May 2022

Condominium ownership has become more popular in recent years as many city and suburban dwellers sought reasonably priced second homes away from the pandemic’s influences.  But condo ownership isn’t for everyone, especially those who like to control what they can do in and around their homes.  A personal cautionary tale highlights this month’s Home On The Course.

Condo Ownership:  Cautionary Tales

Real estate is still hot, despite the rise in inflation.  I write this from northern Vermont where my wife and I babysat last week for our grandson. (His place of daycare was on vacation for the week and his mom and dad both work.) Our daughter and her husband would like to move to a larger home in the area, but nothing is available.  In the past I might have said nothing available “in their price range” but, today, virtually nothing is available below or above their price range.

Something similar is happening in golf communities where single-family home prices have risen by double digits annually in the pandemic years; although condo prices have risen almost as much, they started from a generally lower base and, therefore, appear to be a bargain, relatively speaking.

As readers of this newsletter know, my wife Connie and I own a condo in Pawleys Island, SC, which is an area of terrific golf and a beautiful Atlantic Ocean beach. Our condo is at the west end of a six-unit building; it faces a pond, beyond which is one of the community’s pools and immediately beyond that the clubhouse and first tee of a fine Jack Nicklaus golf course.  When we purchased the unit in 2000, our golf-obsessed son was 11 years old, and the condo’s location a short walk from the first tee gave him the ability to walk over and play early in the morning — without waking his parents.  The guys at the bag drop became quite fond of him and, don’t tell anyone, started letting him drive a golf cart at around age 14.  Tim, who went on to play college golf and today writes for the Golf Channel, honed his early game at Pawleys Plantation.

Paying to (not) Play

Unfortunately, life intruded on our “investment” at Pawleys Plantation, and what we enjoyed in terms of a grand buffet of golf course choices and access to one of the best beaches on the east coast was neutralized by a shortfall in use of our vacation home.  We simply did not spend as much time there as we expected when we purchased the condo and that, of course, made the home a questionable financial decision (although not a bad long-term investment).  Between dues for the semi-private golf club, the cost of mandatory carts to play, Homeowner Association Fees (for both our condo association and the overall property owners association), and property taxes — modest by New England standards — we have paid $20,000 per year over our 20 years.  (We finally downgraded our full club membership to a social membership a few years ago and now pay half the dues we did before; but we now pay green fees, although reduced, just like daily fee golfers.) 

Our most extensive annual use of the condo was probably 14 weeks during two of those 20 years, and some years we did not spend more than eight weeks there.  The average was 10 weeks and that works out to about $2,000 per week considering the costs of ownership and golf.  I daresay that we could have rented a place for an entire summer in Pawleys Plantation for $20,000, or less.

Memories May Be Beautiful, And Yet...

But my wife and I are content understanding that you can’t put a price tag on good memories, and we have some wonderful ones from Pawleys Island.  I should mention that the condo cost us just a bit more than $200,000 in 2000 and that it is probably worth twice that today.  But something recently occurred that has put a damper on two decades of relative calm. And it is a reminder that, as dense and turgid as documents like master deeds and association bylaws may be, it pays to read them before you become a member of an association that can affect your finances.  It also has convinced me that it pays to get involved in association governance; even if you don’t serve on the association’s board, reading the minutes and attending what meetings you can prepare you for some nasty surprises.

Our condo building was ready for occupancy in 2000, six years after the original two-unit building opened 80 yards down the road.  Today, the association comprises seven buildings with 28 units in all.  Our building includes six contiguous units and sits beside the 15th hole’s tee boxes with a lawn and some pine trees serving as a buffer.  Our building’s units each feature a ground-floor screened-in porch from which we enjoy views of the pond and of golfers banging balls off the 15th tee — and cursing when they slice their shots into the condos off the fairway on the right.

Here Come the Porch Decks

In 2005, the original developer of our neighborhood community opened the third building of condos and, over the following three years, the remaining four buildings.  Larger than our own condo units and some with garages rather than our carports, the new buildings shared one other feature that ours did not have — second-story porch decks just off the main upstairs bedroom.  As is customary and required, the developer filed an amendment to the original master deed indicating that, among other things, the new units each included the second-floor porch decks and that — here is the nub of the issue — the elevated porch decks would forever be considered “limited common elements.”

