Monthly Archives: September 2012

Who Has the Highest Condo Common Fees in the State?

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K.C. from Middlesex County writes:

Dear Mister Condo,

Is there a way that I can find out where the highest common fees are in the state? And in addition, what the average fees are for the state? My condo complex has more than 300 units. The only services included in our common fees are grounds maintenance, snow removal, garbage, and pool & tennis courts. The owners pay everything else. Currently I’m paying $389 a month in common fees and $111 assessment for siding & decks. That is $500 a month (which is almost half of my mortgage payment)! These fees and assessments have no end in sight and foreclosures are popping up everywhere because people can’t keep up with all the unnecessary fees from the condo association. Is there anywhere we can turn for help in lowering these fees? I should add that we do not live in a luxury community, so to be charging these kinds of fees is ridiculous and unfair, in my opinion.

Mister Condo replies:

K.C., I feel your pain, brother. You are not alone in feeling that your common fees are excessive but let me assure you, while your fees are high, I know of many communities where the fees are higher. There is no official place to find out where the highest fees in the state are but I suspect communities that are close to the shore, where very high premiums are paid for flood insurance and passed on to the unit owners in the form of common fees are likely the most expensive in the state.

You asked about turning for help in lowering these fees. K.C., I wish I could tell you it is as simple as tightening expenditures but the reality is that almost everything associated with condo budgets is on the rise. You mentioned the visible items that your common fees include but you neglected a few key (and expensive) items that I’ll bet are at the heart of your community’s common fees. First and foremost is insurance. A portion of your common fees are used to pay your Master Insurance, your Umbrella policy, your Workman’s Compensation Insurance, and Flood Insurance. Your management company receives a fee for their services and you pay for that, too. You likely have professional fees associated with a community of your size for accounting, legal, and administrative expenses. You may not see these services as a homeowner but, trust me; you wouldn’t want to live in a condo that didn’t take care of these things for you.

The monthly assessment charge for the siding and decks is indicative to me that not enough money was charged in earlier common fees to properly fund for such a project. Building a healthy Reserve Fund is paramount to long-term community success. The good news is that once your assessment is paid up, that $111 monthly expense will go away. Unless it is time for a new roof or new pavement or whatever. You know how that goes…

The bottom line is that every community is different with regards to its Annual Budget and its Reserve Fund contributions. You should have access to your community’s Annual Budget. I suggest you read it and understand exactly where your money is going. If you see a place where the community could save some money, go ahead and suggest it to the Board. Better yet, volunteer to serve on the Board or one the Finance Committee so you can have a say in how your money is spent. See for yourself if any of these fees are “unnecessary” as you put it. My guess is that it would be a real enlightening experience. You might just find that you’re getting a bargain at $500 per month!

Developer Went Bankrupt! Now, What?

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G.S. from New Haven County writes:

Dear Mister Condo,

HELP! A developer purchased a group of apartments and then started to rehabilitate each unit to sell. When the leases were over on the tenants who were renting at the time of the purchase, their place was immediately remodeled and placed on the market for sale.  Long story short, the building owners went bankrupt. 62% of the units are vacant and owned by the company.  30% of the units were sold and occupied and the last 10% are people who bought and can no longer afford their mortgage and are in foreclosure or short sale.  They lost their FHA financing, so if anyone want to buy a unit it has to be cash.

  1. A lot of complaints regarding the building not being fixed. Do I have any recourse into having items fixed?
  2. Will the property ever be turned back into rentals?
  3. We do pay a home owners association, but there is hardly any money in the reserve account. Therefore the property is being neglected.
  4. Can this turn into a slum area?
  5. Will the property continue to decline?

I’m just at a complete loss.  It’s in an excellent location, but it’s a huge mess right now! Do you have any ideas for me?

Mister Condo replies:

G.S., thank you for the well-worded questions. Sorry for your ongoing saga. Let me try to give you some friendly advice and apply my common sense observations that come from being around condos for so many years.

Developers come in all shapes and sizes. The one thing most have in common is “vision”. The developer of your property saw a rental complex with a great location and saw a potential condominium conversion that would transform something old and worn down into something new and wonderful. And if all had gone as planned, I assume the project would also be profitable. A larger developer with deeper pockets would have likely been able to stick it out and see the project through. But nothing fails faster that a developer who runs out of money. The problem is folks like you, who bought into the “vision”, are left picking up the pieces.

