I need to raise Common Charges Again - When do I tell People?

[Anonymous]

One last thing to check is flood insurance through NCIP, underwritten by Lloyds of London. I have it on my house and it was half the cost of NFIP insurance and was acceptable to my lender. I probably would not have bought the house if I had to pay NFIP rates.

However, the policies are written by real actuaries and not government flunkies, so if you are genuinely high risk it may not save you money.

[Anonymous]

Dude, sell. The guy in NY too. SELL.

You have so much inside information and you're trying to stare down a freight train.

These buildings need to sell for pennies on the dollar, be demolished, and rebuilt/fortified with the latest best practices - i.e., high rise, no units near the sand, mechanicals off the ground, etc.

[Anonymous]

Anonymous wrote:This makes no sense. What state is this condo building located? Most states require an independent reserve study every five years or so. And how do you have no reserves to fund annual insurance without a projected increase percentage?

Oh yes it does.

Trump's policies have caused this and it will only get worse.

Many many communities near the beach will be hit with these increases.

[Anonymous]

Anonymous wrote:I would quit and sell.

Agreed.

Would any lender issue a mortgage for someone to buy a condo in community that's in such bad financial shape?

[Anonymous]

also 2/3rds of buildings are uppers who have zero flood risk. Not even in Sandy. My unit my ground floor is almost five feet up. So the 2/3rds of uppers have head in sand and lower unit owners would need in our 30 unit building at least 16 owners to vote to buy them out. Good luck with that.

But... so what if some individual units have "zero flood risk"? It's a condominium. Parts of the property are owned individually and parts are owned communally. And the increase in insurance is for the condominium as a whole and must be absorbed communally.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I would quit and sell.

Agreed.

Would any lender issue a mortgage for someone to buy a condo in community that's in such bad financial shape?

On paper we are in good financial shape. We closed a condo recently no problem, we have no units in arrears and $120,000 in bank as of 12-31-2024. Which is audited financials. That’s what banks get. Even if bank asked for month end balance 9-30-2025 looks good. Trouble is I got a $120,000 insurance bill due in October. Which brings it to zero.

Which is why we need to hike common charges to build up funds to pay 2026 insurance bill.

The insurance will be costing us $300
month per unit and rising.

We are not required to have reserve study or reserve account in NY and that is not an issue. These are garden apt style condos with no garages, no common areas. Owners liable own HVAC, water heaters, windows, doors, patios. Roof is only major repair we are liable for and we know their costs and lifespan.

But going forward high common charges with limited services will turn off new buyers. In past we had very low common charges and no one minded less services.

[Anonymous]

I would move if I was you.

You’re going to keep paying more and more for the status quo.

[Anonymous]

It is rare for DCUM to have even rough consensus on anything. In this rare case, there is rough consensus (not unanimity) that OP should sell quickly and move away. The question is whether OP will take that advice.

[Anonymous]

Anonymous wrote:Shop for different insurance companies (really just to demonstrate due diligence, you aren't going to find a deal). Then hold a special meeting and provide options - big special assessment and smaller monthly assessment increase, or bigger monthly assessment.

You can’t hide from math or flood insurance increases.

The condo insurance market is very difficult right now. Not many companies want to write insurance so increases are running 20-40%. D&O policy options are even more limited.

Paying the premium from reserves is a terrible precedent. Operating expenses should never be paid from reserves.

You are going to have to explain to all owners the financial picture and start getting your finances and reserves in much better shape. A special assessment is going to be needed because you have no funds for any necessary replacements.

If they don’t do this, the building will go into serious disrespair and no one will be able to sell your unit.

[Anonymous]

Beach condos are money pits.

Breaking news at 11!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Shop for different insurance companies (really just to demonstrate due diligence, you aren't going to find a deal). Then hold a special meeting and provide options - big special assessment and smaller monthly assessment increase, or bigger monthly assessment.

You can’t hide from math or flood insurance increases.

The condo insurance market is very difficult right now. Not many companies want to write insurance so increases are running 20-40%. D&O policy options are even more limited.

Paying the premium from reserves is a terrible precedent. Operating expenses should never be paid from reserves.

You are going to have to explain to all owners the financial picture and start getting your finances and reserves in much better shape. A special assessment is going to be needed because you have no funds for any necessary replacements.

If they don’t do this, the building will go into serious disrespair and no one will be able to sell your unit.

