant/owner. And a real estate industry to revolutionize or something.

    He’s got no time for silly things like considering his financial future :-)

  • http://twitter.com/mattgoyer mattgoyer

    Thanks for the comments everyone.

    yalnes, I’m in a car for the next ten hours so hopefully I find the section you’re referring to. I did a quick search earlier and wasn’t able to find it.

    vlad, I’ll order the book.

    Peckham, why don’t I know more? Well, I don’t work in real estate operations at Redfin; I lead the team that designs the search experience. I also haven’t read through the 200 page POS in detail. I do know that we are paying into two funds and that Madrona is using our HOA dues to do the bare minimum to maintain the building.

    Mike, I am concerned about my investments but am more interested in getting a board formed than actually sitting on it. I imagine that the first year for a new construction condo is a busy one for the board dealing with all the loose ends the developer didn’t wrap up (i.e. mirrors in the parking garage, fully setting up the security system for letting people in, infrastructure for the janitor, etc. etc.)

    jcricket, yeah. I’m busy! :)

  • http://blog.mattgoyer.com Matt

    Thanks for the comments everyone.

    yalnes, I’m in a car for the next ten hours so hopefully I find the section you’re referring to. I did a quick search earlier and wasn’t able to find it.

    vlad, I’ll order the book.

    Peckham, why don’t I know more? Well, I don’t work in real estate operations at Redfin; I lead the team that designs the search experience. I also haven’t read through the 200 page POS in detail. I do know that we are paying into two funds and that Madrona is using our HOA dues to do the bare minimum to maintain the building.

    Mike, I am concerned about my investments but am more interested in getting a board formed than actually sitting on it. I imagine that the first year for a new construction condo is a busy one for the board dealing with all the loose ends the developer didn’t wrap up (i.e. mirrors in the parking garage, fully setting up the security system for letting people in, infrastructure for the janitor, etc. etc.)

    jcricket, yeah. I’m busy! :)

  • Peckhammer

    “I also havent read through the 200 page POS in detail.”

    I dunno… when I buy a half-million dollar thing, I read the manual before forking over the cash. That is why they gave you ten days to review the docs.

    That said, I am not picking on you in particular; you just happen to be out there and visible. I credit you for that, and for taking it all in stride.

    I think that a lot of condo buyers have no idea what they are getting into. It would be nice to have a few condo management types talk about this sort of thing as featured videos or some such thing on your blog. Your blog is condo-centric, and it might be a good venue for this type of info.

  • Peckhammer

    “I also haven’t read through the 200 page POS in detail.”

    I dunno… when I buy a half-million dollar thing, I read the manual before forking over the cash. That is why they gave you ten days to review the docs.

    That said, I am not picking on you in particular; you just happen to be out there and visible. I credit you for that, and for taking it all in stride.

    I think that a lot of condo buyers have no idea what they are getting into. It would be nice to have a few condo management types talk about this sort of thing as featured videos or some such thing on your blog. Your blog is condo-centric, and it might be a good venue for this type of info.

  • Barboursm

    Thanks Matt for driving this topic. I live in Trace currently and surprised by the lack of communication.

    I formerly owned in Braeburn and our property management company helped with setting up a board, including the selection process.

    I wonder what we are paying Madrona for, what we can expect from them?

  • Barboursm

    Thanks Matt for driving this topic. I live in Trace currently and surprised by the lack of communication.

    I formerly owned in Braeburn and our property management company helped with setting up a board, including the selection process.

    I wonder what we are paying Madrona for, what we can expect from them?

  • http://twitter.com/mattgoyer mattgoyer

    No problem Barboursm. I actually wasn’t the one to initiate the discussion, it was another resident but he unfortunately had to miss our meeting with Madrona.

    FWIW, I don’t think the issue is with Madrona but rather it is with Ted. Ted appears to be a team of one and doesn’t have any office support. I think typically it is the developer who drives the hand off with the management company but Ted has his hands full with the few buildings he is trying to develop and isn’t giving us the attention he should.

  • http://blog.mattgoyer.com Matt

    No problem Barboursm. I actually wasn’t the one to initiate the discussion, it was another resident but he unfortunately had to miss our meeting with Madrona.

    FWIW, I don’t think the issue is with Madrona but rather it is with Ted. Ted appears to be a team of one and doesn’t have any office support. I think typically it is the developer who drives the hand off with the management company but Ted has his hands full with the few buildings he is trying to develop and isn’t giving us the attention he should.

  • Lee

    What if a new condo building still leaks rain water in the basement parking garage. Can the Declarant form the HOA and relegate that problem to be a care and maintenance of the Association?

  • Lee

    What if a new condo building still leaks rain water in the basement parking garage. Can the Declarant form the HOA and relegate that problem to be a care and maintenance of the Association?

  • http://twitter.com/mattgoyer mattgoyer

    It should be covered by the building’s warranty.

  • http://blog.mattgoyer.com Matt

    It should be covered by the building’s warranty.