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Most articles on condominiums and special assessments are about how to avoid them. It’s easy to think of condominium special assessments as an unexpected disaster that happens to people who don’t do enough research before buying. There is truth to this; however, buildings don’t deteriorate on schedule, and sometimes a special assessment may actually save significant money in the long term. A special assessment can come from a well-managed HOA that is proactively trying to stop a sudden, expensive problem from becoming worse, or it can come from a terribly managed HOA that has no plan and rarely does maintenance.

Regardless of the reasons for a special assessment, you are statistically likely to pay one if you live in a condominium long-term. At least a third of all condominium associations have insufficient cash, according to Robert Nordlund, CEO of Association Reserves. Nordlund should know, as his firm has conducted over 60,000 reserve studies.

Of course, every HOA should have millions on hand to easily and quickly address a massive emergency, but realistically, it’s rare that an HOA is completely prepared for an unforeseen disaster.

It’s not always obvious which buildings are in bad shape, since poor building materials often don’t become apparent for decades. In the Pacific Northwest, many 1970s and 1980s condominiums were built by California-based builders, who used materials for the building envelope that were for dry, warm climates. However, the Pacific Northwest is extremely rainy, so the cladding on these buildings develops mold, rust, and other major problems. This was largely unnoticed for more than 30 years, until recent and rapid deterioration required many of these complexes to spend millions to redo the entire building’s exterior quickly, before further damage, injury, or even death occurred.

Extensive research is essential when buying a condominium. However, no matter how much research you do, you should absolutely plan for a special assessment. Do not assume that because you did research, you will not have to pay an assessment at some point. If you’re expecting the HOA to be proactively setting aside money, you should also be proactively setting aside money in case something expensive happens to your building.

Besides setting aside your own special assessment fund, here are some essential things to consider and investigate before buying a condominium:

-Find out how old the plumbing is. This is a hugely overlooked area of concern, and is a significant sign of how good the HOA is with fixing hidden problems. If buying in an older building, be sure that the HOA has completed or is in the process of completing a full plumbing replacement. If you’re looking at a 90-year-old building that has never replaced the plumbing, be extremely wary.

-Low HOA fees can be a sign that owners do not want to pay for maintenance, or cannot afford to.

-Obtain past maintenance records, reserve studies, and long-term maintenance plans from the HOA board.

-If major building components are not mentioned in the long-term plan, this is a bad sign.

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A recent survey by Cinch Home Services found that 60% of sellers knowingly did not disclose significant issues with their home to their buyers. Additionally, 77% of sellers said they were encouraged by their real estate agent to mislead in the disclosure process.

This fascinating study of 476 home sellers notes that selective memory and exaggeration are always a concern with surveys. For example, it is not clear exactly how these agents encouraged sellers to hide material facts; was this explicitly said, implied, or was it a general feeling the seller had?

Whether or not the agent actively or passively advised against disclosure, this study indirectly highlights how quickly an agent can be blamed in the event of a lawsuit. It is essential that an agent never even remotely hint or suggest that a seller omit material facts. If a seller is privately considering hiding information, remember that even offhand comments by an agent may be construed as a suggestion to illegally mislead.

How to Identify Problem Properties

This study also reinforces the importance of inspections for a buyer agent, and of paying attention to hidden clues about property condition. If a buyer is displeased with their purchase, this makes them significantly less likely to recommend your services as a buyer agent. So how can you tell if a property is going to have problems?

Criticisms are safer. When you investigate a property for your client, remember that making assurances that a property is in good condition can easily get you in trouble for misrepresenting your expertise. Thus, it’s much safer to make criticisms than specific, positive assurances. For example, if you don’t find any obvious issues with a building’s plumbing, you likely should not disclose this to your client, as they could easily assume you have expertise in plumbing that you do not have. This should only inform your own general optimism about the property. However, if you do find cause to investigate the plumbing further, suggest that the client have an inspection performed.

Here are some ways to identify problem properties:

Get to know your county records. These records can show permitted maintenance and improvements, and can be far more revealing than seller disclosures. For example, if a building is 90 years old, but there is no record of the plumbing ever having been updated, this could become a major expense for the buyer. On the other hand, if you find evidence of regular repairs and updates over the years, this could be a good sign.

