By Don DeBat

 Several Chicago and Illinois condominium owners who are fed up with being ripped off by management companies who charge excessive fees to access legal documents are fighting back with class-action lawsuits, legal experts say.

On November 20^th, CondoCerts.com Inc., a national web database that sells statutorily mandated certification documents to owners selling condos in Illinois, was hit with a $5-million punitive class-action lawsuit from sellers who claim it’s illegal for the website to charge “more than the reasonable cost of copying those documents.”

Condo owner Robert Ahrendt, the plaintiff in the class-action lawsuit, said he paid $370 for the documents he needed from CondoCerts. However, Ahrendt and other sellers say based on how easy and fast the documents were downloaded, CondoCerts is charging far more than the cost of providing them.

CondoCerts is marketed by Mutual of Omaha as an online document management service. It electronically stores the real estate documents related to condominium transactions and provides copies upon request, tasks typically handled by a property manager.

The class-action suit accuses CondoCerts of violating Illinois’ Condominium Property Act, fraud, unjust enrichment and deceptive business practices.

The suit seeks refunds of monies paid to the company as well as punitive damages and court costs for owners who paid a fee to the company for documents related to the sale of a condo in Illinois over the past five years.

Arendt is represented by Elizabeth M. Al-Dajani and Karnig S. Kerkonian of Kerkonian Dajani LLC, James X. Bormes and Catherine P. Sons of the Law Office of James X. Bormes PC, and Kasif Khowaja of The Khowaja Law Firm LLC.

Another three Illinois condominium owners filed a similar class-action lawsuit over allegations that they were charged unlawful and excessive fees for the documents needed to close on the sales of their condos by a property management company.

Condo owners John Murphy, Cecil Mathew and Nirupa Mathew, on behalf of themselves and all Illinois condo property owners, filed suit on October 5^th in the Cook County Circuit Court against Foster/Premier Inc., Homewise Service Corp. and Next Level Association Solutions Inc. for alleged violations of the Illinois Consumer Fraud Act and Illinois Condominium Property Act.

According to the complaint, the plaintiffs allege that they contacted the companies for copies of their condo disclosure documents in order to sell their properties.

To obtain the documents, the plaintiffs were allegedly charged hundreds of dollars, an amount that was greatly in excess of the “reasonable fee” covering the direct-out-of-pocket costs of providing such information and copying permitted by law. 

The condo owners are seeking an award for damages, pre-and-post-judgment interest, attorneys’ fees, expenses, costs of suit, punitive damages, and further relief as the court deems appropriate. They are represented by Charles R. Watkins of Guin, Stokes & Evans LLC in Chicago and David Fish, Kim Hilton and John Kunze of The Fish Law Firm, PC in Naperville, Illinois.

Often, sellers, buyers, brokers, attorneys, appraisers and lenders are referred to an on-line website portal to access the documents they need, which are provided in an electronic format by a third-party servicer or management company for a hefty fee.

However, legal experts say the sales of the documents often are then recycled multiple times in a single transaction and each party requesting them pays the fees.

A resale disclosure package, which includes documents and mandatory disclosures listed in Section 22.1 of the Illinois Condominium Property Act, could range in cost from as little as $200 to a whopping $1,250 or more for each party requesting the documents. Additional “rush” fees may add hundreds of dollars to the cost of obtaining the documents—even if they are stored on-line.

 “How is it legal for a for-profit management company to resell documents that belong to unit owners in a not-for-profit condo association?” asked condo owner Sara E. Benson, managing broker of Benson Stanley Realty, and president of Association Evaluation, LLC, a Chicago-based real estate data-analytics firm. “The money is not going to the condo association. It’s paid to the management company or third-party provider—entities that do not own the documents.”

Benson believes that providing documents should be included in the management contract’s scope of services. Also, governing documents and resale information should be posted on a password-protected website for all owners, so they can be shared with prospective buyers at no cost, she said.

Because failing to provide documents to the seller as required by the Illinois Condominium Property Act (ICPA) can kill the sale of a condo, Ahrendt, one of the class-action law suit plaintiffs, argues that sellers are stuck paying the unfairly high fees or risk the sale of their real estate.

Ahrendt said he was charged a total of $370 for access to the documents, including two unexplained $20 service fees. Within minutes of receiving confirmation that the transaction went through, Ahrendt said, he received an email saying the documents were ready for download.

The suit claims that obtaining copies of the documents filed with the Recorder of Deeds office typically costs about $2.50 and calls CondoCert’s fees “unreasonable” in light of the fact that they are digital and were immediately accessible.

“Plaintiff, and other similarly situated individuals, had no choice or option but to pay the unreasonable fees and costs charged by defendant to obtain and access the ICPA documents in order to comply with the statute and the terms of the real estate sales contract,” Ahrendt’s complaint stated.

