Meritage Annual Meeting and Common HOA Issues

Tonight I went to The Meritage’s annual meeting. It’s been the first home owners meeting that I’ve attended. Of the 48 owners fifteen or so showed up and another ten or so assigned proxies so we had quorum.

Since most of the issues discussed are likely issues faced by many new HOAs and home owners I thought I’d post about what I learned. It shouldn’t be surprising but there is a lot of overlap in first year concerns between the two buildings. From an efficiency point of view it seems inefficient that both buildings’ HOAs and boards are going to struggle learning about rental caps, building security and convincing developers into fixing outstanding issues. A quick search doesn’t reveal a forum for Seattle HOA’s which is unfortunate (of course there is always the Urbnlivn Forums.)

So what’d we talk about…

Rental Caps

The board is pushing to institute a rental cap and brought out John Coe to present the first draft of a proposed amendment for the introduction of a rental cap.

Some of the things he talked about are:

  • He’s a “people, pets, parking” lawyer. Pets are the most difficult issue to deal with of the three.
  • We have a new declaration with all the latest law revisions, this is a good thing.
  • We have good rental management language, see section 11.14 (for instance leases need to be in writing, etc.)
  • He said developers don’t include rental caps in the initial declaration because they want to sell to a broad audience
  • However, owners want to limit the number of rental units for three reasons:
      Financing: Fannie Mae, Freddie Mac, have a 30% building cap on non-owner occupied caps and these two types of loans represent 80% of the market. The other 20% of loans (VA) have a rental cap of 50%.

    • Association: High number of rentals can affect the associations ability to borrow
    • Insurance: Number of renters affects master policy cost
  • With 48 units he suggests a 10 unit rental cap. There are 6-8 renters. Board can wave the cap on a case by case basis for special reasons.
  • Amendment lays out waiting list structure, enforcement language, hearing process for renters
  • It’s only a first draft and is very restrictive, for instance requiring 12 month leases
  • It’s language that has been used before. He feels it’s enforceable language.
  • Washington law puts a high voting requirement, 90%, for changing rental restrictions
  • Owners need to decide what circumstances do we want to allow? To stop? They’ll put language together.
  • For our reference we can go to the King County Recorder website which has declarations to condo or amendment and you can pull up others
  • He recommends we setup a working group made up of both landlords and regular owners to decide on terms, give recommendation to board, board takes to owners and recommends, then get owners to vote

In the abstract I support a rental cap but disagree with some of the restrictions in the first draft.

President’s Report

During the president’s report we learned about some of the things the HOA did throughout the year and things we are considering for the future are. We also discussed a number of other issues:

  • The HOA held a community party (I was out of town and moving out of the building at the time.)
  • Painted parking stall numbers on the wall so they’re visible. Ones of the floor were wearing off.
  • Replaced cleaning crew with a more effective one.
  • Talking about replacing another service provider
  • Discussed changing the elevator floor. It was initially carpet that got very dirty. The developer replaced with linoleum tiles. The glue for the tiles gave off an awful order forever and some feel it is unsightly. Other options are being considered but stone tile not allowed by Kone, the elevator company, because of weight. Right now the HOA is waiting for an interested resident to lead the charge on exploring options.
  • One of the garage doors is constantly breaking and we need to get the developer to step up and make it right.
  • There hasn’t been a reserve study. Sounds like Trace is ahead here because the Trace management company did this when they setup our budget.
  • Discussion of smoking areas and posting of no smoking signs in common areas.
  • We don’t have earthquake insurance. It’d double our insurance cost. The good news is that it’s a new building conforming to the latest code. But we should consider this when they do a budget study for next year.
  • The garage has an acid leaking problem just like Trace! This sparked a discussion about getting an inspection done and being proactive about having the developer fix issues.