Is the building reinforced? If the building is made of unreinforced masonry, it could be structurally unsound, especially if located in an earthquake zone. Make sure the building has steel reinforcement, or at least a wood frame if it’s an average-sized house. An unreinforced building has no significant frame holding it together. This is another area of investigation that county records can help with.

Get to know climate-related concerns in the area. If the building is in a coastal zone, are there signs of rust from salty air that may damage the building? The Surfside Condominiums that tragically collapsed in Florida recently had major rust-related structural damage. If the climate is rainy, get to know the signs of mold. If the area is low-elevation, get to know the flood plain area maps. If the property is located near a stream, investigate if there has been flooding or ground instability relating to the property or to properties nearby.

Always read HOA minutes. In a condominium complex, it’s much more difficult for groups of owners to conceal their concerns about their building in a meeting than it is for one owner of a single family home to hide their concerns.

Always check historical sales records. If the property sold for significantly less than asking in the last few years, or if the property was pending a number of times without selling, this could indicate inspections that found major problems.

Are a lot of units in a condominium for sale at below market value? This is an obvious clue, and an easy one to check out. Generally, this indicates a significant special assessment or major structural problem that forces many owners to consider selling.

Always remember that, no matter how exciting it can be to find a property with seemingly few problems, it is not a good idea to give the buyer specific assurances about property condition. Criticisms and suggestions to consult experts are much safer and more beneficial to the buyer. If you are excited about a property, it is much better to simply say generally that it seems like a good fit for the buyer’s needs.


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Air conditioning used to be considered a luxury, but it is becoming essential for health and safety. As many parts of the world experience record-setting temperature highs and heat-related fatalities, air conditioning is increasingly seen as a basic human need, like heating in winter. It is estimated that home air conditioning cut premature deaths related to heat by 80% since 1960, according to the Washington Post.

Soon, a home without air conditioning could be as difficult to sell as a home without heating. When purchasing a home, make sure it has a good air conditioning system, or verify that one can be easily installed.

If you are purchasing a home that does not have air conditioning, at least verify that the amperage of the electrical system will support the added stress of running an air cooling system. If your home does not have adequate amperage, you may not be able to run basic appliances while your air is on without blowing a fuse. Whether you’re using a portable window air conditioner or a forced air system, you will need adequate electrical capacity to keep all appliances running.

Many older condominiums have a hidden problem of inadequate electrical capacity. If you’re looking at a condo built in the 1950s that has a 60 amp capacity, you may have trouble running an air conditioning system if you also use a lot of appliances. It’s not always easy to increase your amperage, since this likely will involve changing the capacity of the entire building, and getting the local electrical company to make this change could be costly. Make sure to have a professional verify that any home you plan to purchase has adequate amperage.

The Catch-22 of Air Conditioning

As summers become hotter, air conditioning becomes vital; however, widespread use of air conditioning consumes massive amounts of energy and uses toxic refrigerant. Though it may be tempting to skip air conditioning in order to decrease energy consumption, remember that excessive heat can be deadly. If air conditioning ever becomes more environmentally friendly, this will likely be the result of systemic changes, like widespread use of solar systems, geothermal systems, or changes to the way electricity is created in general.

Energy-saving Air Conditioning is Often a Luxury Item

Air conditioning is much more affordable than it used to be. However, air conditioning that uses dramatically less energy is incredibly expensive. Geothermal air conditioning systems consume much less energy, as they use the earth’s naturally cool underground temperature to chill your home. However, geothermal systems cost between $20,000-$50,000 to install, which guarantees their adoption will be limited. In the future, the cost of these systems may come down, perhaps due to government subsidies and/or more efficient production.

Hopefully, major changes will occur in advancements to geothermal systems, solar power, and other efficient technologies. For these changes to be effective, they will have to be systemically implemented, rather than relying only on people who can afford them. In the meantime, it is important to take air conditioning into account as a health and safety consideration when purchasing your home.

