Affordable Housing Buyers Trapped By Association Fees

"When Barbara Hernandez hit the jackpot three years ago and won a coveted "below market rate" studio apartment in the Landmark, a renovated historic building in downtown San Francisco, she never thought her sweet home would unleash a bitter struggle that would wind its way to the floor of the state Legislature."

"A lifelong renter, she applied for a unit in [a housing lottery] because she knew it was her only avenue for homeownership in San Francisco. But the studio apartment she "won" - $233,000 for 450 square feet - happened to be in a remodeled building with hidden construction problems and an upscale population that was interested in amenities like 24-hour doormen.

"Hernandez...represents a potentially scary future for many condominium owners in California. Not only as an official "below market rate" owner, but as a first-time home buyer with modest means, Hernandez embodies the bleeding edge of a precarious new population of homeowners.

"I hear from them all the time," says Marjorie Murray, vice president of California Alliance for Retired Americans. "These are people on fixed incomes - they can't afford these special assessments. You throw a subprime loan into the mix and they go into foreclosure. They have no choice but to go bankrupt and start over."

Murray said one recent call was from a San Francisco couple whose special assessments during the past three years have exceeded $100,000. Another came from a woman in Pasadena whose voluntary homeowners association had suddenly been declared mandatory and the monthly dues raised from $50 a month to $350. This, says Murray, is a surprisingly common phenomenon as a few homeowners attempt to resuscitate a dormant association or make membership mandatory so they can get the group to pay for work affecting their own property."