Condo Operating Expense Versus Reserve Charge

J.N. from Fairfield County writes:

Dear Mister Condo,

When is an operating expense really a Reserve Charge?

Mister Condo replies:

J.N., typically speaking, operating expenses are those expenses which are incurred during the regular course of business during a calendar year for the association. There are exceptions, of course, as there are some expenses that recur at intervals outside of the calendar year that are still operational in nature. Reserve Charges, on the other hand, are quite specifically collected and deposited in the Reserve Fund. Additionally, many associations have specific Reserve Fund components, meaning funds are collected in Reserve for the roof or the parking lot or the buildings or the pool and tennis courts, and so on. These funds should not be mingled with Operating Funds, which further help to identify them as Reserve Charges. If your association is doing something else when collecting Reserve Charges (paying insurance bills or management fees, for instance) then they are not handling Reserve Charges correctly and could find their use of these funds questioned by a concerned unit owner like you. Hope that helps. Good luck!

“Granted” Condo Parking Spaces Used to Entice Buyers Creates Long-Term Problem

 

P.G. from outside of Connecticut writes:

Dear Mister Condo,

When we purchased our units, many, but not all, came with parking spaces granted legally by the developer. Many owners/tenants are leaving their non-moving vehicles (we have 72-hour “must move” to a new spot rule). MANY others are having their “visitors” regularly use their space. They are not visitors, they are there EVERY day. It’s a sublet or extra vehicle of an owner (we have a maximum of 2 vehicles per unit). Did the developer have the right to grant spaces like that to some? For example, what was to stop the developer from granting ALL spaces to one owner? I’m fortunate, I have a space, but many do not. MANY who do are abusing it, or not even parking their car in that numbered spot “in case” they have a visitor. What can be done? Thanks.

Mister Condo replies:

P.G., I am not familiar with the concept of “granting” parking spaces. If the parking spaces are listed on the deed and were made part of the purchase, there isn’t too much the association can do about reclaiming the spaces for the general use of the association. If there is no mention of the spaces on the deeds and the only “claim” unit owners have is a verbal agreement they claim they had with a developer who is long gone, the Board may be able to use the association’s governance documents as claim over the common areas, which typically include the parking areas. If that is the case, reclaiming these spaces is Step 1. Reassigning them is Step 2. Before you try either, consult with the association’s attorney who will give you the correct legal advice to proceed. Understand that this is not going to be a popular decision with the folks who will be negatively impacted. However, fair is fair and right is right. If unit owners have no legitimate legal claim to their extra spaces, reclaiming them is the right thing for the Board to do. This can affect future unit owner’s enjoyment for years to come. Good luck!

Cleveland Condo Association in Search of Assistance

A.B. from Cleveland, OH writes:

Dear Mister Condo,

I’m looking for recommendations for a property management company and/or a company to perform a reserve-study. I’m in a medium high-rise building (60+ units) in the Cleveland, Ohio area. Any help is appreciated.

Mister Condo replies:

A.B., kudos to you and your association for seeking a qualified property management company and a Reserve Study. Great community association governance begins with a solid plan and a great team. As you know from reading my column, I am a solid supporter of the Community Associations Institute (CAI) and their members as they are the folks who bring you the best practices for community association governance. If your association isn’t already a member, you should consider joining. In Ohio, you have three local chapters but the Cleveland, Ohio region is serviced by my friends at the Northern Ohio Chapter of CAI. They have a website at https://www.cainorthernohio.org. My best advice for you is to use their contact form at https://www.cainorthernohio.org/contact and tell them you would like a list of local credentialed community association managers and a list of Reserve Study providers. I didn’t see any local events for you to attend listed on their website but I would ask them about that as well as I know they host educational seminars from time to time where you could not only educate yourself but also network with similarly minded folks and local industry professionals who are sure to want to offer their assistance. Thanks for the question and good luck!