Math and Emotion

For the first time in four years, the Federal Reserve increased its target interest rate in March. Though this was widely expected, the drama was intense.

Former Home Depot CEO Bob Nardelli said that the rate hike will have a “devastating impact” and told consumers to increase cash reserves and “build up a supply of non-perishables in your home.” Former Treasury Secretary Larry Summers warned of “economic distress” and said that Fed forecasts had been “delusional.”

These statements about “economic distress” might make home buyers rush to purchase before the rate hike, or they might drive consumers away from the mortgage market towards assets with greater liquidity. What CEOs and economists say about the rate hikes could have more of an effect than the rate hikes themselves.

A rate increase may seem purely mathematical, but its effects on financial markets involve emotion and significant unpredictability. A rate hike is meant to spark a wide-reaching series of human reactions, many of which are difficult to quantify.

The Fed’s Interest Rate is Not What You Think

Even without the highly emotional element to a rate hike, the connection between mortgage rates and federal interest rate hikes is surprisingly distant. In fact, the Fed doesn’t really “set” the target interest rate at all. Instead, the Fed announces a target rate as a suggestion for banks to use when lending money to each other. In order to move bank interest rates toward this target, the Fed increases or decreases the money supply, and purchases or sells securities, which indirectly motivates banks to charge rates as close to the target rate as possible.

The only interest rate the Fed sets is actually not the target interest rate–it’s the rate it charges banks to borrow directly from the Fed. This is the federal discount rate, and the Fed usually sets it higher than the target interest rate in order to encourage banks not to borrow from the Fed, but instead to borrow from each other closer to the lower target rate.

Two Lesser-Known Interest Rate Drivers

The connection between the target federal funds rate and mortgage rates is also more distant than it may seem. Mortgage rates are highly influenced by 10-year treasury notes. When 10-year treasury notes increase in yield as interest rates increase, purchasers of mortgage-backed securities want even more yield from mortgage-backed securities, since they are far riskier than the extremely low-risk 10-year treasury notes. This causes mortgages to become more expensive.

Additionally, the Federal Reserve itself was buying $120 billion a month in mortgage-backed securities to stabilize markets during the Coronavirus Pandemic. Now, the Fed has slowed its purchasing of these securities, so that $2.5 trillion in mortgage-backed securities will need buyers. This could dramatically cause mortgage rates to increase, and have far more of an effect than the Fed’s target interest rate.

Many analysts think that the Fed’s decrease in buying mortgage-backed securities has already been taken into account by banks in their current interest rates. However, it is impossible to know if this is entirely true. Human emotion and reactivity will play a huge role in how mortgage markets are affected by interest rate hikes. Robert Heck, a vice president at mortgage broker Morty, says that the manner in which the Fed speaks about its participation in the mortgage-backed securities market will have a massive impact on mortgage rates. Often, it’s not about the interest rate itself, but about how it is communicated, and how much of a surprise it is, that affects financial markets.

Anyone who tells you that interest rate hikes are predictable because they’re just about math is missing the point; the market is designed around human fear responses and reactivity. Educated guesses can be helpful, but it all hinges on our collective human hive mind to decide where mortgage rates are going.

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Because imagining is often fun, we like to think that it doesn’t require work. However, imagination involves a lot of effort. Use your imagination right now to see yourself looking through listings on a real estate app; imagine going through each listing and figuring out the exact layout of the floor plan, what each room could be converted to, which walls could be knocked down, and the basic style of the house underneath all the furniture and renovations. Doing this for every single listing is exhausting. If you’re excited and motivated, this might also be fun, but it is important to understand how much work this is.

The lesson here is that you should not expect potential buyers to have any time or imagination to put into viewing your house. Sure, you may stumble across some imaginative buyer with time and money to blow who may see immense potential in your listing, but it is important not to count on this when listing your home.

Before you list, make sure each room in your home is converted back to its original purpose, if possible. For example, if you changed the family room upstairs to be a storage area, remove your stored belongings and make it look like a family room. You don’t want the casual viewer to wonder if they’re looking at a massive closet, a basement, or a garage, and then hope they’re able to imagine what it might look like if it were not that.

