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Dispute over expensive repairs to some units

If a small number of condominium units are damaged in a storm, you would think that the condo corporation would pay to repair the affected units out of the common purse but there are times when the majority of owners, the ones who's units were not damaged, don't agree.

Neighbors call for Association to make repairs at Fenwick condominium complex
By Evan Koslof
Updated: 21 July 2016

Mallard Lakes is located off of Route 54, near Fenwick Island. (Photo: WBOC)

FENWICK ISLAND, Del. - It's been almost four years since Superstorm Sandy rocked parts of Delmarva, and yet the debate over fixing some damaged homes continues in one part of Sussex County. A group of 12 neighbors in the Mallard Lakes community, located off of Route 54, near Fenwick Island have sued the Mallard Lakes Condominium Association, for their lack of action in raising their homes.

On Wednesday morning, a Sussex County Chancery Court judge heard oral arguments on some procedural motions. The case could go to trial in the next year if the parties do not come to an agreement.

The conflict all began in 2012, when four condominium units, with 24 homes, were damaged during Superstorm Sandy. The 12 neighbors said that the condo association made repairs, but did so in a way that did not make the homes compliant with Sussex County Code. The condos need to be lifted in order to be in compliance, but the debate is over who should front the cost.

Richard Heubeck, one of the 12 neighbors, said that it should be the association's responsibility to raise the homes on their dime.

"We are basically right below or right at the flood plane for the units here," he said. "And every time there is a Nor'easter that's forecasted, our biggest concern is are we going to get flooded again."

Lawyers for the Condo Association submitted an answer brief in response to the filed lawsuit. Attorney Chad Toms said that the bylaws for Mallard Lakes clearly dictate that the responsibility to repair damage from natural disasters lie on the homeowner, and not the association.

"They live in a community," Toms said. "Where we must abide by the bylaws."

In October 2015, the association held a vote among all 477 condominiums tenants, asking neighbors if they would support the community absorbing the costs for raising the homes. By an overwhelming majority, the voters said no.

View from Richard Heubeck's condo in the Mallard Lakes development in Selbyville. Richard' condo has subfloor damage from Sandy, the 2012 storm, that never got repaired right. (Photo: Jason Minto/ The News Journal)

Neighbor Lorraine Johnson, another plaintiff,  said that homeowners should only be responsible for the repairs within the home. She said that the condo association should be responsible for exterior repairs, such as lifting up the home.

"Bring our homes up to code," she said. "To have them elevated, and have them clean and livable, and safe."

Judge won't put gag order on Sandy-damaged condo owners

The News Journal
James Fisher
22 July 2016

A bitter disagreement over Superstorm Sandy damage to a set of Selbyville-area condo buildings won't be tamped down by a court-imposed gag order, a Court of Chancery judge has ruled.

Vice Chancellor Sam Glasscock III ruled against the condominium association at Mallard Lakes, which had asked the court to stop some unit owners from speaking publicly about a dispute–and lawsuit–over whether Sandy-damaged structures have to be elevated and who will pay if they must be.

seeking to cause turmoil and tension in the community

The unhappy unit owners, the condo association said in court filings, were "seeking to cause turmoil and tension in the community by driving down property values and making operation of the association more expensive." The association had asked the court to prevent the plaintiffs in the lawsuit from raising the subject in HOA meetings and Sussex County Council sessions, too.

But the owners, who've banded together as the Mallard Lakes Sandy Interest Group, say the condo association and real estate agents listing properties in damaged buildings have tried to paper over the fact that the affected units still lack occupancy permits because their post-Sandy repairs weren't completed. The condo association, the group says, must act to fix the damage and spread the cost among the development's 277 units, not just the handful of units in the affected buildings.

bought a condominium they cannot legally occupy

In at least two cases, the group says in a court filing, "condominium units have been sold to unsuspecting owners who factually bought a condominium they cannot legally occupy... Rather than help resolve the situation, the association has tried to silence the petitioners, ignored the problems, or given false information."

STORY: A Sandy headache that won't go away

Glasscock's ruling this week, denying a preliminary injunction sought by the condo association, is far from the last word in the overall lawsuit. The disgruntled owners filed suit in October 2015, three years after Sandy soaked the Delaware coast. In the storm, four 6-unit buildings saw close to a foot of water intrude on their ground floors.

Because Mallard Lakes had filed three claims with the National Flood Insurance Program in the past even before it submitted a claim for the Sandy damage, the federally-run NFIP insisted the affected buildings had to be raised — in some cases, only by about 4 inches — to qualify for occupancy certificates. Since then, the condo unit owners and the association haven't been able to agree on how the cost of that building elevation should be divvied up.

"The association doesn't oppose the elevation of those buildings," said Chad Toms, an attorney representing the Mallard Lakes condo association. "The problem is, these owners want the entire community to pay for it. Our governing documents say these owners should pay for it. It's a stark contrast. There were solutions, but these particular plaintiffs and the litigation choices they've made have foreclosed those options."

STORY: FEMA spurns Mallard Lakes Sandy grant bid

The upset owners, meanwhile, say they're glad Glasscock declined to force their silence in public about the dispute.

"Mallard Lakes board members have chosen to spend everyone's condo dues on legal fees such as this indefensible attempt to stifle our constitutional right to free speech," Melissa Golden, a Pennsylvania resident who owns one of the damaged condos. "Mallard Lakes HOA's time and resources should be dedicated to resolving the very serious issues of Sandy victims who have no certificates of occupancy."

The costs of rising the units
The attorney for the condo corporation responds that only the members who own the affected units in those four buildings are financially responsible for the cost of elevating their buildings.

Instead of spreading out the estimated price tag among 477 units, it should be divided among the 24 units.

If all units were to contribute, all owners would need to pay a $4,000 per unit special assessment. If only 24 units must bear the cost, each unit owner would have to come up with $79,500 which is approximately 40% of the value of their homes.

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