Condo Association Takes Over Unit Owner’s Deeded Parking Space!

L.I. from Massachusetts writes:

Dear Mister Condo,

My condo was purchased with 2 deeded spaces. The trustees have put a plow in my 2nd spot. They did not ask and I have sent 3 emails asking for them to please remove the plow. It’s a deeded space and they do not have my permission. They have ignored my emails and the plow is still there. What can I do?

Mister Condo replies:

L.I., I am sorry that your Board of Trustees has ignored your emails to remove the plow. Since it is your deeded space to use, and not theirs, you have several options available to you. First off, I wouldn’t use email to communicate with the trustees; they aren’t responding and it may not stand up as proper notification. Send a certified letter threatening legal action against the association if they don’t comply immediately with your demand that they remove the plow from your space and to never park any vehicle in any of your deeded spaces ever again without your express written approval. If they don’t respond and comply, you should promptly seek the advice of an attorney who will likely take you down the path of a lawsuit against the association. Depending on your local and state laws, you may also have the right to have any unauthorized vehicles parked in your space towed, at owner’s expense, to clear your property. This is an extreme measure and, again, should only be done after speaking with a locally qualified attorney who will best advise you of your rights. Alternatively, if you are open to allowing the association to use your space for a fee, you might want to rent them the space as they need it. But for the association to just commandeer your space because it suits them is wrong. All the best.

Condo Visitor Parking Conundrum

E.A. from outside of Connecticut writes:

Dear Mister Condo,

We have an issue with some residents not having room for their cars. We have 20 parking spaces designated for visitor parking. What would be appropriate to change to resident parking?

Mister Condo replies:

E.A., the pages of this website are chock full of parking questions. Condominiums, apartment buildings, and other high-density housing areas will forever face the challenge of on-site parking. In the development phase of the property, certain allotments were made for parking. There are numerous configurations – assigned parking, deeded parking, general use parking lots, and many more. However, if the parking lot is owned by the association (most are) then the Board is the final authority on how the spaces can be used. To be frank, the issue facing residents isn’t one of too little parking; it is one of too many cars. Depending on the climate of the Board, they could do away with Visitor parking altogether. They could assign all 20 of the Visitor spaces to units and tell unit owners that visitors would have to use one of their assigned spaces when they visit. Or they could keep visitor parking just the way it is and tell unit owners to park their “extra” vehicles off site. There are no hard and fast rules about this. Needless to say, there will be proponents and detractors of any plan that changes the status quo. Take a hard look at the true needs of the community and make the best decision for all unit owners, not just those clamoring for more assigned parking. All the best!

Homeschooling Condo Unit Owner Seeks to Add Garage Window

A.R. from California writes:

Dear Mister Condo,

I want to add a window in the garage because I homeschool my kids and is too hot inside for them.

Mister Condo replies:

A.R., I appreciate your desire to provide a window for your children as you feel it would help cool your garage, which I gather you are using as a classroom for homeschooling purposes. However, adding items like windows falls squarely under the governance authority of the Board who has to consider the architectural compliance issues that allowing you to do so may create. If you are allowed to add a window to a garage, theoretically all unit owners who asked for the same modification would have to be allowed. That creates a potential nightmare for the Board, who has a duty to keep the community looking in a uniform fashion. You can certainly ask but please respect the decision of the Board in this matter. It isn’t as simple granting your request to assist with your homeschooling efforts; the decision has far-reaching consequences. All the best!

Condo Board Resign Looking to Help Fill Vacated Seat

T.S. from Illinois writes:

Dear Mister Condo,

I resigned from our Board in August and the present board have not filled the empty seat. Our by-laws require us to have 5 members. I was told I can request a “special meeting” to have that seat filled. How do I go about doing this? And am I required to get someone to fill this seat? Or can the present board put one of themselves in that spot which 2 are up for re-election in March or do they need to get someone? Thank you!

