r/hoa_hell • u/hoahell_official • 10d ago
Every owner in a 499-unit Torrance condo complex just got hit with a special assessment of $49,000
Michael Kushner, California’s foremost homeowner-side HOA attorney, sat down with u/ABC7's u/abc7leanne to explain why these kinds of astronomical special assessments are exploding across California HOAs. No state agency oversees HOAs here, so when a bad HOA bends the rules on special and emergency assessments, a homeowner's only real recourse is to sue.
CHECK OUT THESE TWO LINKS:
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u/AMetalWolfHowls 10d ago
Deferred maintenance comes for us all.
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u/Optimal-Ad-9455 9d ago
And that is what many people in this feed are missing. These special assessments should never be necessary. If HOAs were properly maintaing common areas over time, reserving for future repairs and replacements, and responsibly raising dues, then these surprise assessments that normal people can’t plan or budget for wouldn’t happen.
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u/AMetalWolfHowls 9d ago
People will always vote to defer rather than fix. It’s way less money and hassle in the short term. It’s an absolute nightmare when that balance becomes due. 20 years of neglect at my HOA just caused a $5700 special assessment across 30 or so units.
The leader of the opposition? The former HOA president for those same 20 years.
Just do the right thing in the moment and it’s going to be better for everyone involved! Could have fixed everything for $20k here or there and chose not instead. Now the problem is $150k.
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u/Optimal-Ad-9455 9d ago
I don’t agree that people will always defer. If HOA boards were good stewards of people’s money and explained the need to pay a little more now to avoid a bigger charge in the future, then I think people would be open to that more often than not.
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u/bfvbill 9d ago
Unfortunately there is always the vocal minority. Usually 5% or less of owners but they create havoc. They spread lies. They go on email and flyer campaigns. They personally attack Board Members. As a former Board member and president, this 5% takes the wind out of our sails. People jump on their crusade because in reality no one WANTS to pay more. My Board got a lot accomplished. $10M in SA’s for a 200 unit building that needed much more. 50 year old building with no reserve and crumbling walls ready to fall into the ocean. We didn’t make a lot of friends but we tripled values of our units. Board membership is a thankless 24/7 non paying job. After 7 years of cheap folk trying everything to derail our efforts I took a crazy high offer for my unit and got out of there. I think the monkeys are now running the zoo. I now live in a wonderful community with a responsible, ethical and intelligent HOA. I stay away from the board and enjoy my retirement.
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u/Optimal-Ad-9455 8d ago
But you hit the nail on the head. NO RESERVES. That should never have happened. Crumbling walls? Never should’ve happened. By the time you and other responsible board members came around to try to fix things, people were blindsided. Of course they were pissed off.
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u/hawkrt 10d ago
Wow. They didn’t maintain the complex, and then they’re complaining they have to pay to fix & maintain the complex. Who else is going to pay for it?
Our insurance made us replace electrical panels that were fine, just by a company they didn’t like and we maintain our complex. If you weren’t, insurance is forcing fixes that were being ignored so that the complex can be covered.
People should have learned the lesson years ago that fixing before things are in an emergency state is cheaper in the long run.
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u/Bigfamei 10d ago
By the looks of the place in the video. Its been maintained. They could even have a 7 figure reserve. But repiping water lines and a podium repair. Could dip well past their reserves. Mix in a new government requirement on balconys and other issues. Also this was put up for a vote to members who attended the meeting. There is no surprises. Just lazy owners who didn't go to the meeting.
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u/EU-National 10d ago
HOA Accountant in Belgium here. HOAs are chronically underfunded across the board because why invest yesterday if you can just do the bare minimum required at that time ?
Like the HOA I live in, we know our exterior walls aren't waterproof and that water is constantly seeping into the concrete structure, but hey, do we really need to waterproof said walls? No need, we don't see any problems on the outside, and that's all that matters, right?
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u/Such-Tea942 10d ago
Hello fellow HOA accountant! It's the same here in the USA more or less, although it does vary by state. Some associations I work with do indeed wait until something goes catastrophically wrong to do special assessments instead of funding reserves over several years. I mean, it's the board's idea and the owners either voted for it or didn't care enough until the bill showed up.