I pause here for a bit of a discourse on “common elements,” also referred to as “common areas,” which are typical of all condominium developments.  Examples of such common elements are parking areas, external elements like roofs and foundations, lampposts, park areas and other landscaped sections, and even ground floor screened-in porches.  These are “common” to all units and their owners.  But until recently I was not aware that some common elements are “limited.”  “Like other common elements,” according to one definition, “a limited common element is owned jointly by all of the unit owners (in a condominium) or by an organization of which all the unit owners are members (in a planned community or cooperative).  But unlike other common elements, the use of a limited common element is restricted to only certain unit owners.” (The italics are mine.)

Something's Rotten

In other words, the 20 of 28 units in our association include porch decks that my immediate neighbors and I have no access to but for which we are as financially responsible as those who have exclusive use of them.  A study of the association’s infrastructure conducted in 2018 indicated that the second-floor porches, under normal conditions, would require replacement in the year 2026.  But as luck would have it, some of the porches sprung leaks beginning in 2018; one thing led to another and after repairs to the decks failed to correct the problems, the board hired an engineer to inspect them more closely.  He found rotting wood around doors and joists adjacent to some of the decks.  The Board decided to replace them all, at a total cost of $310,000. 

The porch replacements were completed in late summer of 2021 and the funds to pay for them virtually exhausted the association’s reserve fund which exists to cover for such emergencies.  But here’s the rub:  The roofs on all seven buildings are also in need of replacement — some more urgently than others — and there is nothing left in reserve to pay for the roofs. 

In a December 2021 letter to all association members, the Board announced a special assessment of $14,000 per owner to refill the reserve in order to pay for the upcoming roof replacements — something that would not have been necessary without the damages to the second-story porch decks and the costs to replace them.

One For All

You can imagine how those of us who do not have porch decks felt about the assessment, in effect subsidizing those who do enjoy them.  But we are members of the association, and the master deed applies to all of us and indicates that the porches are limited common elements.  (Note:  Neither we nor our neighbors understood previously that limited common elements existed; I doubt most with porch decks knew that either before the assessment letter arrived.)  My neighbors and I petitioned for a special meeting, permissible under the bylaws of the association when 10% of members request it.  At the meeting we asked such questions as whether all porches required replacement, why insurance did not cover at least some of the costs, and why members of the association were not offered the opportunity to vote on whether the board should take out a low-interest loan and have all members pay the costs of the porch replacements over time, rather than in one lump.  In most cases, the responses from the board and the management company it hired were essentially that the board acted in the best interests of the association; while some members might disagree with the decisions or the logic behind them, the laws of South Carolina and the association’s bylaws give condo boards broad power to do what they consider best. Everyone’s $14,000 payment for the assessment is due September 1.

Lessons Learned

Why am I taking the time to recount what is basically a personal expense and a unique situation? The answer is that anyone who owns a vacation condo or plans to purchase one can extrapolate helpful lessons from this experience.

First, read the condo association documents before you buy a unit or, even if you own one, review those that govern the operation of your association.  Condo associations and the management companies they employ are required to provide all association documents upon request. Be on the lookout for any provisions that distinguish between units, especially “limited common elements” (like porch decks, entryways, certain pipes, etc.) that might apply to other units in your association but not yours.  Pay attention to the bylaws. Some, like our own, for example, compel a member of the association to solicit the support of at least one board member in order to speak at a board meeting. (We will be working to change that rule in our association.)

Taxation Without Representation?

Get involved in the governance of your association.  That can be as much as serving on its board or as little as reading the minutes of quarterly board meetings. I am a part-time resident of the community but some of my immediate neighbors, equally upset with the surprise nature of the assessment, are full-time residents. (Note: The president of our board is a part-time resident.) Yet none of us were on the board when the decision on the assessment was made, and we only sporadically attended quarterly meetings.  My wife and I and our five adjacent owners comprise more than 20% of the association’s members and should be directly involved to avoid the equivalent of taxation without representation.  Given our recent experience, a few of us are considering running for board slots in the coming year.  Better late than never.

Become familiar with the laws that govern condo associations in the state where you intend to purchase a condo, or already own one.  I have friends who own condos in Florida and have served on their boards and, as we compared notes, I learned there were significant differences between Florida laws and South Carolina laws. (South Carolina laws appear to give broader powers to association boards.)  No matter where you live, however, condo boards have a fiduciary responsibility to their members. (That they may fail to live up to those responsibilities, on the other hand, is extremely difficult to prove.)