According to the suit, the document-servicing company’s conduct caused Ahrendt and other similarly situated individuals to suffer harm by depriving them of a choice—charging an unlawful and unreasonable fee for the documents, forcing them to pay the unlawful and unreasonable fees in order to comply with the Illinois Condominium Property Act—in order to convey the condominium unit.

Necessary documents also include a statement of any liens or other unpaid assessments against the unit, insurance information, rules and regulations, outstanding association loans, and other information common to the sale of a condo, some of which should be publicly available.

Ahrendt said that after he received a written purchase offer for his condo in May of 2017, he was instructed to use CondoCerts to obtain the documents, and was forced to pay the $370 in fees or risk losing the sale.

“To be clear: a selling unit owner’s failure to turn over the Illinois Condominium Property Act (ICPA) documents to the potential buyer will terminate a real estate sale and the selling unit owner could be precluded from selling his own real property,” the complaint said. “This can cause litigation, monetary and nonmonetary damages for seller.”

Among the four counts in the complaint, Ahrendt and the sellers said CondoCerts violated the ICPA, as the statute caps the “reasonable fee” associated with copying and providing the documents to the direct out-of-pocket cost incurred by the provider.

Ahrendt alleged CondoCerts has basically no cost on its end to provide the documents, as evidenced by the speed with which the documents are provided, the suit claims the $370 is not “reasonable.”

Other counts in the suit include allegations CondoCerts violated the Illinois Consumer Fraud and Deceptive Business Practices Act and that it unjustly enriched itself.

The complaint asks the court to certify a class including anyone who paid CondoCerts for the Illinois Condominium Property Act documents dating back to November 20, 2012. The complaint also seeks more than $5 million in damages, interest and court costs for the case.

***

For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.

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“Novice buyers often fall in love with the decorative staging or the lakefront view of a for-sale unit,” said Sara E. Benson, a Chicago real estate broker and appraiser with more than 30 years of experience.

“However, you need more high-tech inside information than typically available on a Multiple Listing Service printout,” advised Benson, CEO of Association Evaluation LLC, a Chicago-based real estate data-analysis firm. (www.AssociationEvaluation.com)

Working as an exclusive buyer’s broker for decades, Benson always did the behind-the-scenes condo-investigation homework for clients. On every deal, Benson dug into the condo documents—budgets, board minutes, history on special assessments, status of reserve funds, and common-area conditions before she let a buyer blindly sign a sales contract.

Why? Because more than half of the 337,000 community associations in the U.S. are facing “serious financial problems,” reported the Community Associations Institute. And, 72 percent of association-governed communities were underfunded in 2013, according to Association Reserves, a California-based company that helps associations with budget and operational issues.

In 2012, Benson utilized her real estate appraisal background to develop a unique algorithm analyzing more than 140 data-points regarding the internal workings of community associations. Using the data, she commissioned a team of computer scientists and programmers to create a new, patent-pending scoring system—the “Private Association Rating”—or PARScore®, a revolutionary new high-tech, data-driven analytics process.

So, how does a condo shopper obtain the often hard to get financial information? The simplest way is just ask for it, and make the deal contingent on getting the information.

“You should insist that your Realtor or real estate attorney attach a special “Condominium Association Inspection Contingency Rider” to the contract to make completion of the deal contingent on receiving important documents and often hidden financial information.

The rider requests the following information: Declaration or Covenants, Conditions and Restrictions (CC&Rs), association rules and fine schedules, current and prior year’s operating budgets, most recent 12 months of board minutes and audits.

The rider also requests most recent reserve study and reserve study review, current reserve and operating account balances statement, lawsuit disclosure statement, owner-occupancy disclosure statement, life safety completion statement, and most recent 24 months of special assessment history disclosure.

The Contingency Rider also requires the seller to pay any expenses related to gathering the documents and providing them to the buyer.

The Contingency Rider also includes a new benefit—a Buyer’s Inspection Notice—which calls for visual examination of the property’s commonly owned elements, such as recreation facilities, swimming pool, fitness center, parking, elevators and common roof deck. The prospective buyer pays for the visual inspection as part of the PARScore® fee.

While surfing the web, a Chicago-area condo shopper found Association Evaluation through a Google search.