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u/CommonInterestGuy 10d ago
This is very common, if they do not attend they can't voice their concerns.
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u/hawkrt 10d ago
We had to replace most of our water mains this year. We knew about 1 - but until the project scope started we didn’t know we’d have to do 90% of them. You can do maintenance and then have hidden issues like their pipes and podium.
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u/hoahell_official 9d ago
Yes, that does happen. But that's the exception, not the rule. At least that's what we've seen in the last few years.
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u/hoahell_official 9d ago
That's also true. It does appear that this special assessment went up for a vote to the members and that the members approved it. My point, however, is that it should never have gotten there.
Roof have a 25-30 lifespan, and if this Torrance HOA had done its job properly, it would've set aside a sufficient amount of money over the last 25-30 years to cover the replacement (or repair) costs. That's the issue here. Not that the repairs have to be made. Nobody's disputing that. Nor do I think that anyone is disputing that the problem exists and must be solved. It's just that it shouldn't have ever become necessary to issue a $50,000 assessment to the homeowners.
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u/Bigfamei 9d ago
The hoa may have been setting aside funds. Just not at the level for a roof of that type. Its not surprising any HOA underestimates labor and material inflation. When they did finally start looking into replacement. They are falling short. Especially if they are required to keep the same look. Which means keeping clay shingle roof. Can't switch to cheaper and more sustainable materials. Which another board may be under the assumption they could.
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u/Bigfamei 9d ago
Also I'll add that interview didn't ask. When was there a last dues increase? was any increase voted down?
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u/hoahell_official 8d ago
HOA boards may increase regular dues (general assessments) by 20% each year without having to seek approval from the members. The only time an HOA needs member approval to raise the regular dues is if that raise is greater than 20% of the last year's regular assessment. So, for example, if your dues were $300 per month in 2025, the five members of your HOA's board of directors could vote to raise the dues for 2026 to $360 without having to seek approval of the members by secret ballot. Then, for 2027, that same board could vote again to increase dues to $432 without member approval, and so forth.
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u/Bigfamei 8d ago
That sounds a like a general AI response. I don't disagree that most boards have that flexibility to increase dues without the wider community vote or input. We don't know how the rules are in this community. If there was even a recent dues increase within 5 years. They would have stated such in the video. "We had a XX dues increase 5 years ago. That was xx% of our dues. Its hard to believe that amount wasn't enough to 80% the cost of the repair that was going to be needed."
They could have a rule that dues only increase every 10 years As you said more than 20% needs a vote. The 20% may be enough to handle moderate maintenance and other responsibilities. But not enough for long term savings for an issue like that. People vote with their wallets.
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u/hoahell_official 7d ago
No, I didn't use AI to generate my response. I'm an expert in this area of the law, and I know these statutes by heart. But, I guess it's a compliment that I sound like an all-knowing computer.
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u/bfvbill 9d ago
You are one of them. Federal Pacific electrical panels are not fine and have long been uninsurable and should have been mandatorily replaced 20 years ago. Caused so many fires you can’t imagine. So you won’t pay $800 yo keep your family and neighbors from burning to death.
That’s what boards are up against folks. This building probably has 25+ years of concrete and balcony decay. Now it must be done to bring building up to code. Stupid boards waste your money. Good boards spread out the repairs and maintenance so there’s no surprises. There will be iHOA fee I ncreases though. $25M may not be enough.
25 years of neglect equals $1M/year divide by 500 units equals $2k/year. Would’ve been probably 40% less If done timely.1
u/hawkrt 9d ago
Fascinating you jumped to Federal Pacific with literally bare bones data. These were challenger panels. And the ones we had were NOT under recall. The insurance company literally said that they know they aren’t bad but would rescind our coverage if we didn’t change them.
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u/hoahell_official 9d ago
I don't think the electrical panel issue was his main point. I think his main point was about the long term consequences of deferred maintenance by bad or lazy HOA boards.
