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“Advice on Sleazy Condo Developers?”

by Prince Of Petworth June 1, 2017 at 12:25 pm 37 Comments


Photo by PoPville flickr user Eric P.

“Dear PoPville,

I wanted to see how other folks have overcome terrible condo developers. We bought a unit in a new 30-unit condo building. The developer hasn’t finished some construction tasks, hasn’t provided HOA accounting information, has rented out units that are for low-income housing on Airbnb, and failed to pay our water bill, which resulted in the water being turned off for the entire building.

We’ve tried to be nice or threatening to get them to respond. But short of suing them which will be costly, is there any advice or city services that could help motivate them to act?”

  • Bobert

    Talk to a lawyer. Let me guess – you’re in Brookland?

    • Rasputin

      +1

  • Dupont Resident

    You were able to close with out a proper Association set up? Wouldn’t the association pay the water bills? Did your title and lender (if you used one) not require all the accounting information before you could close?

    • Anon Spock

      You need a certain number of owners in place before an association is formed. I think it’s 75%. Until then the developer handles bills and such.

  • DC Raz

    On the Airbnb issue, contact DC Attorney General Karl Racine’s Office. He’s pursuing litigation against the misappropriation of low designated income units for incorrect uses.

    On the other issues, it would be helpful either to know the address of the building or the name of the developer and/or the LLCs they used to put the project together.

  • Steph

    Wow. Definitely consult with a lawyer. And probably the corresponding city agencies/departments for some of the possible regulatory violations – even if filing complaints doesn’t encourage the company to do better, then at least they’d be on record…

    (I am not a lawyer or condo expert. But, this crap is exactly why there are so many regulations governing developers, landlords, housing, etc!! And often, threats of lawsuits are the only thing that gets them to act, so don’t hesitate! A letter from a lawyer might be all you need. And – document, document, document everything.)

  • BrightwoodPark

    Lawyer up. Went through this in Columbia Heights.

    • FoggyBottom

      Building on Kenyon perhaps?

  • anon

    I’ve read enough about this stuff, which seems to be utterly common, which is why I’d never buy a new-construction condo. Wait til a building is a few years old, then look at units for sale, then try to find out from the association what of the stuff the developer left unfinished or constructed problematically has been done by the condo association, while also keeping in mind that there still may be some major, major (read: very expensive) projects that the condo has to do to correct for shoddy construction practices.

    • Guillermo Brown

      I would qualify this statement by saying that not all new condo developers are shady. There are plenty of larger developers run by pros that have reputations to uphold, rather than these fly-by-night LLCs formed all over town.

      • anon

        Oh, I don’t disagree – I’m sure there are some that deliver a quality product – the trouble is, you have to research them to know which ones they are.
        .
        And then you have to make sure they are still building up to standard, and that quality hasn’t taken a hit, either on a particular building, or for a period of time, due to financial problems, or hiring different work crews/subcontractors.
        .
        That’s a lot of work, while also looking for a place to live. And perhaps impossible in a time when there are fast sales and bidding wars.

      • FoggyBottom

        Even good developers run into issues that aren’t discovered until years later. A huge leakage issue arose at 3303 Water Street (perhaps an aptly named street). The HOA sued EastBanc and after years of wrangling, the developer finally ponied up. At least those people can afford an extended lawsuit, not many can.

  • J

    A competent property management company would go a long way!

    • Vicki

      Are there any competent management companies in DC?v

  • northeazy

    Suing is not expensive at all nor do you need to consult with a lawyer, at least not initially. Just leave work an hour early one day and head on over to the Landlord Tenant court or Small Claims court. Sue this person for whatever you think is best. (keep in mind small claims has a $5,000 limit and Landlord Tenant has some subject matter restrictions, naturally) and then pay the clerk $10 to serve them. Typically, once people get the official summons in the mail, the work miraculously gets done. I have done this multiple times with all sorts of service providers.

    • LoganHero

      Small claims limit is $10,000 in DC.

    • T

      Can you sue a developer in Landlord Tenant court? I don’t really know how this setup works, but I don’t know if they would count as a landlord (since the OP owns his/her unit).

      • northeazy

        Not sure on that–but certainly in small claims. Either way, its surprisingly easy to get the summons out, which is the whole point. It is to encourage a bad actor to own up to their duties. The hope is to not even have to go to court.

    • GBinCH

      Just an FYI, the limit was up to $10k. See page 5: http://www.dccourts.gov/internet/documents/SmallClaimsHandbook.pdf

  • LeDroit Gator

    You may want to change the picture at the top of the heading. The 2 companies who’s logos are partially in the photo may not want to be associated with this issue, especially because the picture is of demolition of a building where an office building was built (the old NPR site), so not relevant to the article.

  • PkVwCndoPrez

    Lawyer. And an accountant to perform an audit.

    • PkVwCndoPrez

      Also, if your building is completely new construction (vs rehabilitation of a previous building) the developer is required to put a bond on the building, which is held for two years from the date of purchase of the first unit of the building. Get in contact with DCHD Lauren Pair’s office to confirm that the developer put down a bond and ask when the release date would be.