Security

Like at Trace, the elevator is not locked in the garages. This means if the garage is compromised the building is compromised. The board looked into getting the elevator connected to the same system that we use for our door fob’s and the cost was $8,000. Some residents balked at this amount until a few residents shared a few stories. Let’s just say that shut everyone up.

This same security issue has already come up at Trace several times (fortunately our HOA is forming at the end of April). In general I think its appalling that developers on mid-range buildings are cutting corners on costs around security and opting for the cheapest option forcing the residents to live in an unsecure building until a board forms, the board gets recommendations and then implements a solution. It would be nice if the developer thought about what they would want if they lived in the building.

Bonus link: Elizabeth Rhodes in her Home Forums Extra answered an HOA question recently, Condo board considers hiring members to manage association

About Matt

Matt , Urbnlivn's publisher, has a love for lofts, floating homes and mid-century moderns.

For years Matt resisted becoming a real estate agent preferring to be an executive in the startup world but he recently caved in the spring of 2014 and became an agent.

You can also find Matt on Twitter or skiing.

  • Peckham

    We dont have earthquake insurance. Itd double our insurance cost. The good news is that its a new building conforming to the latest code. But we should consider this when they do a budget study for next year.”

    Um yeah, the latest code. That little rumbler we had a few years ago did $450K damage to my little building, which adhered to the latest code. We live in one of the most seismically dangerous areas in the contiguous US, and you don’t have earthquake insurance? Ah but what is an additional $30K to $50K per year divided amongst 48 owners? Hey, that’s URBNLIVN for you.

  • Peckham

    We don’t have earthquake insurance. It’d double our insurance cost. The good news is that it’s a new building conforming to the latest code. But we should consider this when they do a budget study for next year.”

    Um yeah, the latest code. That little rumbler we had a few years ago did $450K damage to my little building, which adhered to the latest code. We live in one of the most seismically dangerous areas in the contiguous US, and you don’t have earthquake insurance? Ah but what is an additional $30K to $50K per year divided amongst 48 owners? Hey, that’s URBNLIVN for you.

  • http://twitter.com/mattgoyer mattgoyer

    I was surprised we didn’t have it too. I wonder what percentage of condos have it/don’t have it.

  • http://blog.mattgoyer.com Matt

    I was surprised we didn’t have it too. I wonder what percentage of condos have it/don’t have it.

  • Peckham

    “I wonder what percentage of condos have it/dont have it.”

    That’s a really good question. It has gotten very expensive, post 9-11. I am sure the numbers of uninsured has increased. The cost is huge, but think of it this way: If your building moves one inch, it may be red tagged.

    For those that live on slopes, the cost is rising faster and higher. And even if your building is still standing after a quake, the deductible is typically more than $250K. That means an assessment since no one works emergencies into their reserve funding.

  • Peckham

    “I wonder what percentage of condos have it/don’t have it.”

    That’s a really good question. It has gotten very expensive, post 9-11. I am sure the numbers of uninsured has increased. The cost is huge, but think of it this way: If your building moves one inch, it may be red tagged.

    For those that live on slopes, the cost is rising faster and higher. And even if your building is still standing after a quake, the deductible is typically more than $250K. That means an assessment since no one works emergencies into their reserve funding.

  • http://www.yalnes.com yalnes

    The deductible on EQ insurance varies from 2-5%. It is typically set by the insurance company and is not negotiable… It’s been up and down in the last few years, but seems like 3% has been the average recently. EQ deductible is based on the percentage of total insured value. So, if your building is insured to $10M, your deductible is $300k regardless of how much damage your building sustains.

  • http://www.yalnes.com yalnes

    The deductible on EQ insurance varies from 2-5%. It is typically set by the insurance company and is not negotiable… It’s been up and down in the last few years, but seems like 3% has been the average recently. EQ deductible is based on the percentage of total insured value. So, if your building is insured to $10M, your deductible is $300k regardless of how much damage your building sustains.