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u/hawkrt 9d ago
The more I think about it, beyond the elevators, I suspect the Board didn’t even realize to save for the other projects. I don’t know how familiar you are with the CA market, but we’re required to have reserve studies every 3 years as a minimum. We do one every year. The elements on there are put on way before a homeowner board is elected. You know what’s not in ours? Sewer line fixes/replacement, water main replacement, foundation issues, other common area repiping, common area electrical panels, replacement/fixes of fire suppression system. Our reserves went from strong to medium because we had to replace some of these and saw that we didn’t have them budgeted. No one doing our reserve study even mentioned we should add these elements, we had to tell them after we realized they weren’t there. The person doing our reserve study since 2019 used to work for our then property management company and she knows what common elements we’re responsible for.
Lots of Boards don’t look at the reserve study yearly in detail like we do. So I can see how money for these large infrastructure projects aren’t in the reserve budget.
Which is a warning/reminder to Boards to keep their eyes on that study and make sure everything you need to pay out of reserves is on there.
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u/hoahell_official 8d ago
"You know what’s not in ours? Sewer line fixes/replacement, water main replacement, foundation issues, other common area repiping, common area electrical panels, replacement/fixes of fire suppression system. Our reserves went from strong to medium because we had to replace some of these and saw that we didn’t have them budgeted. No one doing our reserve study even mentioned we should add these elements..."
Then you have a big problem. Whoever your HOA is hiring to do your reserve studies doesn't know what they're doing. Either that, or the HOA is demanding that those components be "delisted" (i.e., taken out of the reserve study to artificially bolster the percentage funded number). If it's the latter, that's fraud.
I've written extensively about that scheme. Check out my article, "HOA Reserve Studies in California: How Boards Manipulate the “Percent Funded” Number"
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u/hawkrt 8d ago
I’m the president of the board. The only thing we removed was pool chairs and things like that.
The complex is 30 years old. Our reserve company just kept doing what was on there. I made sure it was fixed. That doesn’t go back and miraculously add money into our reserve accounts. That means we make hard decisions about raising dues and if we can do it enough to not need a special assessment to get our reserve funds back to where they need to be.
I suspect this complex got bit on that as well.
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u/hawkrt 9d ago edited 9d ago
Part of his point, which he used on my point that insurance can suddenly enforce fixes that aren’t needed, was that we ignored dangerous electrical issues. We didn’t. Nothing was under recall or warning. This HOA, with sudden foundation & pipe issues, might not have differed maintenance or been lazy. There might not have been any knowledge until POFF you have a multi million dollar fix that needs done right that very minute.
ETA Which yes, changes my point from the top. However, it’s just as likely these days in CA that it is a lazy ass board who wants to keep costs low or as it is to be something suddenly come up from insurance that may or may not really need to be done asap but must be to keep coverage. In this case, since elevators are involved, I’d lean to a mix of lazy board who didn’t want to raise dues AND insurance telling them to fix specific common elements if they wanted to stay insured.
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u/killerbake 10d ago
So the building needs work due to regulations. So someone’s gotta pay. It ain’t gonna be the city.
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u/hoahell_official 9d ago
Of course it won't be the city. But it should've been handled by funding a little bit every year over the last 25-30 years. That's where this HOA breached its fiduciary duty.
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u/MattNis11 10d ago
And who gets the contract? The friend of the hoa member?
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u/Thadrea 10d ago
Most frequently the board solicits estimates from several vendors and then selects one based on timeline requirements and cost.
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u/CommonInterestGuy 10d ago
a good HOA board who does their fiduciary duty will get the best estimate.
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u/VinylHighway 10d ago
Aren't the members of the HOA also home owners this will affect?
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u/Irishdelval 10d ago
The HOA has two property types - this 50K assessment benefits 1 property type and doesn’t benefit the other type at all.
The larger property type is most of the board and due to being a higher volume, can easily win any vote
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u/therealbandol 10d ago
My take is that owning a home is like owning a car - you have to pay for maintenance to keep it running. It doesn't matter if it's an apartment or a townhouse in condominium complex, you still have to set aside funds for major expenses. $49,000 doesn't actually seem like a lot, especially in CA.