This is where staging can be helpful; remove all your belongings, and have some basic, clean and mildly attractive furniture that is appropriate for each room’s original purpose spread throughout the house. Make each room look like it’s always clean, and has just the amount of furniture to barely qualify as a room. That is, make it look like no real people live there; like it’s a room from a TV ad.

The furniture doesn’t necessarily have to be nice, just clean and sparse. This is where you can finally trust the imagination of potential buyers, only after you have removed the personal clutter that serves as a barrier to seeing what the house is and can be.

Another essential part of staging your home is lighting. Bright, warm lighting in every room helps leave less to the imagination of each buyer.

Of course, there are exceptions to every rule. For example, if you have a beautifully restored Victorian home, and you have many carefully selected antiques that make it look like a movie set, then you may want to leave the house as-is. Or, you may in fact live like you’re not a real person, and your house may be spotless with barely any furniture. If this is the case, congratulations–you’re ready to sell without staging!

Another essential rule to follow is to allow buyers to see your home without you there. This will make them feel less uncomfortable, and will allow them to more easily picture themselves owning the home rather than seeing you as the owner. Again, the less there is to distract from the potential buyer’s imagination, the better.

Listing your house can be an understandably challenging process, especially because it’s difficult to have perspective on your personal space. This is why it’s helpful to have a broker or other real estate professional come look at your house and advise you on what might be good to change before listing. You can also look at houses that have sold quickly for high prices in your neighborhood, and take notes on how they look.

Remember; the average house will sell faster and for more money if each room is converted back to its original purpose; if the furniture and decor is more generic and is sparse; and if the house is brightly lit. When in doubt, assume that your buyer has no imagination, and stage your home like people who are not in any way real live there. Good luck!

Many people rush to update their kitchen when buying a new home. Though it can be tempting to rip everything out and start anew, it might be a terrible idea. According to the site Remodeling, the national average for a significant kitchen remodel over the last year was $68,490, but the resale value attributed to that kitchen was only $40,127.

Of course, if you’re not planning on reselling your house, this might not matter to you. But given dramatic shifts in the real estate market over the past few years, it might be good to keep resale value in mind.

Kitchen trends are some of the quickest to change, and to do so dramatically. For example, granite countertops were once perceived as high-end and somewhat exclusive. However, granite has become a builder-grade material sold in every large home improvement store, and can easily make a kitchen look dated. Bob Vila’s “Kitchen Trends You Might Regret” lists speckled granite second, after open shelving.

If you have an older home with original built-ins, leaving these intact can add to the old-world charm of your home. If you have a 1950s mid-century modern home with original fixtures, it might be better to sell it as-is, since original mid-century design is extremely popular right now. As mentioned above, an average kitchen remodel’s resale value is already about $17,000 less than its cost. However, if your home is a trendy and original 1950s home, and you do a new, mid-range kitchen remodel that doesn’t fit with the rest of the house, you could lose significantly more money on resale than the national average.

It’s often a better idea to focus on cleaning and modernizing the basic functioning of a kitchen rather than doing a dramatic remodel. That is, a fresh paint job, refinished floors, and the addition of a new garbage disposal and refrigerator are probably a wiser use of money than ripping out original built-ins and covering all surfaces with speckled granite.

That said, if you’re passionate about speckled granite and price is no object, don’t let us stop you from reaching for your dreams!

Most condominium ownership is structured around the concept of air space. This means that the building, walls, and common areas are owned communally by all owners through the homeowners association (HOA). Thus, the individual condominium owner only controls the air space created by the walls of their unit. Generally, a condominium owner cannot eliminate walls, or cut through them without the express permission of the homeowners association, even if the walls are only on the inside of their unit.

Besides how strange it is to only own air, this type of ownership seems relatively straightforward. However, there are a number of complexities to air space ownership. Generally, the condominium owner may paint, tile, or put hardwood floors in their unit without the consent of the HOA. This may seem odd, since the individual owner owns nothing but air. However, the paint and floor surfacing are generally seen as part of the owner’s air space, and not as a fundamental part of the walls and floors themselves. By adding a layer of paint or tile to a wall, the owner is only infringing on their own air space; they are not taking anything away from the wall. The drywall, insulation, and reinforcements of the walls are owned by the HOA, but anything applied to the wall or floor surface is generally under the control of the condominium owner.

