tag:blogger.com,1999:blog-5060417.post1350622564616948316..comments2023-11-05T06:18:25.377-06:00Comments on The Privatopia Papers: Fred Fischer on the "Do owners believe CC&Rs are contracts?" debateEvan McKenziehttp://www.blogger.com/profile/04479661304143631524noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-5060417.post-76404790091605664282012-01-06T08:10:12.422-06:002012-01-06T08:10:12.422-06:00It seems appropriate to bring up something that Mr...It seems appropriate to bring up something that <a href="http://privatopia.blogspot.com/2009/12/why-wont-they-serve.html" rel="nofollow">Mr. Berding wrote two years ago</a> regarding community associations (aka HOAs):<br /><br />"<i>It seems that I am increasingly a prophet of doom. But really, if owners are unwilling to govern themselves then condominiums are merely apartments, and if they are unwilling to make the contributions that must be made for a community association to survive, then they must be willing to </i><b>surrender their ownership interests and be renters</b><i>. This is a housing crisis as serious as the present economic one, and it may be worse, because the crisis in community association government is not likely to end in a year or two.</i>"<br /><br />On the <a href="http://onthecommons.net/2010/10/02/on-the-commons-with-tyler-berding.aspx" rel="nofollow">October 02, 2010 episode of "On The Commons"</a>, Mr. Berding talked about a "hybrid" model:<br /><br />[41:55] <i>Maybe we need to have a whole different concept… Instead of the developer building this building and selling the units off to individuals, who the end up owning the entire building and have to maintain it… Maybe what we ought to do is have a hybrid between an apartment building and an ownership of the individual units. The individuals own the airspace in their unit, and they pay an assessment. But the developer, an investor, retains ownership of the building shell, and treats it like a residential rental property. The association, which would deal with just behavioral issues and recreational issues and things like that, doesn't deal with the repair of the building and all of those expensive things. The owner of the building does that, and he gets paid a certain amount of money by each owner, call it rent if you want. So you can get the appreciation from being the owner of the unit, but somebody else is going to be responsible for the shell. And that kind of hybrid may very well be where we're going to have to go in the future. We've kind of done it a little bit with time-shares… When you have one owner, an investor, owning the shell of the building, and let the individual owners own their individual units, buying and selling them same as they could, you'd shift the responsibility to somebody who has a long-term interest in protecting the condition of the building.</i> [43:55]<br /><br />An alternative to Mr. Berding's proposals would be to convert condominiums to <a href="http://en.wikipedia.org/wiki/Housing_cooperative" rel="nofollow">co-op</a>s, where the owners are shareholders of a single mortgage. Although I admit that I'm not familiar with the pros and cons of co-ops, but it can't be worse than the current situation.<br /><br />The fourth alternative is the industry's answer to everything: more power for the association balanced with fewer rights for the individual homeowner -- up to and including the power to foreclosure for trivial amounts and reasons. This doesn't address the problem that associations are a fundamentally flawed, unsustainable, and unworkable business model; but does put money in the pockets of the vendors and attorneys.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5060417.post-59871792513365474362012-01-05T16:25:13.998-06:002012-01-05T16:25:13.998-06:00Fred Fischer, a brilliant, informative, educated a...Fred Fischer, a brilliant, informative, educated and realistic perspective. Thank you very much for writing, submitting and allowing Dr. McKenzie to post.<br />Anonymous above, what a great comment!<br />I am thrilled to pass the link to the site and this intelligent, well thought, logical, transparent, truthful, realistic perspectives offered by THE REAL EXPERTS IN THIS COUNTRY.<br />Thank you all.Cynthianoreply@blogger.comtag:blogger.com,1999:blog-5060417.post-85920150101035293112012-01-05T07:04:02.073-06:002012-01-05T07:04:02.073-06:00As Professor McKenzie said last year's Urban I...As Professor McKenzie said <a href="http://www.ustream.tv/recorded/15712398" rel="nofollow">last year's Urban Institute video</a> : "The condominium…it's kind of almost a fictional real estate interest. These things can only exist by statute…Condominiums can only exist where statutes authorize them to exist. So we've had them since about 1960." <br /><br />And as <a href="http://onthecommons.net/2007/04/30/on-the-commons-with-steve-siegel.aspx" rel="nofollow">Steven Siegal</a> wrote back in 2007: "Before 1960, the condominium form of ownership was unknown in the United States. Beginning in the early 1960s, the states began enacting statues authorizing the condominium form of ownership, principally in response to the enactment of the National Housing Act of 1961, which extended Federal Housing Administration mortgage insurance to the condominium form of ownership. See McKenzie, supra note 2, at 95. By 1967, all fifty states had enacted condominium statutes. Id. at 95–96." ("The Public Role in Establishing Private Residential Communities." <i>Urban Lawyer</i>. Fall 2006. Footnote 23 on page 869.) <br /><br /><a href="http://privatopia.blogspot.com/2012/01/do-owners-believe-cc-are-contracts-part.html" rel="nofollow">A few days ago, Tyler Berding wrote</a> in a blog post that should be mandatory reading for our policy makers that<br /><br /><i>the real problem which is that community associations are created mostly for the benefit of municipalities and developers, with very little insistence by government on a financial model that can remotely meet the expectations of the eventual homeowners. Community associations are dying financially. Their business model is fundamentally flawed and many will eventually become obsolete and fail.</i><br /><br /><i>cf.</i> Tyler Berding's death spiral. Although Mr. Berding writes primarily about condominium associations, many of his arguments are applicable to "community associations" consisting of single-family housing.<br /><br /> Since there is no common-law basis for condominiums, and condominium ownership can only exist by statute, maybe it's time to think about prohibiting condominium ownership -- or at least any new construction of and FHA subsidies for condos. It is a failed legal fiction that has caused a lot of harm to both the individuals involved and the economy as a whole.Anonymousnoreply@blogger.com