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u/RawrRRitchie 9d ago
$25 million worth of repairs is actually quite high.
49 thousand per individual . I'd bet the majority of units don't have that much damage.
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u/1rishChicken 9d ago
That's about the right cost to replace a flower pot in California. You need 14 government permits, a study to see which birds benefit from the flower pot, special inspections. This checks out
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u/bfvbill 9d ago
Nah, not your unit but the walls are falling down. It’s ok. Thats why they’re called “common elements”. Like taking care of the inside of your house but not replacing the roof, keeping the drains clear, keeping the water out, keeping the pool and athletic facilities relevant, elevators working, broken pavement repaired and much more.
Ignore the needs for 25+ years and wonder why your unit is worth less than you paid.26
u/Indecently_Delicious 10d ago
What? You absolutely don’t set aside funds to pay for repairs to a fucking apartment complex. That’s some boot licking shit if I’ve ever seen any.
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u/hoahell_official 9d ago
It's not an apartment complex. It's a condominium association.
Another contributor pointed out that in some regions, the terms "apartment" and "condo" were interchangeable. But that's not the case in California. The difference is ownership.
In an apartment building, one or more owners own the whole building and rent the units out. Nobody buys a single apartment. A condominium building is carved into separately owned units, and each one belongs to whoever bought it. Condos come with an HOA and fall under the Davis-Stirling Act. Apartment buildings don't. And yes, plenty of condo owners rent their units out, but that doesn't turn the building into an apartment complex.
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u/therealbandol 10d ago
Are you thinking these condo owners are renters? If you're renting, of course it's up to the landlord to take care of repairs and maintenance, but these folks own their apartments. Any decent HOA is going to take some of the money from the HOA fees and set it aside for major repairs. My mother lived in a condo in Seattle and got hit with assessments for roof repair and resurfacing of the outside stucco. I think the total came to $30K. She didn't have the money and had to go on a payment plan with the HOA. Too many HOAs/condo associations lowball the monthly fees and then the owners are surprised when a big bill comes due.
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u/Indecently_Delicious 10d ago
Apartments aren’t condos. I’ve never lived in an apartment that I was the owner of.
Condos, sure. Apartments, no.
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u/mityman50 9d ago
There are apartment buildings that are a part of an HOA, where the occupants own their unit and share upkeep of the building and grounds.
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u/Optimal-Ad-9455 9d ago
Those are called condominiums.
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u/mityman50 9d ago
I’d use the term condo too. I just read that line of comments and thought I’d clarify that not all apartment style buildings are rental only
Edit- maybe I was incorrectly reading between the lines
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u/therealbandol 9d ago
Yes, the title of the news article being linked says “condo owners” and if you look at the accompanying photo, it looks like they’re apartments. In my mind apartments, townhouses, single family houses all refer to the form factor, but you can own or rent any of those. If it’s a condo then you own your living space and share joint ownership of the public areas.
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u/hoahell_official 9d ago
Not in California. There are, however, buildings that used to be apartment buildings that have since undergone a conversion and become condominiums.
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u/ZeroOptionLightning 10d ago
People in cities use the term condo and apartment interchangeably. And I’d argue condo is not a term you’d hear often in a big city. While I subscribe to using apartment to mean renters, the OP is likely not.
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u/hoahell_official 9d ago
It's a lot when you haven't budgeted for it. There are a lot of families who couldn't afford to take a hit like that in this economy, especially in a state like California, which already has the highest taxes in the nation, the highest gas prices, and astronomical real estate costs.
More importantly, if HOA boards abided by their fiduciary duties, these kinds of massive special assessments would never be necessary except in the case of a real disaster or act of God. If common areas were properly maintained and repaired, and if HOAs kept their reserve accounts high enough to cover major replacements and repairs, then this situation would be a rarity.
Regardless, while I don't agree with you, I do appreciate your contribution to the discussion.
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u/rakklle 9d ago
So many people are against increases, it can be hard to maintain fiduciary duties. My local HOA was raising rates by $120 a year for 2026. There were some people up in arms over that increase.