Mister Condo replies:

T.S., I am sorry you needed to resign from your Board. Quite frankly, once you resigned from the Board, none of this is your problem anymore. For the remaining Board members, they simply need to review the governance documents and follow the procedure for filling your vacated seat. Typically, the seated Board has the power to appoint a qualified candidate to fill the vacancy. Some condo documents do call for a special election or call for the vacancy to be filled at the next regularly scheduled election. Either way, it is a fairly straightforward process. It would be unlikely that you would be required to get someone to fill your seat but I am sure the remaining Board members would be open to any suggestions you may have to help them find an interested candidate. Good luck to you and your Board!

Jersey Co-op Unit Owner Strong-armed into Questionable Repairs

L.S. from New Jersey writes:

Dear Mister Condo,

I have unit in a large co-op (almost 500 units) which is rented out. The Manager of the co-op is pushing me into renovation of 2 bathrooms in this unit. The claim is that high moisture reading in adjacent hallway is caused by my bathroom. The reading of moisture is provided by co-op engineer who does what Manager wants. The Board doesn’t want to help. The Manager has only 2 approved contractors who do all work in co-op and gets paid from them (no proof, all cash). The Manager has same bullying background and law suit from previous work place (co-op) requesting unit owners to do unnecessary repairs and getting kickback.  Both bathrooms have no visible defects and look perfect from inside. What can I do? The Board doesn’t respond to my complaints. I wrote to them showing Manager’s background. All correspondence goes through Manager. Is there any organization that protects unit owners in co-op in NJ?

Mister Condo replies:

L.S., thank you for writing. I am sorry for your situation. I am not an attorney so I cannot offer you legal advice. You are describing a particularly legal situation that may very well require legal action to settle. Further, since the Board isn’t amenable to take your side and question the tactics of the Property Manager, that leaves you alone in your battle. If you can’t afford an attorney to represent your best interests you may have little other practical choice but to sell the unit and buy elsewhere.

In NJ, the Department of Community Affairs is tasked with investigating allegations of HOA abuse, which this may fall under. Their website is http://www.nj.gov/dca/divisions/dhcr/ and I encourage you to look there and see if there isn’t a resource to assist you. Good luck!

Can Anyone Other Than a Unit Owner Serve on the Condo Board?

J.D. from Hartford County writes:

Dear Mister Condo,

Do you have to be an owner of a condo to run for an officer on the board of directors?

Mister Condo replies:

J.D., the answer depends on your condo’s governing documents. They should clearly define who is eligible to serve on the Board. It is typical that unit ownership is a requirement but it is not a hard and fast rule and many associations have by-laws that allow for non-owners to serve on the Board. Personally, I believe it should be a requirement. After all, who better to look out for the best interests of all of the unit owners than someone who is also a unit owner. I wouldn’t want someone who wasn’t going to be effected by financial decisions that impact unit owners making those decisions. But my personal preference really doesn’t matter. There is also the period of time when the declarant or developer controls the Board. Unit owners really don’t have too much to say about the governance during that period. Take a look at your condo docs for the definitive answer. Good luck!

Condo Work Contract Awarded Without Bid!

J.B. from New Haven County writes:

Dear Mister Condo,

Does the condo board have a fiduciary responsibility to obtain multiple bids for work completed on exterior? If so can they set a dollar limit whereby they must obtain bids?

Mister Condo replies:

J.B., it is a best practice to obtain multiple bids for any work done at the association. However, there are plenty of times that a Board will work with a contractor they trust or who has done previous work for them that they feel merits further hiring of the same contractor. That being said, if the by-laws call for a minimum of three bids before jobs above a certain dollar amount are awarded, then they should follow the by-laws. If not, they are setting themselves up for a lawsuit from unit owners who feel the Board isn’t following the rules on such purchases. You should take a look at your by-laws to see what it says on the matter. If it doesn’t describe the process, then the Board is likely free to hire as they see fit. All the best!