My neighbors and I were surprised at how much the board seemed to defer to the management company it had hired. Board members are volunteers, unpaid for their time and energies, and it seems logical they would defer operational activities to a management company the association pays.  But that does not mean that the board should defer its oversight responsibilities; for example, to qualify vendors. Repairs of the porch deck leaks in 2019 and 2020 took longer than promised by the contractors and, as it turned out, did not address the root causes for the damaged decks. 

There is much to consider when considering purchase of any vacation home or full-time residence in a condo community.  Financial considerations are always top of mind, and of course you should consider if you will get your money’s worth out of the investment.  But right behind those considerations should be the governance of your condo association.  I learned a lot from reading the master deed, bylaws and other documents related to our association, as well as the state laws regarding governance of condo associations.  My neighbors and I would have been much better off reading them before we needed to.

Larry Gavrich
Founder & Editor
Home On The Course, LLC


My Post-Pandemic Golf Adventure

In 2008, I became smitten during my first Scottish golf vacation with the Crail Golfing Society and the nearby fishing village of Crail.  Located in the Kingdom of Fife about 75 minutes north of the famed city of Edinburgh, Crail is postcard perfect. In June, when the flowers are in bloom, there are dozens of sites above the village from which even the most mediocre of photographers can snap what will appear to most as a professionally taken photo.  Crail is small and lacks some of the creature comforts that visiting golfers seek out, like more than two pubs and a few choice restaurants.  But the golf at Crail is more than worth missing a few amenities, and the bustling, university town and mecca of golf is just nine miles away in St. Andrews.

Golf at Crail may be the most underrated in the British Isles.  Not only is the links golf everything an American dreams of on a Scottish golf excursion, but the views – literally from every hole – are unique.  It may be the only 36-hole complex in the world with views of the ocean – in this case the North Sea – from every single hole. Throw in pot bunkers, brick walls – some that cross fairways – rocky beaches, grazing sheep, hard-packed linksland turf and the ever-present ocean winds and you have virtually every British Isles golf condition wrapped up into a single round.

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Two years before the pandemic began, I signed up for an overseas membership in the Crail Golfing Society.  The modest fee pays for eight rounds annually on each of the two golf courses – the vintage Balcomie course designed by Tom Morris and the more “modern” Craighead layout by Gil Hanse. (“Modern” is in quotations because Hanse did a wonderful job of making Craighead fit the landscape and the notion of vintage links.) My membership also grants me the ability to bring guests to play at a rate about 1/6th the regular green fee rate.  You will never feel more charitable than introducing a friend to Crail Golfing Society and at a rate so low you will feel like treating them; they will certainly feel treated.

I leave this week to visit Crail for the first time in four years and to play my club’s two golf courses for the first time as a member.  My friend Bob will accompany me for seven days of golf, a day of touring the castles and other sights of Fife, and one day of relaxation in the village of Crail.  I can’t wait and look forward to recounting the nine days in this space next month.

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Village of Crail

My Golf Clubs Travel First Class

I worked for a brilliant CEO during my corporate days.  His presentations to Wall Street analysts were legendary within the company.  His philosophy was simple:  Under-promise, then over-deliver.

I recalled that this morning when I began tracking my golf club shipment to Scotland via ShipSticks and its carrier, DHL.  I have used ShipSticks and DHL four times in the past with nothing but smooth sailing (well, flying actually).  My clubs were picked up by DHL at my Connecticut home on Monday, and ShipSticks guaranteed their arrival at Crail Golfing Society in Scotland for the following Monday, the standard five-business-day promise most shippers make.  Yet every time I have shipped my clubs with Shipsticks, they have arrived within just three or four days.

This morning (Wednesday) I checked my tracking information for this trip and my clubs are already in England, ready to be driven over land to Crail.  My first round is Tuesday and, if past is prologue, my clubs will be waiting for me in the pro shop, well rested after an early arrival.  My playing partner’s clubs arrived there just three business days after he sent them from North Carolina. That was his first experience with ShipSticks but probably not his last.

I rarely make any public endorsement of a company’s service, but in ShipSticks’ case, I am happy to make an exception.  Literally, in two senses of the word, they consistently over-deliver.

Crail Golfing Society, Crail, Scotland
Crail Golfing Society, Crail, Scotland


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