The buyer, who plans to move from north suburban Gurnee and hopes to buy a condo in southwest suburban Oak Lawn, downloaded the free “Buyer Kit,” the Condominium Association Contingency Rider, and the HOA Contingency Rider using the following links:

• Buyer Kit: https://associationevaluation.com/buyerkit/

• Condo Rider: https://associationevaluation.com/wp-content/uploads/2014/06/AE-Condo-Inspection-Rider.pdf

• HOA Rider: https://associationevaluation.com/wp-content/uploads/2014/06/AE-HOA-Inspection-Rider.pdf

The buyer also asked Association Evaluation to complete a PARScore® evaluation on the Oak Lawn condominium he plans to buy. He already has received the association’s declaration, bylaws and insurance certificate. “Financial information and other documents listed on the Association Evaluation website have been requested,” he said.

“Today, potential buyers of condos or homes in HOAs have access to digital tools that de-clutter murky data in favor of transparent information that actually empowers the consumer in advance of their purchase,” said Benson.

The Association Evaluation team already has captured more than 50,000 Chicago-area and Illinois condo associations and HOAs in their database, and has completed hundreds of PARScore® reports from Bethesda, MD to Palm Springs, CA.

Through the proprietary algorithm, PARScore® provides a standardized rating between 400 and 900. Every association is assigned a unique Permanent Identification Code (PIC). More than 140 data sets are analyzed and scored against the coded individual associations by using the patent-pending PARScore® point system.

Depending on the number of units in the condo building, the cost of a PARScore® typically ranges from $300 to $850.

Collected data includes direct investigations with association directors and property managers, as well as on-site inspections of the communities. Additional data sources include monitoring corporate filings such as lawsuits, judgments and bankruptcies.

Financial reporting includes verification of operating and reserve-account monies. Board minutes are examined for adherence to standard accepted business protocol procedures and to ensure against unexpected and costly special assessments that have been discussed by the association’s directors, but not yet levied at the time of sale.

A check for date of last reserve study and date of last financial audit also serves to greatly reduce risk. News, Internet and media sources are consistently monitored for each association.

For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.

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“Many condo management companies now charge prospective buyers and sellers excessive fees of hundreds or thousands of dollars for providing condo documents that should be free for the selling unit owners to provide through their broker,” noted Sara Benson, president of Association Evaluation, LLC.

Launched in 2012, the Chicago-based real estate data analysis and technology firm developed the Private Association Rating, or PARScore, which provides a standardized high-tech condominium association rating between 400 and 900 via a data-driven proprietary algorithm. Every PARScore report includes a site evaluation of the common areas by a certified association evaluation professional plus a review of the association documents.

Documents necessary for a real estate buyer to review before committing to a purchase include the declaration – or covenants, conditions and restrictions – bylaws, house rules, regulations, board meeting minutes, state mandated disclosures, prior and current year budgets, and the reserve study.

“Doc fees can range from $50 to $250 per document, so the price can really add up depending on the number of documents requested,” said Benson (right). “On average, fees run approximately $500 for electronic delivery for a complete set needed for a condominium sales transaction.”

Reviewing condo documents is critical, consumer advocates say, because buyers need to know well in advance if the association being bought into is on the brink of bankruptcy or fiscally fit and a sound investment.

“You wouldn’t want to get hit with that $50,000 special assessment six months after the closing, would you?” Benson asked.

Most governing instruments and state statutes were created long before online delivery was a possibility, consumer advocates note. They allow for a “reasonable cost” of copying association-related documents.

However, in the age of the Internet, association documents are often stored electronically and can be shared with a simple click of a mouse. There are no paper, ink, or shipping costs. There is no manpower time associated with copying documents and sending them to the buyer by USPS or FedEx.

“Despite this, many management companies – and some boards – are using the documents as a literal profit center,” Benson said. “These are new expenses conjured up by property managers, charging fees for materials that are owned by the sellers or documents that are a public record.”

“Realtors and condo buyers and sellers are beginning to wonder if this is a ‘reasonable cost’ when delivery is paperless.”

Benson recently formed a Broker Advisory Board that is dedicated to improving the lives of current and future residents in association-governed communities by fostering transparency, accountability, credibility, and best practice governance in community associations nationwide.

Several members of the advisory board strongly questioned the ethics of the relatively new practice of some management companies to market condominium documents to buyers and sellers, creating a lucrative income stream for the management firm while representing a not-for-profit condo association.

Housing advocates find it surprising and of great consumer concern that the media is not scrutinizing the practice of management companies charging upfront fees for providing the documents and disclosures, and then charging a second fee for the property transfer at the back end of the transaction.

This practice likely is a violation of the Fair Housing Act because the fees amount to hundreds, perhaps thousands, of dollars. This affects affordability and that can be discriminatory.

If these hefty condo and homeowner association fees are tacked onto the closing statement required by the Real Estate Settlement Procedures Act, shouldn’t management companies be subject to all of its provisions?

For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.

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A new national survey by the Coalition for Community Housing Policy in the Public Interest (CHPPI), has found that 81% of community association residents surveyed feel that “lack of transparency” and “poor communication” are major problems of HOA and condo life.