Another factor that complicates this air space concept involves HOA-maintained appliances or fixtures. For example, a radiator may be located well inside the walls of the unit, and therefore in the air space of the unit owner. However, since the radiator is part of an HOA-controlled system, the radiator is generally not under the control of the homeowner (besides the owner’s ability to turn the heat up or down). To remove a radiator would affect the entire radiator system, so a homeowner could not do this without express permission of the HOA.

A positive aspect of HOA-owned appliances like a radiator is that, if the radiator leaks and causes damage to the unit, the HOA is generally responsible for fixing this damage, as long as the homeowner has not interfered with the functioning of the radiator in any way. Many HOAs may try to make the homeowner pay for this damage; however, from a legal standpoint, the HOA is usually responsible for this kind of repair.

Another complexity of condominium ownership involves HOA-owned spaces that are limited to use by one or a few owners. For example, a parking space that is part of the HOA-owned parking lot might be limited to use by only one owner for the purpose of parking their car. Thus, this owner does not have much ability to change the parking space in any way, but they are the only owner who may use it. The HOA bylaws or CC&Rs should clearly specify this type of communal area that is limited to use by one owner.

Of course, condominiums have endless variability in their rules and regulations, and there are countless exceptions to the rules outlined in this article. It is essential to read the fine print of the CC&Rs carefully to understand how ownership of each individual unit is structured. Legal disclaimers are always fun, so please remember that this article should not be construed as legal advice. However, understanding the general concepts behind air space condominium ownership can help contextualize any variations or exceptions.

Unreinforced masonry is stone, brick, or cement construction that supports itself, without any other framing to add strength and reinforcement. For example, a building made of only bricks, mortar, and poured cement without any steel or wood frame for support, is unreinforced.

A brick wall with no steel frame will crack in an earthquake very quickly. When a steel frame reinforces a building, that building can flex more without damage. The ability of a structure to deform without being damaged is called ductility. If a wall can be temporarily deformed by the shaking of an earthquake without suffering significant breakage, that wall has a high degree of ductility.

When buying a house or building, it is essential to verify that the building is reinforced, especially if you live in an area that experiences earthquakes. The steel reinforcement that generally frames buildings is called rebar.

Interestingly, wood houses are generally the best-performing structures in earthquakes. Wood has a high degree of flexibility and ductility, so it can shake and move flexibly without breaking. Additionally, wood homes are often made almost entirely of wood, without cement or brick that can crack easily. Steel-framed buildings generally are made of cement or brick, so while the steel provides flexibility, the cement is fairly inflexible and breaks more easily under stress.

An experiment by the Portland Cement Company showed that wood and steel have similar levels of ductility, meaning they both can be deformed to a similar extent without suffering damage. In the Portland Cement Company’s tests, both wood and steel began to suffer damage when 3,500 pounds of force was applied, which surprisingly suggests that wood and steel have almost identical levels of ductility.

Though wood and steel are similar in this regard, there are many ways in which they differ. Tests suggest that wood is more durable than steel in the long run, but that steel withstands sudden shocks more effectively.

Earthquakes affect identical buildings in different ways, based on what type of ground the buildings are on, and on their respective heights. For example, a short building will suffer more damage if the earthquake’s shaking is high frequency (short and fast vibrational waves), while a tall building will suffer more damage if the quake’s shaking is low frequency (longer, slower waves of movement). To understand this, it’s useful to think of a massive ship that is unaffected by short, fast, small waves, while a tiny boat will be highly affected by these small, fast waves.

The performance of buildings in an earthquake can be highly unpredictable; however, masonry buildings without any reinforcement perform poorly in all types of earthquakes. When buying an old masonry building, or a condominium inside of one, verifying that it is reinforced masonry should be one of the first steps in your purchase.

Property servitude is not what it may sound like; it does not involve servants. Servitude in this context refers to someone having control over a property they do not own. That is, the property is owned by one party, but a different party has control over that property in a specific way.

