Valuable lessons for condo buyers

Question: Due to upcoming major repairs at our condominium, we will receive an assessment of approximately $35,000 per unit. The work indeed needs to be done because there are lots of structural problems in the complex.

However, the value just isn’t there; condo prices have gone down and as

much as I’d hate to ruin my excellent credit, I may have to walk away and let the condo go back to the mortgage lender. I’m wondering about both my rights and responsibilities in doing this.

Am I required to give them any notice? Is there any communication between lender and borrower or do I simply leave the keys when I go?

The mortgage holder is my credit union where I have savings, CDs and IRAs. Can they attach any of those monies? Can they attach any monies in other financial institutions, or will I be on a cash and money order basis for years to come?

I’ve talked to a knowledgeable real estate broker, and basically he said I’m in a pickle. I can’t sell because the siding has been removed, showing the dry rot and other structural problems. No one would be interested in buying with such a large assessment coming up.

Answer: Your problem illustrates a number of important issues when you buy a condominium. Unfortunately, my advice is too late to help you, but this will help other readers who may be considering buying a condominium.

First, when you look at a condominium, always get a copy of the current budget. At some condominium complexes, the management purposely keeps the monthly homeowner’s dues low to keep the owners happy. But that is a short-sighted approach because a properly run condominium will include a budget for reserves to cover future maintenance and repair costs.

When management keeps the monthly dues low, they typically are not performing preventative maintenance to reduce major repairs in the future. There are also predictable expenses such as replacing the roof every 15 years or so, for which money should be set aside.

Without proper planning, the condo owners are eventually hit with a massive special assessment when the maintenance and repair bills finally come due. I have seen this happen many times. It even happened to me once, on one of the first condos that I ever bought. It was just a $3,500 assessment, but it still hurt.

To make matters worse, special assessments are not pro-rated according to how long you have owned the condo unit. Somebody who purchased a condo in your complex last year would have to pay the same $35,000 special assessment as somebody who has owned their unit for 10 years.

Which brings me to another suggestion for condo buyers: Talk to people who live in the complex. The real estate agent and sellers have a vested interest in putting the best possible spin on the condo. If you want to find out the “real story,” talk to people who live there now and have no reason to mislead you.

Finally, about “giving the condo back to the bank.” That is misnomer, because the bank never owned it in the first place. You borrowed the money from the bank (in your case, your credit union) to purchase the condo, but the title is in your name.

If you fail to make the mortgage payments, the lender will foreclose and sell the condo at auction to try to recover the money it loaned to you.

I suggest that you contact the lender and ask if they might be willing to give you some relief rather than just walking away.

But any way you look at it, if you go into foreclosure, or give the bank a “deed in lieu of foreclosure,” your credit will be severely damaged for many years.

I wish I had better news for you. Unfortunately, you are in a “no win” situation. This should serve as a cautionary tale to all readers who are looking at condos.

Steve Tytler is a licensed real estate broker and owner of Best Mortgage. You can e-mail him at

Talk to us

More in Herald Business Journal

Members of Gravitics' team and U.S. Rep. Rick Larsen stand in front of a mockup of a space module interior on Thursday, August 17, 2023 at Gravitics' Marysville facility. Left to right: Mark Tiner, government affairs representative; Jiral Shah, business development; U.S. Rep. Rick Larsen; Mike DeRosa, marketing; Scott Macklin, lead engineer. (Gravitics.)
Marysville startup prepares for space — the financial frontier

Gravitics is building space station module prototypes to one day house space travelers and researchers.

Orca Mobility designer Mike Lowell, left, and CEO Bill Messing at their office on Wednesday, Aug. 16, 2023 in Granite Falls, Washington. (Olivia Vanni / The Herald)
Could a Granite Falls startup’s three-wheeler revolutionize delivery?

Orca Mobility’s battery-powered, three-wheel truck is built on a motorcycle frame. Now, they aim to make it self-driving.

Catherine Robinweiler leads the class during a lab session at Edmonds College on April 29, 2021. (Kevin Clark / The Herald)
Grant aids apprenticeship program in Mukilteo and elsewhere

A $5.6 million U.S. Department of Labor grant will boost apprenticeships for special education teachers and nurses.

Peoples Bank is placing piggy banks with $30 around Washington starting Aug. 1.
(Peoples Bank)
Peoples Bank grant program seeks proposals from nonprofits

Peoples Bank offers up to $35,000 in Impact Grants aimed at helping communities. Applications due Sept. 15.

Workers build the first all-electric commuter plane, the Eviation Alice, at Eviation's plant on Wednesday, Sept. 8, 2021 in Arlington, Washington.  (Andy Bronson / The Herald)
Arlington’s Eviation selects Seattle firm to configure production plane

TLG Aerospace chosen to configure Eviation Aircraft’s all-electric commuter plane for mass production.

Jim Simpson leans on Blue Ray III, one of his designs, in his shop on Friday, August 25, 2023, in Clinton, Washington. (Ryan Berry / The Herald)
Whidbey Island master mechanic building dream car from “Speed Racer”

Jim Simpson, 68, of Clinton, is using his knowledge of sports cars to assemble his own Mach Five.

An Amazon worker transfers and organizes items at the new PAE2 Amazon Fulfillment Center on Thursday, Sept. 14, 2023, in Arlington, Washington. (Ryan Berry / The Herald)
Amazon cuts ribbon on colossal $355M fulfillment center in Arlington

At 2.8 million square feet, the facility is the largest of its kind in Washington. It can hold 40 million “units” of inventory.

A computer rendering of the North Creek Commerce Center industrial park in development at 18712 Bothell-Everett Highway. (Kidder Mathews)
Developer breaks ground on new Bothell industrial park

The North Creek Commerce Center on Bothell Everett Highway will provide warehouse and office space in three buildings.

Dan Bates / The Herald
Funko president, Brian Mariotti is excited about the growth that has led his company to need a 62,000 square foot facility in Lynnwood.
Photo Taken: 102312
Former Funko CEO resigns from the Everett company

Brian Mariotti resigned Sept. 1, six weeks after announcing he was taking a six-month sabbatical from the company.

Cash is used for a purchase at Molly Moon's Ice Cream in Edmonds, Washington on Wednesday, Aug. 30, 2023. (Annie Barker / The Herald)
Paper or plastic? Snohomish County may require businesses to take cash

County Council member Nate Nehring proposed an ordinance to ban cashless sales under $200. He hopes cities will follow suit.

A crowd begins to form before a large reception for the opening of Fisherman Jack’s at the Port of Everett on Wednesday, August 30, 2023, in Everett, Washington. (Ryan Berry / The Herald)
Seafood with a view: Fisherman Jack’s opens at Port of Everett

“The port is booming!” The new restaurant is the first to open on “restaurant row” at the port’s Waterfront Place.

Tanner Mock begins unwrapping new furniture that has been delivered on Thursday, Aug. 24, 2023 in Everett, Washington. (Olivia Vanni / The Herald)
In Everett, new look, new name for mainstay Behar’s Furniture

Conlin’s Furniture, based in South Dakota, bought the huge store and celebrates with a grand opening this week.