• Some 65.9% are “very dissatisfied” with and 15.1% are “dissatisfied” because of transparency and communication issues.

• A whopping 72.6% of the condo and HOA owners surveyed said they were generally “very dissatisfied” (51.2%) or “dissatisfied (21.4%) with the whole concept of community association living. And, 60.8% of survey respondents urged that community associations should have more government oversight and regulation.

Chicago currently has about 12,235 condo and homeowner associations containing approximately 305,000 residential units, according to a comprehensive directory—the “2016 Association Evaluation Report on Illinois Condominiums and Homeowner Associations.” Association Evaluation, LLC, is a Chicago-based real estate technology firm that rates the livability and stability of condo and homeowner associations. Visit: www.AssociationEvaluation.com.

“Our 2017 CHPPI survey, which rates the level of concern on more than 50 commonly reported topics and issues, found that a broad spectrum—from voting and election procedures to power of the board to fine owners—were viewed as major problems within condo associations and HOAs by respondents,” said Sara E. Benson, a CHPPI advisory member and president of Association Evaluation.

“Regarding transparency, a shocking 67.4% of community association residents say that prior to closing on their home they were not told that an HOA or condo association has a legal right to foreclose on the property if the owner becomes delinquent on assessments, fees, dues and fines,” noted Shu Bartholomew, a CHPPI advisory member and host and producer of “On The Commons,” a weekly radio show broadcast from Fairfax, VA. Visit: www.onthecommons.com.

“I am not aware of any state that requires associations to disclose to a buyer that an HOA or condo association has the power to foreclose on a homeowner to collect alleged money due,” Bartholomew said. “These amounts may be legitimate dues, but also fines, attorney’s fees or other junk fees. Housing consumers should be told before they complete the sale.”  

“Some 59.1% of survey respondents reported that they did not even know prior to closing that their condo or HOA board had the power to issue fines,” Bartholomew said.

The on-line, opt-in survey’s preliminary results were gathered from more than 500 owners residing in condominium and HOA communities in Illinois, Texas, California, Florida, Arizona, Nevada, Missouri and Kansas, and a host of other states coast-to-coast.

The survey will conclude on January 31, 2017. Visit: www.CHPPI.org, the organization’s home page, take the survey and see details of the initial 2015 CHPPI survey report.

According to the Community Associations Institute (CAI) there currently are more than 337,000 homeowners associations where more than 68 million people reside across the United States. CAI is a trade association and special interest group that primarily represents attorneys and property management companies servicing homeowner associations.

In a survey on community association success published by CAI in 2016 it was reported that only 12% of respondents are dissatisfied with their HOA. However, that suspiciously low percentage still translates into 8.2 million very unhappy residents.

One of the biggest attractions of shared-community ownership is the so-called “carefree living” aspect. There are no yards to maintain, grass to cut, snow to shovel, windows to wash, decks to stain or roofs to repair. All an owner has to do is sit back, pay his or her monthly assessment, and enjoy the recreational amenities.

And, condo ownership also can be a good lifestyle choice for singles—especially single women seeking security—retirees and smaller families not in need of larger spaces.

Another attraction of condo and HOA living is the hefty tax breaks—federal and state tax deductions for mortgage interest and property taxes that are handed to owners.

However, critics of community associations say owners really are “subject to double taxation” because they not only pay real estate taxes to local municipalities, but also are required to pay monthly assessments for common areas.

For example, owners in a private community association must pay for snow plowing and upkeep of private roads, maintenance of private streets and lighting, upkeep of storm-water retention basins, and other common-area amenities within the HOA or condo association’s jurisdiction.

A rare chance to rate your condo association or HOA

If you love your condo association or Homeowner Association or hate it, now’s your chance to rate it as part of a new 2017 National HOA Survey conducted by the Coalition for Community Housing Policy in the Public Interest (CHPPI). To take the survey, visit www.CHPPI.org, the organization’s home page. Your input will remain anonymous. Final results will be published in Inside Publications after the January 31, 2017 deadline.

For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.

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Every day I hear or read about outrageous events in Association Governed Housing Communities. And I see the same issues over and over again.

These are not “isolated incidents” as the HOA industry would have the public believe.

Two very common issues I encounter:

• disputes over who should pay for substantial repairs to exterior elements in condominiums and
• failure to disclose important information to homeowners and homebuyers.

A few months ago, I wrote about Mallard Lakes Condominium Association in Selbyville, Delaware, where several condos were damaged by Superstorm Sandy 4 years ago. A group of condo owners are currently locked in a battle with their Association over who will pay to elevate their condo units as required by FEMA and Sussex County, Delaware.

