How to Sell a Condo When It's Managed by Nincompoops

Before we could start any construction work, we had to sell our condo.  We needed to borrow money for the remodel and that wasn’t possible for us while holding two mortgages.

 

 

In October of 2017, we’d hit the two year mark owning our condo and we were able to sell it without taxable impact.  We met with our realtor, started forming a plan and looking for somewhere to live. Almost right away, we found a home near the Going Queen and things started coming together.  We started a lease on the rental December 1st and moved in. We had some work done on our condo to get it condition to sale. We did some painting, clean up and minor tweaks. We had a company come in and stage it with some hipster furniture.  We had it up for sale by mid December.

 

Within a few weeks of it going up for sale, the home owners association voted to hire legal representation to file suit against the builder over some alleged deficiencies.

 

It was apparent right away that this was going to create a huge obstacle for us.  In addition to the normal back and forth that occurs when you are selling, we had to disclose that the HOA is suing the builder for construction deficiencies and safety issues.  And oh by the way, you can’t get a loan for the property while it’s in litigation so you’ll need to pay cash. It felt like an impossible situation. We were mentally preparing ourselves for having to bail out, roll this whole thing back, move back in and wait out the lawsuits.

 

The lawsuit being pursued by our HOA made no sense.  I’m trying not to be too harsh on them but it was amatuer hour at the Waterfront Pearl.  It seemed the primary driver for the lawsuit was that the statute of limitations was running out (10 years) and they wanted to force a lawsuit that wasn’t very well thought out.  First, they worded the deficiencies like they were serious threat to life and limb. The problem with that is that the HOA just said, in an public document, that there were construction issues and safety problems with the building.  So of course, this damages the equity for all of the 199 property owners in this condo project. You can’t take that back.

 

Looking at the suit, it seemed like the most significant findings were windows that were delaminating and leaking in the underground parking.

 

Regarding the windows, I can only report that the windows in my unit were in good condition.  I spoke to several other owners in the building who also reported that their windows were fine.  I asked if they had done a complete inspection of all the windows and determined what percentage of them had failed and found that this type of inspection wasn’t performed.  What I was told is that one of the people that was a primary instigator of the suit had problems with their windows. Ugh.

 

Water leaking into the parking garage.  Sounds bad right? I personally witnessed this water leak in the 2nd level parking garage.  A small pool of water about ¼ inch deep and as big as a cookie sheet. There were are few other places similar to this.  But here’s the thing. These condos are built on the banks of the Willamette. The water is no more than 30 feet from the front window on my unit.  The parking garage, 2 floors underground is feet from a river. And there is a little bit of water leaking in. Did I mention the condo has a moat around it?  So, again, it’s a 10 story high building, 30 feet from a significant body of water large enough for container ship traffic and it’s surrounded by a moat. No shit there's a little itty bitty water puddle 40 feet below ground.

 

There were other things in the findings, but here’s the worst of it...  How much in damages was our pre-pubescent board of directors seeking? 3.2 million.  Seriously. All this bullshit and damage to the equity for 199 property owners … 3.2 million in damages.  When the lawsuit went up for a vote, they had trouble getting enough yes votes. Their campaigning to owners included dire warnings of a ‘special assessment’ where owners would need to pay for the work if they didn’t sue the builder.

 

So, here’s the math:  3.2 million / 199 owners = $16,000 per property.  While 16k is not a small amount of money, it’s not like it’s worth publicly proclaiming that the buildings are a health and safety risk.  It’s not worth spending who knows how much in legal fees to fight the builder. It’s not worth the damage to everyone’s equity. And frankly, 16K is the kind of money that homeowners sometimes have to pony up to take care of maintenance problems like a new roof, foundation work, siding, or sewer line break.

 

I think the nicest thing I can say about the board of directors and the HOA is that they are inexperienced, scared and dumb.  If I were going to give them the benefit of the doubt I’d also add that they are children and probably get easily confused and regularly eat their boogers.  If I wanted to dial that back a little and show some empathy towards them I add that they may at some point have been accidentally lobotomized by orangutans dressed in lab coats who promised them Little Debbie dessert cakes if they sat quietly during surgery.

 

Our realtor, Kris Kachirisky, was the difference between us being stuck in this unwinnable situation and being able to move forward.

 

When putting the condo on the market, we offered it at 799K.  This was priced by taking comps for recent sales, calculating a price per square foot and applying it to our unit.  Our unit came out to 805K so we priced it at a friendly 799k. We got positive feedback on this initially because, unlike the comparable units, ours was on the water and had an unobstructed view.

 

Then the lawsuit hit.

 

We initially had several interested parties but they all bailed as soon as this news came out.  Working with our realtor, we decided to do a few things. First, we offered the condo with a 16,000 credit to offset a potential future ‘special assessment’ based on the 3.2M in deficiencies.  We then dropped the price to 785k so it was at a comparative discount. It looked like we were able to find a bank that would be willing to lend on it but that fell through after they saw the deficiencies were filed as a ‘safety issue’ with the courts.  We had to find a cash buyer.

 

Our realtor was confident and determined.  She navigated us through this self inflicted dumpster fire.  She did many showings. I think she spent most weekends at our condo tirelessly showing it to potential buyers.  Carefully explaining the litigation issue. I think we must have had 300 people through the condo over the course of six months before she finally found a cash buyer.  We had to negotiate down to 760k and had a few risky contingencies but ultimately we were able to close escrow. So, as of a few days ago, the condo is sold.


Pro tip: If you need a realtor, contact Kris Kachirisky <kris@findyournestpdx.com>.  She’s relentless.