  • Eric

    I recently went to the Brix buyers event at Harvard Exit. This will be my first experience living in a condo and I never really thought much about earthquakes or security concerns. After reading this, I feel fortunate that they mentioned that the garage elevators in Brix will be accessed by key fobs and earthquake insurance is included in our dues. All of that and the building is looking great too! :-)

  • Eric

    I recently went to the Brix buyers event at Harvard Exit. This will be my first experience living in a condo and I never really thought much about earthquakes or security concerns. After reading this, I feel fortunate that they mentioned that the garage elevators in Brix will be accessed by key fobs and earthquake insurance is included in our dues. All of that and the building is looking great too! :-)

  • Peckham

    “After reading this, I feel fortunate that… earthquake insurance is included in our dues.”

    This is a good thing in the event of a total loss, or severe damage. A word of caution though: A moderate earthquake could still result in a pretty big assessment. I don’t know how much Brix is insured for, but my 50-unit building is insured for $15M. That means a $500K deductible. Multiply your percentage of ownership by $500K [in this $15M scenario] and that’s what you could be on the hook for.

    You may want to speak with your personal homeowners insurance company to see if there is any additional coverage available to you. State Farm covered some of my earthquake damage. IOW, you should be carrying your own insurance in addition to the building’s insurance, for a variety of reasons.

    For example, your building insurance probably has a fairly hefty deductible for any loss or damage. If your 5th floor hotwater tank blows out and damages four other units below you, there’s a good chance that you are going to be responsible for part of the repair bill for those units. Without an individual homeowners policy, that means you may be writing a check from your personal account up to the amount of the building’s deductible.

  • Peckham

    “After reading this, I feel fortunate that… earthquake insurance is included in our dues.”

    This is a good thing in the event of a total loss, or severe damage. A word of caution though: A moderate earthquake could still result in a pretty big assessment. I don’t know how much Brix is insured for, but my 50-unit building is insured for $15M. That means a $500K deductible. Multiply your percentage of ownership by $500K [in this $15M scenario] and that’s what you could be on the hook for.

    You may want to speak with your personal homeowners insurance company to see if there is any additional coverage available to you. State Farm covered some of my earthquake damage. IOW, you should be carrying your own insurance in addition to the building’s insurance, for a variety of reasons.

    For example, your building insurance probably has a fairly hefty deductible for any loss or damage. If your 5th floor hotwater tank blows out and damages four other units below you, there’s a good chance that you are going to be responsible for part of the repair bill for those units. Without an individual homeowners policy, that means you may be writing a check from your personal account up to the amount of the building’s deductible.

  • http://www.belltowninsurance.com State Farm Insurance, Belltown

    Currently there are VERY few insurance companies in Washington state that are offering earthquake insurance. The risk of such catastrophic damage has caused most insurance companies to re-evaluate their underwriting standards for offering this endorsement.

    Each unit owner should have an understanding of the Master Policy. In addition, should cover their personal unit and Contents with a (HO6) – (Condo Unit Owners Policy)
    There are a few KEY coverages that every unit owner should have in their policy.

    -Contents (your personal property)
    -Building (carpet, fixtures, cabinets, appliances, etc)
    -Liability (asset protection) – What would happen if you left on vacation and your water heater blew; damaging 3 other units below you? You would personally owe for all the damage without this coverage!
    -Loss Assessment (your portion. If the association has an assessment for a covered loss)
    -Earthquake Protection

    Individual HO6 insurance generally runs between $15.00 and $30.00 per month depending on your individual needs.

  • http://www.belltowninsurance.com State Farm Insurance, Belltown

    Currently there are VERY few insurance companies in Washington state that are offering earthquake insurance. The risk of such catastrophic damage has caused most insurance companies to re-evaluate their underwriting standards for offering this endorsement.

    Each unit owner should have an understanding of the Master Policy. In addition, should cover their personal unit and Contents with a (HO6) – (Condo Unit Owners Policy)
    There are a few KEY coverage’s that every unit owner should have in their policy.