To refresh your memory, or if you’ve missed it, here’s the link to the Previous blog:

4 years after Sandy, it’s a no-win situation at Mallard Lakes

Over the past few months, there have been some new developments.

Another lawsuit at Mallard Lakes

John and Jennifer Mingora, condo owners who purchased their unit in 2013, have filed a lawsuit against the seller, their real estate agent, and Mallard Lakes Condo Association.

Mingoras allege that important (material) facts about their recently remodeled condo unit were not disclosed to them.

According to public court documents, here’s a summary:

Mallard Lakes has 477 townhouse condo units. 30 of those condo units are located in five buildings on a barrier island.

Superstorm Sandy slammed the island condos at Mallard Lakes on October 29, 2012, causing coastal flooding, and damage to the first floor of several units.

On April 24, 2013, Mallard Lakes Association opened a claim with FEMA. On May 14, 2013, Sussex County designated Mallard Lakes units as “substantially damaged.” To meet the definition of “substantially damaged,” the cost to repair must exceed 50% of current estimated value of the property.

Both FEMA and Sussex County Flood Control Ordinances require “substantially damaged” structures to be raised to prevent damage from a future flood. Until a “substantially damaged” structure is raised to the required elevation, no certificate of occupancy can be issued.

The formal complaint also states that Mallard Lakes Association failed to timely follow FEMA procedures when applying for funding, therefore, the Association received very little money to use toward extensive repairs.

The Association is required by law to raise 24 condo units to a higher elevation, but there’s not enough money to do the job.

After the owners of those 24 units were told they could return – despite the lack of a certificate of occupancy – they were then told they must contribute $60,000 each to cover the cost of  construction to elevate their condo buildings. (4 buildings with 6 units each)

One of those units was owned by Charlotte Hurley of NC. Hurley sold her unit to John and Jennifer Mingora on October 13, 2013.

(In a separate lawsuit, attorneys for Mallard Lakes owners argue that all 477 members of the Association must share in the cost of elevating affected units, see previous blog.)

The Realtor representing both buyer and seller, Cynthia Spieczny of Resort Quest Real Estate in West Fenwick (DE), has sold many properties in Mallard Lakes and owns a unit in the condo association.

However, Hurley, Spieczny, and Mallard Lakes all failed to disclose to the Mingoras that the condo they purchased did not have a valid certificate of occupancy. The buyers were also not told that, as new owners, they might have to pay a $60K special assessment to cover their share of the cost of elevating the building.

Non-disclosure of material facts involving a real estate sale is against state law.

In late September of this year, Mingoras filed the following legal complaint. In the exhibits, see if you can spot misrepresentations in the seller disclosure. The complaint lists seven counts against the defendants, including breach of contract, fraudulent misrepresentation, and civil conspiracy between Spieczny and Mallard Lakes Association.

Mingoras paid $114,900 for the Mallard Lakes property. They seek reimbursement of their purchase price and related costs.

Legal complaint – non-disclosure of material facts

https://cldup.com/cc8OwXJRzB.pdf

Association tries to silence condo owners

Melissa Golden and other condo owners are stuck with condos they cannot legally occupy. They want to set the record straight with their neighbors, because Mallard Lakes Association has misrepresented or omitted key facts in official correspondence with their members. This has led to resentment toward victims of Super Storm Sandy.

But when damaged condo owners tried to communicate with their neighbors, or call attention to the issue at board meetings, Mallard Lakes Association filed a court order to prevent condo owners from speaking out in public.

The gag order was a blatant attempt at stifling free speech, one that was thankfully denied by a Judge this summer.

Judge won’t put gag order on Sandy-damaged condo owners

James Fisher , The News Journal 12:12 p.m. EDT July 22, 2016

A bitter disagreement over Superstorm Sandy damage to a set of Selbyville-area condo buildings won’t be tamped down by a court-imposed gag order, a Court of Chancery judge has ruled.

Vice Chancellor Sam Glasscock III ruled against the condominium association at Mallard Lakes, which had asked the court to stop some unit owners from speaking publicly about a dispute – and lawsuit – over whether Sandy-damaged structures have to be elevated and who will pay if they must be.

Read more:

http://www.delawareonline.com/story/news/local/2016/07/22/judge-wont-put-gag-order-sandy-damaged-condo-owners/87379894/

**Reposted with permission from Independent American Communities blog http://independentamericancommunities.com/

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Alan P. Gold reportedly had signature authority on Edgewater Condo Association accounts, but allegedly misused that authority to overpay himself for management services and other services not rendered.

According to reports, thefts occurred between 2010-2014. AP Gold Realty and Management’s license was revoked in 2014.