I am not paying insurance from Reserves as remember this is NY. There are no reserve accounts required. We have checking/operating account for bills and a money market/FDIC insured for savings. Per bylaws I pay bills allowed. I transfer for larger bills out of savings and in months we have surplus we transfer funds to savings. Managing agent keeps track not me as I dont touch money ever or have access to money.

[Anonymous]

This is going to be a disaster, OP. People are going to stop paying. When enough stop paying, it will become impossible for buyers to get financing, sending the property into a death spiral. You need to sell immediately.

[Anonymous]

Anonymous wrote:This is going to be a disaster, OP. People are going to stop paying. When enough stop paying, it will become impossible for buyers to get financing, sending the property into a death spiral. You need to sell immediately.

Back in late 2007 before I owned the building was in terrible shape with zero reserves and need five new roofs and had some people in arrears (two on board). The shady condo board at time decided to take take a ten year loan from NCB bank instead of raising common charges or do an assessment.

They got that loan in before all loans died in 2008 in financial crisis. However, they did a $150 a month surchage for a decade per unit to pay off loan which made them unpopular.

Well here comes Sandy. Building got hit hard, all ten lower levels flood with several feet of water, all 30 units electrical boxes flooded, all 30 units HVAC and Water heaters distroyed. Rather than deal with it the whole board quit. Leaving building heavily damaged with zero board members.

Two women not on board did their best to get building open again. Lots of fights. I then bought after building opened. Appointed treasurer and find out a 1/3 of building stopped paying common charges and we were way underpaid in flood insurance. I hired a tough lawyer and we filed liens and lawsuits and foreclosures against all ten units not paying. One by one they settled up, did short sale or bank expidited foreclosure process. Banks dont like a condo beating them to the courthouse steps. So they sped up process.

Flash forward 100 percent of people are current in common charges. While our financials was a mess from 2013 to around 2017 we had nearly all cash buyers. Since then most loans are via local banks requiring 25 percent down. The people pre-Sandy 2012 not mostly have no mortgage or small mortgages.

So everyone has a ton of equity. This is not like Sandy where we had bubble buyers of Spring 2003 to Spring 2008 who did 5-10 percent down who after Sandy were underwater.

But I had the whole 2/3rds of building cheering for me when I went after the 1/3 dead beats. This time I would be going after good hard working folks though no fault of my own.

We found two more insurance agencies to bid this years insurance renwal. We also decided to pay $500 to an independent company to negotite on our behalf to get best rates. All the policies renew by Nov 1st. I am trying to get it as low as possible.

People are irrational. They want to live near the beach. But since Surfside and FEMA raising flood insruance on grandfathered policies the low common charges in a flood zone has become a thing of a past.

My prediction to future buyers. I the next Sandy building departments and FEMA will not allow basement units like we have to be rebuilt. I heard the building dept was 50/50 granting the CO to rebuild in Sandy. That would leave lower level. owners with expensive storage units. Meaning there would not have a CO to live in. They would just be unfinshed space. Good luck selling that. Sure might be nice to park cars, store your surfboards, store your beach chairs, have a BQ, maybe outdoor shower. But with no CO it means no kitchen or bathroom. Just a unfinished basement. And people paid $400k to $450K those units the last 1-4 years. I dont have an answer for that. In sandy I did approach NY Rising and FEMA about buy outs but they dont buy out part of a building and the program was geared towards buying out SFHs and raising buildings. Not buying specific condo units. So no dice.

[Anonymous]

You seem very bright, so dedicated, having gained extensive knowledge about this condo, the history, the finances, the laws, that I almost feel bad about the insulting things I'm going to say.

You seem so deep in this that you're in denial about reality. A unit may have sold recently, but very soon that's going to become an issue. You can't hold back the ocean and insurers know this. Insurance costs will never go down. As a taxpayer, I hope no government bailout of properties like this occurs.

Sell your unit now while you can. Get out and don't look back. Or buy some deck chairs and practice rearranging them.

[Anonymous]

Look at all the construction in Miami in the past 10 years. The first 6 levels above the ground are parking garages then the lobbies/communal amenities, then the apartments for the next 20-40 floors above that.

My buddy's building has their POOLS on the 10th floor in Brickell. There's nothing at the ground levels escape landscaping and the entrance to the parking garages.

All these low slung buildings in Florida, New York, etc need to be torn down. You'll never be able to get financing and eventually insurance will be too expensive.