    -Contents (your personal property)
    -Building (carpet, fixtures, cabinets, appliances, etc)
    -Liability (asset protection) – What would happen if you left on vacation and your water heater blew; damaging 3 other units below you? You would personally owe for all the damage without this coverage!
    -Loss Assessment (your portion. If the association has an assessment for a covered loss)
    -Earthquake Protection

    Individual HO6 insurance generally runs between $15.00 and $30.00 per month depending on your individual needs.

  • TJ

    Every pound you add to the elevator cab (car), you have to add to the counterweight. The counterweight frame is probably nearly full, thus, no tile on the floor.

  • http://www.loanmodifyexpress.com/ car loan modification

    Individual HO6 insurance generally runs between $15.00 and $30.00 per month depending on your individual needs. ———— LOL!!!

  • http://www.extremesteam.biz/carpet-cleaning carpet cleaning miami

    I hope I can a survey that answer the question of mattgoyer.. It makes me curious,,

  • Andy

    I think the HOA assessments are comparable to other surrounding communities. The HOA issues all owners an itemized budget on an annual basis during the meeting whch you mentioned above..
    hoa management

  • http://www.thuryfoster.com/ State Farm Insurance Seattle

    You should make sure your building has been inspected for earthquake preparedness and that master policy covers earthquake damage.

  • http://www.thuryfoster.com/ State Farm Insurance

    I agree. Earthquake insurance is very inexpensive for condos and should be considered.

  • http://www.thuryfoster.com/ State Farm Insurance

    I agree. Earthquake insurance is very inexpensive for condos and should be considered.

  • http://www.pridecarpetcleaning.com/ Oriental Rug Cleaning Miami

    this is really a great post and the issues is good..

  • http://www.marblepolishing.net Marble Repair Miami

    Meritage Annual Meeting and Common HOA Issues! Some great comments in here.Would visit here again!!Thanks .

  • http://www.marblepolishing.net Marble Cleaning

    Meritage Annual Meeting and Common HOA Issues.

  • http://www.colonialfloorcare.com Concrete Polishing

    I’ll post the same information to my blog, thanks for ideas and great article.

  • http://www.colonialfloorandstonecare.com/ Concrete Floor Care

    It shouldn’t be surprising but there is a lot of overlap in first year concerns between the two buildings.

  • http://www.moldtestingservice.com Mold Testing Carson

    I agree.

  • http://concretepolishingmagazine.com/index.php?option=com_content&id=64 Lavina 32

    I have recently started a site, the information you provide on this web site has helped me tremendously. Thank you for all of your time & work.

  • Anonymous

    This one is truly looking one of awesome post about HOA issues. And this one is really looking informative post about it. And this one really increases my amount of knowledge about it. Thanks for sharing some exceptional and incredible thing about HOA issues.

    Homeowners Association Management

  • http://www.creativecarpetrepair.com/carpet_repair_seattle.php Seattle Carpet Repair

    A carpet in the
    building helps to avoid slip on the floor. Sometimes old and break carpets are
    thrown by other people. It is because they don’t value their carpet and they
    had a lot of money to buy another one. But if you value your carpet, you should
    refer it to someone who make a carpet repair.

  • http://digg.com/ritabowersox Mary Wilson

    Good post overall.  Enjoyed reading it.

  • http://www.marblecleaningmiami.com/ Marble Cleaning Miami

    I think it is so popular site and more information! Love the idea. I always read your posting. 

  • http://marblecleaning.blogspot.com/ dull spots on marble Miami

    A fascinating blog post right there mate . We appreciate you that

  • http://rugcleaningservices.blogspot.com/ Rug Cleaners Miami

    This is truly revolutionizing! 

  • http://marblepolishingmiami27.weebly.com/ marble repair Miami

     There are certainly not some websites with information like this man!

  • http://concrete-staining.tumblr.com/ Concrete Staining

    Its Pleasure to comprehend your blog