According to the criminal complaint, AP Gold may have managed up to 600 units located in 50 different client associations.

Condo association fees were deposited into nine different bank accounts, of which seven were under the sole control of Alan P. Gold, as sole proprietors of his management business. Also according to the criminal complaint, up to nine victim condo associations (VCAs) allowed Gold access to both their operating and reserve accounts for their respective associations. VCA board members report not receiving copies of actual bank statements for years.

Gold was in the habit of providing after-the-fact “owner statements of account” to condo board members by U.S. Mail. For example, in one association, the complaint notes that 22 “owner statements” reported inflated bank account balances and omitted multiple withdrawals that were made from both the association’s operating and reserve accounts.

The discrepancies were discovered in 2014 by the Treasurer of one VCA, who compared the actual bank statements with owner statements that had been mailed to him by Gold.

Charges in this case include mail fraud. If convicted, Gold could serve up to 20 years in prison.

This case is another reminder that owners should never defer unsupervised control of finances and bank accounts to an association manager or any one individual. Furthermore, at least two board members must obtain signature authority over all association bank accounts, and all board members should be receiving original bank statements for monthly review.

Property Manager Charged with Fraudulently Pocketing Fees from Chicago Condominium Association

**Reposted with permission from Independent American Communities blog http://independentamericancommunities.com/

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This week, we discuss how condo and homeowner associations are addressing the rampant bedbug problem infecting the nation.

Bedbug Compliance Mandated

The city of Chicago passed an ordinance in 2013 to help quell the growing problem of bedbugs in multifamily housing. With input from the Chicago Department of Public Health, the ordinance requires governing associations of condominium and cooperative buildings to prepare a pest management plan for the detection, inspection, and treatment of bedbugs. The ordinance also requires landlords to provide a brochure on bedbugs to tenants when they are signing a new lease or renewing an existing lease.

New York City now requires owners and managers of properties where bedbug infestations have been identified to inspect and treat units on either side of, above, and below and bedbug-infested unit. They must also use a licensed pest control professional to treat the infestation and employ a variety of treatment strategies rather than depending on chemical pesticides alone.1

If bedbugs persist or occur in multiple apartments in the same building, the department of health will require owners to take additional pest removal steps, including notifying residents that bedbugs have been identified in the building, and also to develop and distribute a building-wide pest-management plan to all residents.

Penalties for noncompliance can quickly add up. Violations will require an owner or manager to appear at a hearing before the city’s Environmental Control Board, where fines may be issued and noncompliant owners may actually end up with liens on their buildings. This is serious stuff – and a process to be avoided at all costs. The US Department of Housing and Urban Development (HUD) ha also published bedbug guidelines for owners and occupants. The guidelines may be found on the HUD website.

Bedbug Treatment

Treating bedbugs is difficult, but not impossible, and depends on the extent of the infestation – whether it’s in one unit or dozens. Treatment options include the application of extreme temperatures, such as freezing or high heat, high-powered vacuuming, steam, and pesticides, or a combination. Many bedbug strains have grown resistant to the pesticides available to treat them. Prices may range from a few hundred dollars to several thousands of dollars for larger infestations.

Contrary to popular belief, bedbugs are not an indicator of poor sanitation. However, excessive clutter provides them with more places to hide and makes them more difficult to treat.

“In an apartment building, the landlord has the authority enforce bedbug services or inspections,” said Sara Kantarovich, technical director and entomologist for Smithereen Pest Management Services in Niles, Illinois. “In a condo building, there’s no one authority who can enforce those kinds of procedures.” Many condo boards and managers won’t even discuss the subject, she said, “They want to keep things quiet. They fear that if word gets out, the value of their property will decrease.”

Association boards must never look the other way when it comes to bedbugs. They must be immediately proactive. The most successful associations will have a strong board that is willing to mandate inspections and remediation. Bedbug control is yet another expense community associations may need to add to their budgets.

1 _{Tom Soter, “What Do You Do When You THINK Your Co-op Has Bed Bugs?” Habitat Magazine, September 29, 2011.}

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This week, we delve into the dirty bedbug problem plaguing the entire nation.

Don’t Let the Bedbugs Bite!

According to a recent report issued by the US Department of Housing and Urban Development, bedbug infestations have become a serious problem in housing throughout the country. In recent years bedbug infestations have increased dramatically in all 50 states, reports the National Pest Management Association, which tracks the little critters. In 2000, bedbugs were a growing problem for only 25 percent of pest-control professionals. By 2010, a new survey found the pest experts were treating the bedbug epidemic 95 percent of the time.

Bedbugs thrive on human blood. They hide until they hunt for nourishment, which they typically do under cover of darkness. Amazingly, these pesky night biters can go for a year without food. You may not even know you have them until you wake up with small red welts on your skin – often three in a row. They will bite anywhere, but prefer soft spots on the body such as the inner arm, stomach, neck, breasts, or behind the knees.