      • MHillPark

        I second this; however, Lauren Pair was out on leave for a long time this year, and isn’t great about returning phone calls and emails. I would call her colleague, Karen Sawyer, p (202) 442-4407, [email protected]. Also, if Dan could send you my email address, we can connect and talk about how my new building has navigated a sketchy, non-responsive developer. Good luck!

      • james bonds

        This is not correct information. You do not HAVE to bond a project by any means? Would you mind explaining under what scenario one would need to “put a bond on the building”? I’m just curious

        • Waterfront

          For condo projects DC requires developers establish a letter of credit with a financial institution in the amount of 10% of hard costs. It’s held by that institution for two years. This is just for situations where shoddy construction and other nonsense occurs. If things go sideways you can make a claim against that letter. Lauren Pair and her staff are the right people to inquire about this to. I second this suggestion to reach out to them. It is definitely one way to get the developers attention. Might only take a strongly worded letter.

          • JoDa

            This, 100%. Despite PkVw’s comment above, it also applies to rehabs (conversion from apartment/house to condo). Process is painfully slow, though, and you have to prove that you spent the money repairing sub-par construction/completing unfinished construction before they release it. OP should look into this immediately, along with discussing with other residents how severe the undelivered items are and whether there’s a will to get them finished and then go after the developer for the bond.
            .
            I also agree with others that it’s time to engage a lawyer and accountant. If the developer is collecting your fees and not paying the bills, that money you’ve paid for common expenses could vanish unless you act quickly. You’ll also need solid legal advice as to whether the undelivered construction stuff was properly promised (not sure what hasn’t been completed).
            .
            I also suspect I know what development this is (Brookland, as mentioned off the bat), and I was always wary of that one given how construction went (they built 2 units, then tried to do pre-sales to get some cash, then apparently got another loan to get construction going again)…I know a few people who looked at it and backed slowly away after talking with the development team. And I’ve seen units there listed on AirBnB and for regular-term rentals.

          • JoDa

            Can’t ever get it all out in one thought…
            .
            OP should consider working with other owners to, essentially, set up a shadow Board and Association. This is not going to be easy, and leadership/someone taking responsibility to make sure each step happens and moves forward will be crucial. OP should encourage all owners to get involved, but make sure anyone who steps up and volunteers to be a leader knows this is going to be a time/energy suck. If it is the development I’m thinking of in Brookland, I know one of your owners, and am happy to provide some insight into the bond process. If you want to chat, ask Dan for my email.

  • IZ

    Even though IZ units are money losers, since they’re now built the developer is going to be better off financially selling them over running them as permanent AirB&b units. The IZ process is administratively long and arduous to get a buyer to settlement, so this is likely an interim (but maybe illegal) solution for them.

    • FridayGirl

      Still, I feel like if an IZ condo owner isn’t able to rent it out the developer shouldn’t be able to either. (And I’m also really curious how they’re even renting them as Air B&B if they’re unfurnished? Or did they furnish them?)

      • wasting my time

        This is not how IZ works. You do not sell the affordable condos yourself as a developer. The zoning commission grants IZ either for rezoning — i.e. from industrial to residential — or for purposes of bonus density. At delivery certificate of occupancy (delivery) DHCD controls the lottery system and selects those on the list (currently 4,000 individuals) who will have right of purchase. Same rules apply for renters.

    • Grant Circle

      I went from my the orientation to get on the list to closing in less than 5 months.

  • ExWalbridgeGuy

    I honestly feel like naming and shaming is an action that helps

    • dangerous dave

      +1

  • Bort

    If the developer is an LLC, has left that entity empty and enough time has passed, you’re SOL. If the condo was recently established a lawyer might be able to help you. Band together with other owners who are willing to put in time and effort to clean up the various messes left behind. I bought a condo in a building that had never formed a proper association, collected monthly fees only from some unit owners who were willing to pay them (and new owners like myself who didn’t know what a total disaster everything was), had vacant units being illegally airbnb’d by friends and relatives of the developer (none of whom paid into the association), never paid bills or filed tax forms, etc. I got a great deal on the property, but it took YEARS to sort out. Lots of sweat equity. We found out we owed PEPCO approximately $250k when we had $25k in the bank. And watch out for snakes. We had an owner who filed bullshit lawsuit after bullshit lawsuit against the association (which he knew was broke) in a blatant attempt to seize control of several hundred thousand dollars worth of parking spaces and the entire roof for his own personal use. It was a nightmare for years. BUT, I spent several otherwise enjoyable years in a great little unit and now am generating rental income from it. Good luck.

  • Fairmont

    First, make sure that you document EVERYTHING. Next, talk to a lawyer and get them to write and send a strongly worded letter to the developer and hopefully that will be enough to get their priorities where they should be, it is what worked for my building. If that doesn’t work, get in touch with every DC government housing and regulation authority that you can find and start reporting them. Even get the mayors office involved. She has gone after the major slumlords, maybe she will start taking on the developers that are doing a crappy job as well. Sorry for the horrible experience that you are having, I know some of the pain you are going through, although yours sounds even worse.

  • Wendy Testaburger

    OP – Do you mind sharing the name of the developer? I may be in similar situation and would like to know if they are doing this at other properties…

  • Emerino

    If a dying husbang gives power of attorney to sister and is married and sister uses it to enrich her family not help dying husbands family i.e. wife n his 2 children what can the wife do anyone know pls help

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