What happens if a condo building deteriorates beyond repair?

A reader and client wrote to me today to ask:

How long will an older building (say built in the 1930’s) last before it deteriorates to the point beyond repair? And what would happen to one’s ownership of the condo if a building is determined no longer inhabitable?

And then later, the client followed up:

The question of the lifespan of a building may strike you as weird, but this is a totally normal question coming from a place like China, where buildings start to show serious problems after only a couple of years and then crumble after a couple of decades. In China, when a building needs to be demolished and rebuilt, the residents have certain rights to receive compensation in the form of new housing, cash, etc. In this context, the question of what owners of American condos constructed in the 1920s and 1930s do if the building deteriorates beyond repair is entirely natural. I actually don’t know the answer. I’ve never heard of such a situation, which of course doesn’t mean it hasn’t happened.

What a great question, and one that I never considered before.

Chicago is no Rome

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I’m always impressed when watching House Hunters International and the episode features some adorable European city with buildings and apartments that date back to the 1700’s.  The charm and grace of some of the old apartments can be breathtaking. 

Here in Chicago, we don’t have any housing that dates any earlier than the 1880’s, primarily because the city burned to the ground in 1871.   A few structures survived the fire, but the Chicago Water Tower located at Chicago and Michigan Avenues isn’t a residential structure.

Homes and apartments in Chicago can date back to the late 1880’s, 1890’s and early 1900’s, but Chicago’s oldest condominiums date back to the late 1910’s and 1920’s.  So let’s look at those buildings and see how they are behaving as they age.

Brick buildings from the 1920’s

1238 Carmen ext2

One example shown here is your classic Chicago courtyard from the 1920’s.  The construction technique used when building a Chicago courtyard would be an all-brick building on a brick foundation, or maybe a concrete foundation if newer.  The walls would be three or four courses of brick thick, and the outer course of brick would be a fourth or even fifth course added as decoration.

Brick buildings are long-lasting, durable, and require very little maintenance.  The decorative outer skin of brick will require maintenance every 20 to 30 years, and if it were to fall into serious disrepair could be completely removed and reinstalled.  This drastic measure is rarely necessary, and most brick maintenance involves tuckpointing and taking care of the aging windows.  The other major component of brick buildings like this one is the roof.  Flat roofs in Chicago typically last 10 to 20 years.  And can be rather expensive to replace.  However keeping up with the roof and the brick can ensure that a brick building can last virtually forever.

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Older high rises in Chicago, such as the Rookery Building shown here, can be either all concrete block construction, or concrete over steel frame. 

Concrete block buildings have walls that get thicker and thicker closer to the ground to support the massive weight of the building above.  Steel frame buildings can be clad in concrete block without needing the additional thickness of their walls near the ground.

Both styles of buildings are nearly maintenance free and durable.  The most common defect found in buildings such as these can be the decoration that can fall off if not maintained properly.  Maintenance of the roofs is similar to that of the classic Chicago courtyard, but on a larger scale.  The same can be said for the maintenance of the exterior.  The giant concrete blocks are just larger versions of the common brick of the courtyard style building.

Amoco - AON building

The old Standard Oil, then Amoco Building, currently the AON building, offers an interesting maintenance history.  By no means “old” by Chicago standards, the Amoco Building was constructed in 1973.  It was originally clad in shimmering Italian Carrara marble which gave the building a gorgeous warm glow in the sunshine. 

Unfortunately, the thin slabs of Carrara marble did not handle Chicago’s change of seasons very well, and after only a year began to warp, bow and crack.  Steel straps were installed to attempt to hold the marble in place.  But eventually the marble crumbled and in 1990 a project began to re-clad the entire building in white granite.

Even with this dramatic defect, the underlying structure of the building remained completely stalwart. 

Probably one of the most dramatic instances of building neglect, and a situation that nearly describes the situation the client asks about in her email above is the situation at Marina City during the 1980’s and 1990’s.

Marina Towers

Converted to condominiums in 1977, the Home Owner’s Association did not adequately plan for the maintenance and upkeep of the towers, and over the years the building and some of its systems fell into disrepair.

By the mid 1990’s the concrete exterior badly needed attention and chunks of concrete could be seen falling from the building, parts of the parking garage were closed because it was not longer safe to park cars in some areas, the roof was leaking leading to damage to the condominiums on the upper floors of the towers, and the elevators stopped working frequently.

When the Home Owner’s Association actually went insolvent, a court ordered receiver took over and began the process of revitalizing the property. 

To my client’s question above, and as a “worst case” scenario, what happened at Marina City was that the new management company levied Special Assessments to make the major repairs to the building.  Some of the Special Assessments actually exceeded the purchase price of the units that some of the owners paid when they bought their condos.

Today, Marina City has been completely revitalized and enjoys a solid reputation as a building owners truly enjoy living in due to the building’s myriad of amenities and superb location on the Chicago River.

Could Capitalism be a factor?

Throughout all of the United States (and most European and Western countries) the building construction materials are of a quality that have an indefinite lifetime with maintenance and care. I think it has to do with the fact that as capitalist economies with an emphasis on property ownership, it is completely normal for the individual home owner to property maintain his or her property in order to preserve the value inherent in the ownership of the property. And that translates into the same instinct for condominium buildings where the Boards, the managers, and the homeowners all strive for the same ideal as well.

From a home inspector’s perspective

I called Michael Massart, a home inspector from Speaker of the House Inspections to ask him whether he ever heard of a condominium building falling into disrepair, and here are some of his thoughts:

  • Most of the housing stock in Chicago is 140 years old or younger.
  • The question from our client above would be a great question if the property in question were a frame house, especially a frame house in the suburbs constructed shortly after World War II as many of those homes were quite hastily constructed.
  • Your Chicago brick condo building from 1890 through 1960 were constructed of solid brick, not hollow bricks, and therefore feature more clay or concrete, and as a result it is very unlikely that this type of building would ever deteriorate during our buyer’s lifetime.
  • Chicago’s soils are very stable, made up of mostly clay and sand.  ‘our soils are clay and sand and don’t settle or heave greatly, or as severely as they may in other parts of the country or the world…. Our soils DO settle and it causes a fair amount of hardship for people; they just don’t settle greatly, i.e. bldgs. don’t tumble over because of it; our soils will subside to an extent especially in draughts, but not as much as say, Texas, where there are expansive soils and people have to water their foundations.
  • In over 8,000 inspections, about the worst Michael has ever seen are in two situations:
  • Buildings built right on top of the water – like on the Chicago River or on the lakefront.  Sometimes there is evidence of settlement in those buildings.
  • Buildings that have had their foundations compromised by malfeasance – such as construction immediately next door that undermines the foundation of the nearby buildings.
  • Chicago is the home of the Sky Scraper, and most of the world’s most experienced architects come from Chicago architecture firms.
  • High rise foundations in Chicago normally feature caissons that drill down as far as the underlying bedrock which makes the construction extremely stable.
The short answer

I haven’t heard of a situation where a condo building has fallen into such disrepair that the building could not be repaired.  Based on my experience and the comments from Michael above, I think our client can be quite comfortable that any condominium we purchase can be expected to easily outlive them.

How about if the building is destroyed?

In the event that a building DOES get destroyed by some catastrophe, such as a fire, your home owner’s insurance would pay you for your loss. And if a building was completely destroyed by a catastrophe, such as a REALLY BIG fire, the home owners that lived in the building would get together to decide whether to re-build the building, or take their insurance money and go somewhere else.

One Comment
  1. Mr. Sean
    September 3, 2010 |