Pest-management experts say bedbugs are on the rise because people are traveling more often to exotic locations and some are bringing them home. Bedbugs are especially attracted to environments inhabited by large numbers – their primary food source.

The environments they seek not only include condominiums and cooperatives- both luxury and modest – but apartments, hotels, hospitals, and assisted-living centers. They are equally fond of fitness center gym lockers and department store dressing rooms.

Scratching at the Problem

Take the case of the condo renter who woke up one morning with what looked like a few bug bites. She contacted a doctor friend and he said they looked like bedbug bites. The concerned renter spoke with her landlord, and an exterminator and he instructed her to look for signs of bedbugs (markings on sheets and shell casings), none of which were present. The exterminator said without such evidence, it’s difficult to tell if bedbugs are present and it might take at least a month to find such things.

“He gave me the number of a dog scene service,” the renter said, “Dogs can trained to locate live bedbugs when they are not visually present.” The renter asked the dog service to come out to check the apartment. “The owner of the dog service said the animal sensed bedbug activity in one corner of my box spring, but nowhere else in the unit. He could not, however, find any physical evidence, but he did believe- consistent with the bites I had received and the dog’s indicators – that there were bedbugs in the unit. He believed the infestation was very early and said it could be just one or two bugs.”

Not wanting to wait or let the problem worsen, the renter asked an exterminator to come and spray the entire apartment, and a second treatment was also scheduled. “I have also taken the additional precautions of washing and drying all of my linens and clothes in the entire apartment. The good news is that since they sprayed, I’ve had no new bites,” she said.

Bedbugs travel easily from unit to unit through electrical outlets, under baseboards, and across hallways. They hitchhike on luggage, clothing – and even pets. They do not distinguish socioeconomic classes.

The good news is that they won’t kill you and they don’t transmit disease. The bad news is that they do cause health problems, such as varying degrees of skin irritation due to itching, and can cause allergic reactions in some people, which may lead to secondary infections. They may also cause stress, anxiety, and insomnia.

As an owner of condominium or a cooperative, it is your duty to immediately inform your board of directors if you have the slightest suspicion that bedbugs are present. Just one week is a virtual eternity of breeding in the bedbug world. The board must quickly conduct its own investigation. Ultimately, it has the legal responsibility and duty to deal with the issue.

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This week, we continue our exploration with disturbing stories out of Michigan and New York.

Human Garbage Dump in Michigan

When inspectors checked a unit at the Wingate Condominium Association, just south of Ann Arbor, Michigan, they found rotting meat in plastic bags, decaying animals, animal feces, money strewn throughout the debris, around 30 bicycles, “unknown soft items” in various states of decay, and mold and raw chicken stuffed in the mailbox. Mice and rats were living in the heating vents and ducts of the low-rise property. Because their skin felt like it was being bitten by tiny insects, building officials wore disposable, protective outerwear and respirators while inspecting the home.

“It’s absolutely the worst scene you can imagine, in terms of just the nightmare of decaying food and rodents,” said township attorney Doug Winters. “It’s almost like a human garbage dump.” The condominium association and its property management company had to be ordered by a court to have the abandoned property completely cleaned and cleared.

New York Cleanup  

In one chic Upper East Side co-op, a reclusive owner had lived in the building for 20 years and had never permitted anyone into her apartment. It wasn’t a problem until a water leak began infiltrating the unit below.

“The entire apartment, floor to ceiling – and they were 10.5-foot-high ceilings – was filled with garbage bags,” recalls the board president. The debris was so thick that initially, the plumber could not find the source of the leak.

When the shareholder refused to work out arrangements with the board, they sued for eviction, arguing that the shareholder was in violation of her proprietary lease by failing to keep her unit in a habitable condition. She was given an ultimatum: either clean up or leave.

Suing for eviction was beneficial. The shareholder hired an attorney, whom the board insisted come out and personally inspect the apartment. That did the trick, said the president. The shareholder signed an agreement stipulating that she would remedy the problem within a certain time period, and if deadlines were missed, she would pay a fine. The agreement also gave the board the right to inspect her apartment on a periodic basis.

Is Hoarding Entertaining?

Apparently, Americans find hoarders fascinating. Recent series of reality television shows and documentaries have included TLC’s Hoarding: Buried Alive and A&E’s popular Hoarders. But when a hoarder lives next door or across the hall, it isn’t entertaining in the least. In fact, it’s a healthy and fire hazard.