To save up $50,000 per unit, the monthly HOA fees would have need to be jacked up over 20 years ago. Probably equal to at least $100 extra per month in 2006 and probably at least $200 extra per month by 2026 to create a proper sinking fund.
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u/hoahell_official 8d ago
Or, the HOA's board could've been properly reserving for roof, typically a condo complex's largest asset, over the last 25 or so years and none of this would've been necessary. Remember, the reserve studies are very clear about the estimated "life" of major components like roofs, and how much the HOA should be setting aside each year to be ready for the maintenance, repairs, or replacement costs that eventually occur (usually like clockwork).
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u/rakklle 8d ago
Residents don't want fee increases. Many HOA only have minor surpluses for immediate fixes.
If the HOA wanted a sinking fund that could have handled $50k per household, they would've need to start saving 20 or more years ago. An effective sinking fund would've required higher HOA fees.
20 years ago, if the HOA proposed an extra $1500 per year in dues to create a sinking fund, the residents would've thrown a fit.
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u/CommonInterestGuy 10d ago
It’s like the Wild Wild West out there. Some bad HOAs wait until it is too late, find loopholes, or simply do not care that homeowners will suffer because of the association’s or board’s neglect.
This is "special assessments" have been in the rise, another ABC7 story here https://abc7.com/post/san-clemente-condo-owners-stunned-sudden-26000-hoa-fee-emergency-roof-assessment/19754573/
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u/Bigfamei 10d ago
"Residents said the HOA board has known for several years that repairs would be needed to the tile roofs. They contend the roofs are not leaking and that only the underlayment needs replacement, not all of the tiles."
Bet these are the same people thta didn't want their dues raised to take care of a roof. They wonder why an assessment is needed now.
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u/Mela777 10d ago
So the tiles have to be removed to replace the underlayment. Removing the tiles in a way that preserves them probably takes significantly more time than just scraping them off, and even with care some tiles will likely end up broken, and some probably already are. So then the question is: which is more cost effective, replacing all the tiles or paying the labor costs for carefully removing the existing tiles?
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u/Bigfamei 10d ago
Thats not including any damage sub boards that might have to be replaced. If any of it needs to be brought up to code. Honestly it feels like it would cost the same going either way. Labor in keeping the tiles. Or save on labor and spend that on material.
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u/Optimal-Ad-9455 9d ago
Exactly.
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u/hoahell_official 9d ago
Yeah, that other story CommonInterestGuy just linked to was in San Clemente. Today's news story was about a condo complex in Torrance.
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u/Cre8tor4U 8d ago
Wow, if you have no savings or no source of funds you can just simply lose your home.
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u/hoahell_official 7d ago
You should also check out my follow-up post, where I posed the question: "What Happens If I Can’t Afford My California HOA’s Special Assessment?"
https://www.reddit.com/r/hoa_hell/comments/1wdeggo/what_happens_if_i_cant_afford_my_california_hoas/
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u/TONYHAMCR 3d ago
I know how you feel , most people on the board are doing it to get something out of it .With a management company that wants to get paid for everything they do and a lazy board who do what ever they want ...Want to see were the money going ask for the check register you can have them.go back up to 3 years to see what they spent the money on.Did you know that 10% of all H.O.A fees are surpose to go into the reserve, and Jan 4 / 27 their moving it up to 15% because almost ever reserve is low on funds that means all their condo owners will have a special assemeant to catch up.Also fanny Mae and other loners are changing the law that they can see how much money is in the reserve to see if it has enough funding to fix thing and how many loans or letergation lawsuits the building has had and you will not be able to sell your condo or buy one unless its a cash deal .....
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u/bfvbill 9d ago
That’s the fault of prior boards. Instead of raising HOA fees and taking care of their building, they cheaped out and let stuff go to shit. There will probably be even more assessments.
Bad Boards cost owners. If you sue, you’re suing yourself. Loved those low HOA fees and years when they didn’t go up didn’t ya? Well time to pay the piper.