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Do You Live in a Common Interest Community?

by Connie Yoshimura

According to the Community Associations Institute’s report published in 2016, 68 million Americans  or the equivalent of 21% of the U.S. population live in a common-interest community. Fifty-three percent are Homeowner Associations and forty-four are Condominium Associations. Three percent are Cooperatives. Although it is difficult to determine the exact number of associations in Alaska, a public search of state records identifies 480 condo associations; approximately 420 homeowners associations; and 980 owners associations for a total of 1,880. That’s a lot more than I expected to find! And with Anchorage’s diminishing availability of residential land, condo associations, in particular, will continue to increase as Anchorage is forced to become a higher density community. So far this year, 908 buyers have purchased a condo with an average sales price of $208,459.  Many of these buyers are first time homeowners and are unaware they are purchasing one of the most sophisticated and complicated types of property ownership.  

 

The recent 7.0 earthquake has brought to the many owner misunderstandings and issues related to who is responsible for repairs and damages. The answers are in the public offering or resale certificate but, frankly, most buyers don’t read the two or three inch statement they are given to approve prior to closing. But a lot more owners are reading them now as a result of earthquake sheetrock cracks, broken windows, damaged door jams, et cetera. And condo owners are finding out there are significant differences in the description of what they have purchased and what their owner’s insurance and the HOA insurance covers.  

 

Not all HOA insurance covers the building structure if it is a site condo which by definition the building is enveloped in a defined air space. However, if you are not purchasing a site condo, you can expect the HOA to cover the structure of the building which includes roof and foundation and any party wall in a two or more attached configuration. One area of potential disagreement is cracked or broken windows. If a neighbor’s kid throws a baseball through your window, you can expect to replace it yourself. However, if an earthquake cracks your window as a result of the movement of an exterior wall, you may have an insurance claim to submit to your HOA. But not always because unit boundaries differ per community. As you can see it gets complicated, and so the best thing you can do as a condo owner is read your offering statement, read your declaration, read your personal insurance policy and your HOA policy.  

 

However, the important thing you can do as a condo owner is discuss with your insurance agent the addition of loss assessment insurance to your policy which will help mitigate any special assessments from the association as a result of an earthquake or any other casualty. That’s what I’m doing as a condo owner.        

Got Drywall Cracks? Here’s What You Need to Do

by Connie Yoshimura

 

The November 30th earthquake  was a big one, creating thousands of drywall  cracks  in hundreds of homes. According to national building standards, drywall cracks greater than 1/16th of an inch should be repaired. So if you’ve got drywall cracks in your home as the result of the earthquake, the first thing you should do is hire a home inspector.  Most inspectors are not engineers but they will be able to advise you whether or not you should also hire a structural engineer. A home inspector’s fee is approximately $500 while a structural engineer can cost anywhere from $800 to $1,000, depending on the time spent in the home to assess the degree of damage and write the report. Given the number of aftershocks we are still experiencing, you may want to wait another week or so before you call an inspector unless you feel that your home in structurally not safe. Aftershocks can create additional drywall cracks.  One general contractor told me that after the Friday quake, he had only one crack in a 2,800 square foot home but in a reinspection five days later there were an additional nineteen. All the cracks were cosmetic and at the seam which is where most cracks occur. Repair of drywall cracks vary, depending on the contractor and the painter. A little mud can hide a lot of cracks but some contractors will cut the drywall, mud, caulk and then paint. 


If you have your home listed for sale, we want to encourage you to get a home inspection and a structural engineer if the home inspector recommends it. Although buyers usually buy with their eyes and are not generally concerned about the number of tie downs, steel strappings around the garage opening, they are going to undoubtedly now want a third party opinion as to the integrity of the home. If you are in a buy/sell contract, you should reach out to your mortgage originator to see what their investor’s protocol is when dealing with a home that has experienced an earthquake.  Some credit union lenders are requiring a home inspection that they will pay for prior to closing in order to be assured of the home’s value.  Other lenders simply want a hold harmless agreement signed by the buyer and the seller. If the appraisal was done prior to the earthquake, most lenders are requiring a reinspection by the appraiser in order to re-establish the condition of the property which the seller is required to pay.     

 

If your home is a condo, and there is no earthquake insurance for the community, and your governing documents delineate your condo beginning at studs, and not sheetrock, you as an owner are responsible for any repairs. If you have substantial cracking or uneven floors, contact your management company immediately to report the damage. The HOA may be responsible for structural repairs. That would not be the case if it was a site condo.  


We have all been through a traumatic event. Congratulations to the Municipality of Anchorage for their disaster preparedness, fast and articulate communication and building code improvements since the 1964 quake which has obviously saved many lives. We thank you. 

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Dwell Realty
561 E. 36th Ave., Suite 200
Anchorage AK 99503
907-646-3600