Whether treasure or trash, compulsive hoarding is characterized by the excessive acquisition of stuff- mostly useless- and the inability to discard it. Hoarding has been associated with health risks, impaired functioning, and poor sanitation, and it negatively impacts personal and familial relationships.

Many hoarders have piles of debris to the ceiling with tiny pathways cutting through the clutter. Others have to climb over mountains of trash in order to move around. Hoarding becomes problematic when it crosses the line into health, safety, sanitation, and welfare issues.

Amid the piles of debris are often found rotting food, maggots, rats, roaches, vermin of every type, and animal feces. Hoarders can be difficult to spot, and an association may not know a problem exists until an emergency erupts.

“Hoarders tend to be antisocial and often won’t let anyone into their units,” said Tom Skweres, president of Wolin-Levin, a Chicago-based property management firm. Symptoms of hoarding may include foul odors, insects or vermin coming from a unit, and window blinds that are always closed.

Miami property manager Gloria Donnelli, owner of Elite Management Associates, said that she has had to call the fire marshal to explain the situation to owners. Her management company posts signs that there will be a fire department inspection on a certain day and time. Upon the department’s inspection, she then has the firemen explain the life safety issues involved with hoarding. They also explain the danger involved and how the situation puts other unit owners at risk.

“In Chicago we deal with this on a frequent basis,” said the late Mark Pearlstein, a condominium attorney. “The first step is to contact the family, but in most cases family members want nothing to do with the individual. The second step is to contact the neighborhood community police officer, who, if they respond, will notify the Board of Health and may refer the individual to a care facility on a temporary or permanent basis.”

Pearlstein stated: “More often, with a younger person, we advise the owner with a cease and desist notice that they have 48 hours to clean the  unit or we send in ServiceMaster to clean the premises and restore it to a sanitary condition. If the owner resists access, we seek an emergency injunction. Management or staff will often find insect infestation, thus justifying the emergency.”

In dealing with a hoarder, David Hill, an Atlanta, Georgia, community association manager, found that “in the end, the association had to obtain a court order. By the time we were able to enter the unit, the hoarder managed to accidentally burn the building down.”

Living inside a community-governed association requires neighborly involvement. Be sure to look for warning signs of hoarding and be vigilant about any insect or vermin infestations in your building.

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. This week, we begin an examination of HOA Horrors stories about roaches, bedbugs, and rats across the nation.

A “Biblical” Explosion of Roaches

Cleanliness may be next to godliness, but when your community is invaded by roaches, bedbugs, rats, maggots, and other vermin, it’s time for quick action.

New York City’s famed Ansonia has had an illustrious and remarkable past. The 18-story Beaux-Arts style structure was originally built as a hotel around 1900. Ninety-two years later, it was converted to a 430-unit condominium building.

Over the years, the Ansonia has been home to Babe Ruth, Igor Stravinsky, and Angelina Jolie and has been featured in several movies. During the 1960s and 1970s, it house an infamous gay bathhouse in its basement. Later, the club became, Plato’s Retreat, a renowned heterosexual swing club.

One couple at the Ansonia, Alan Arkin (not the famous actor) and his wife, Suzanne Bagert, said they were hardly able to sleep at night and stopped using their kitchen for fear of crawling critters. They started seeing roaches scurry about in 2006 and had an exterminator spray their unit, but it helped only temporarily. They started sleeping with the lights on.

Ms. Bagert, who worked from home, imagined roaches crawling on her neck. “My brushes my neck and I scream,” she said in an interview with the New York Times. Her husband found a roach in his sock.

After what Mr. Arkin called “a biblical-type explosion of roaches,” the couple filed a lawsuit in New York State Supreme Court against the Ansonia’s management. “This infestation,” Mr. Arkin wrote in his court papers, “has rendered their apartment completely unfit to live in.” According to the filing, the situation was so bad that the roaches were on the floor, the walls, the ceiling, the curtains, and even the couple’s bed.

The suit further alleged that his and his wife’s complaints were met by “doublespeak and half-truths.” Management reportedly responded by sending a maintenance worker to knock cockroaches off of the hallways walls, vacuum them up, and then wash the walls with soap and water, a treatment Mr. Arkin called “grossly and negligently” insufficient.

Mr. Arkin further states that management said the infestation was caused by an elderly tenant on the same floor who would not allow exterminators into her apartment.

Even if you’re the most spic and span housekeeper in the world, if you’re sharing walls, ceilings, or floors with a hoarder, or someone who simply keeps wet cat food out all day, getting rid of roaches – and even ants- can be next to impossible. It’s the actual physical nature of community living that is the most challenging.

If infestation exists, communities would be well served to have a regular maintenance schedule for extermination with mandatory cooperation from all unit owners. If the root source of the problem is overlooked, all the spray in the world will be only temporarily effective.

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