New Board cont’d

2/11/10 Addendum: Well, I mis-spoke.  Oops. There are three people on the board now who are anti-the established order, and already have issued notices that the management firm is fired. No new one is in place. The lawyer is also being sent a notice that they are no longer desired. The attorney hired by this group has already issued requests for all records from the attorneys hired to make the condominium conversion happen, concerning the condominium conversion and to please turn over all those documents.

However, there is one more level of administration that is currently being ignored. This is someone called a trustee, independent of the board, the management and the home owners. Our current trustee happens to be affiliated with our management company. The trustee has the power to say this is not in the best interest of the association, of the homeowners. From the various votes on condominium conversion over the years, the home owners want to be a condominium association. The trustee then takes that into consideration, and makes an independent assessment, an independent determination.

In speaking with former board members who have lived here for more than a decade, they remember when there was no management company. The association at that time was nearly bankrupt. If any major emergency had happened, such as has in the last few years when the boiler heating the entire building needed replacing, there would have been no money for repairs, and a special assessment that most residents could ill-afford would have been needed. At this point in time, with six or so years of the same management firm, we have nearly 200k in various forms of liquidity available for the maintenance of the building. We have been advised that 300k would be ideal to have in reserves, because the entire plumbing and electricity systems are still needed to be repaired/replaced within the next few years. This is a known fact. We are still using the nearly 100 year old original systems. Time for an intelligent, well-planned upgrade.

I do not believe this newly elected board is currently thinking about maintaining the building, which means all of us who invested in ownership here, hoping to remain living here for many years to come comfortably, are fearful. But we are also wondering what they ARE thinking. We wonder what their attorney is telling these people, why condominium ownership is so bad. The fear is, she is actually taking these disgruntled owners for a ride, just throwing legal procedures around to rack up a bill to charge them. She has already told them that whatever they pay her out of their pockets can be re-imbursed by the home owner’s association. Perhaps she sees that 200k held in reserves for the building’s needs as a large potential paycheck. Perhaps.

There is a meeting scheduled tonight by the new board at the request of their lawyer, and that is the one question I want to ask. Why is condominium ownership bad? Being able to sell a unit with bank financing is the way of most real estate transactions these days, as most people don’t have a hundred thousand dollars or so in a back pocket to finance a cash transaction. Being allowed to be a condominium association is exactly the legal vehicle that will finally allow bank financing.

There are still owners in this building who only paid $5,000 to $7,000 for their units. Their perspectives as to how much it costs to buy a unit, and how easy that is for others is slightly skewed, to say the least. I paid approximately 20x their purchase price for my unit, and still feel I got a good deal for Los Angeles, but bank financing at the time would have made the transaction a lot easier to take place.

The fact that bank financing not being an option when I purchased into the building is exactly what allowed me to get into the building. But it makes it extremely difficult to ever consider selling it. Not that I am, but circumstances change. Knowing I have that as an option, especially without a full time job, is exactly the sort of peace of mind that helps one sleep at night.

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