A.J. from Middlesex County, Connecticut writes:
Dear Mister Condo,
I found out recently that the master insurance policy on this old house (1832) turned into condos in 1988, 8 units, was cancelled by the insurance carrier due to the condition. The president, who is almost 80 and president for 20 years, doesn’t live here fulltime, thinks that we live like we did back in 1988. He asks us to all pitch in and take care of the property! When you are paying $500.00 a month, for HOA, ask for bills from his side kick, and don’t get them, something is fishy. I have been cut off from contacting the association, blocked from emailing the association, and contacting them. I have an offer on this unit (thank god) but I cannot go further as we have no master insurance on the building and common elements. They will not answer my questions. There is a special meeting in August to address what kinds of repairs must be done, and, of course, the budget! I don’t have the money for another assessment and another rise in HOA fees. I have spent a lot of money, to the point I am just about broke. I will not go into detail how I was threatened to close on this place. What do I do? I have a buyer, and without master insurance I cannot go forward. Please help. Thank you!
Mister Condo replies:
A.J., I am sorry you find yourself in this unpleasant situation. You have a real problem here and an expensive one at that. Small condominiums like yours don’t always function well and this is a great example of why they can fail. An uninsured condo is unsellable to a buyer who requires a mortgage. No bank is going to lend to a buyer who cannot insure the collateral. The condo association is responsible for keeping the Master Policy in place and needs to find a solution. As you have mentioned, that solution is likely going to be very expensive and require a Special Assessment to bring the building up to snuff so that it can be properly insured. I am afraid I don’t have good news here. As a current owner of record when that assessment hits, you will be on the hook for the money, whether you have it or not. Unless you can find a cash buyer between now and then. Even then, it would be wise to alert a potential buyer to the likelihood of this Special Assessment. If it is levied before you sell, you must reveal it. If it is on the Minutes of the association’s Board meetings, it must be revealed to the potential buyer. As to the Board’s ability to silence you, that is a “no, no”. You can always write to the Board and make your requests known. You have a right to see all association records. There may be a fee to inspect the records but it is your right. Personally, I think that buying into an old home under the premise of it being a condo is a huge mistake. They are almost always money pits and conversion stories like yours are all too common. If you can find a cash buyer and get out, I certainly would. Even if you need to sell below market value, it would make sense because staying an owner n this small association is going to get very expensive in the not too distant future. All the best!