For example, if one property is blocked from the road by another property, the blocked-off property owner may have a limited right to drive over the roadside property in order to reach the road. The blocked-off property owner does not have any other control over the roadside property except for a right to drive over it. This right to drive over the property would be limited; that is, the owner of the blocked-off property would not have the right to drive all over the property wherever they want, but would have the right to some specific path over the property for the sole purpose of reaching the road.

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The reason the word “servitude” is used here is because one property (or “estate”) is dominant, and the other estate is “servient.” In the above example, the dominant property is the property that has a right-of-way over the other property, and the property that may be crossed over is the servient property.

This dominant and servient relationship between properties can take many forms. For example, if one property is located on a hill, that property may have a right to see over the property next to it that is lower down the hill. This might mean that the lower property would only be able to build a one-story house, since a two-story house might block the other property’s view. The uphill property that has a right to look over the property below it would be the dominant estate, and the property that may not block the view would be the servient estate.

These dominant/servient relationships are generally between properties, not between people. That is, the owner of the uphill property only has the right to control the other property’s height while they own their property. If the owner sells their uphill property, they no longer have any control over the neighboring property, but the new owner of the uphill property would have control over the neighboring property’s height.

Another word for the dominant/servient property relationship is easement. The dominant properties described above have some sort of easement over the servient properties. This easement is some right to use or control another property. These easements belong to the dominant property, not to the individual owner. Thus, these easements are appurtenant to the properties described here, meaning that the easements are attached to the properties themselves, and stay with the properties even when they are sold to new owners.

Property law is very complex. Even if you are the sole owner of a property, there may be multiple other parties who have certain control of your property in specific ways.

Property Tax Deferral: Hidden Gem?

Property tax deferral programs are often kept somewhat secret, and are far less popular than reverse mortgages. These deferral programs can cost states and counties current tax revenue, which is why some jurisdictions avoid advertising these programs extensively. However, tax deferral programs can be a much more attractive alternative to reverse mortgages in certain situations.

Like a reverse mortgage, a property tax deferral gives the borrower a financial benefit that the borrower (or the borrower’s estate) must repay when the home is sold or when the borrower passes away. This financial benefit is a deferral of property taxes, rather than a direct payment to the borrower.

Tax deferral programs are generally only available to people above a certain age; some states allow tax deferral for those 61 and older, and others start at 67 years and older. Certain other groups, like veterans and those with disabilities, are often allowed to participate in tax deferral programs as well. Usually, you must have owned your home for a certain number of years before you will qualify.

Reverse mortgages have significant upfront costs and complexity, but a property tax deferral is much cheaper and more straightforward. The complexity of a property tax deferral comes from the wide variation of programs between states and counties. State laws surrounding tax deferral programs are constantly changing, especially after the pandemic. However, if you find that your local jurisdiction offers a property tax deferral program, it is usually easier and cheaper to obtain than a reverse mortgage.

In some states, like Oregon, the state will pay your property taxes to the county for you, so your deferred taxes would ultimately be paid back to the state. In Massachusetts, the deferral program is between you and your town or city. Thus, the state is not paying the town on your behalf; the town must wait until you pass away or sell your home to receive tax payment.

Deferred tax payments generally accrue interest that must be paid back. In Massachusetts, the interest rate in some towns is 8%, and in other towns is as low as 1%. As you can see, the benefits of these programs can vary widely.

Since this is just a tax deferral, the amount of money you will free up will be significantly less than a mortgage. This may be perfect for those who are not comfortable with the responsibility and expense of a reverse mortgage, and who need a smaller amount of money.

If you want to free up funds using your home, and are uncomfortable with a reverse mortgage, it is worth checking with your state, county, or town to see if any deferral programs exist.

The states listed below currently offer some sort of tax deferral program, though this is not always available statewide. This list is ever-changing, so be sure to check with your local state, county, or city government website to see if you might qualify.

States with Tax Deferral Programs in 2022:

Colorado
Washington DC
Florida
Idaho
Chicago
Massachusetts
New Hampshire
Oregon
South Dakota
Virginia
Washington
Wyoming