As for your questions (1 – 5, above), let me say this. When the developer went bankrupt, all bets were cancelled. Bankruptcy protects the developer from further financial action. Unless another developer or financier (like a bank) takes the project on, there is simply no more money available to complete the work. If a new owner emerges, you may have recourse into having items fixed. The new owner would have the right to do whatever they wanted with the property, including turning it back into rentals but they would have to buy out any existing owners (or wait until they were foreclosed on, ouch!). It could easily turn into a slum area and could easily continue to decline.

My advice would be to get out if you can, although I don’t know who would want to buy into such a “huge mess” as you put it. If that is not an option, you could ride out the craziness and see what happens but don’t expect too much in the way of improvements or maintenance. If there is a homeowner’s association (HOA), they should meet and immediately hire an attorney to protect the common interests of the remaining owners. The HOA needs legal advice more than anything else right now. I don’t want to panic you but the odds of this turning around favorably are not very good. It might just be best to write this off as a learning experience of following someone else’s dream as it turned into everyone else’s nightmare. Best wishes, G.S..

What’s “Reasonable” About Fees for Record Inspection?

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A.D. from New Haven County writes:

Dear Mister Condo,

I have asked my Association’s Management Company to allow me to see documents which our by laws allow us to view. I have no problem paying for copies but he is going to charge me $45.00 dollars an hour to look at the documents at his office. I’m not sure the $45.00 per hour charge is considered “reasonable fees”. Also if the owner of the Management Company is also owner of the “contractors” hired to do any maintenance and repair he needs to disclose this to the unit owners, correct? He can not abbreviate the names of his maintenance Companies and mislead us in meeting minutes and other documents, correct? Thank you so much for providing us with any and all information. It is so appreciated and helps me to vent and relieve some of the stresses of condo ownership. Thanks, again.

Mister Condo replies:

A.D., I am sorry you are finding so much stress in your condo ownership. I am glad you can find some relief by venting here.

You, and every other condo owner, have the right to inspect the books of your association. This right is likely guaranteed in your by laws, as you mentioned, and also under state law. The hourly fee charged by your management company can always be questioned but there is little in the law, as I understand it, which clarifies “reasonable fees”, so unless there is a court case or additional law that addresses what fees are “reasonable”, the Management Company can charge fees that it considers reasonable. For the record, I see both sides of the coin here. Access should be easy and affordable but the Management Company is a business and has to pay for employees, benefits, overhead expenses, etc.. In a perfect world, all of these records would be online with secure access granted as needed, thus eliminating what is reasonable and what is not, although that would require another level of recordkeeping and internet access for all condo owners.

My greater concern from your question is in your assertion that the Management Company is also acting as a contractor and not disclosing that information to the Board or unit owners. That is a serious accusation that should be brought to the Board’s attention for further investigation and/or legal action. If the allegations you are making are true, there could be serious repercussions to the accused. At the very least, your community would be well-advised to seek out a new management company if your current one is performing illegally or unethically. There are a myriad of reputable and qualified property management firms to choose from so there is no reason to use a firm with questionable practices with regards to hiring contractors. Also, doesn’t your Board have a say in who gets hired to do the work of the association? At my association, we solicit bids and award contracts based on price and reputation. I can’t imagine awarding contracts any other way.

As always, all my best, A.D.. Good luck!

Is There a Government Agency that Pays Common Fees for Unemployed Unit Owners?

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S.S. from Middlesex County writes:

Dear Mister Condo,

Does any government agency help when you can’t pay your condo fees and you fall behind without a job?

Mister Condo replies:

S.S., I know of no government agency that helps specifically with paying condo common fees for folks who lose their job or become otherwise financially strapped. There are programs that offer unemployment benefits, and programs that offer rent assistance. There are even government programs that can help with mortgage refinancing to help lower monthly mortgage payments but common fees are the responsibility of the condominium unit owner.

Landlord Doesn’t Pay Common Charges, Tenants Rights Effected

E.E. from Fairfield County writes:

Dear Mister Condo,

If a landlord doesn’t pay the common charges, can the Board take away the tenant’s privileges of using the pool or renting the clubhouse from them?

Mister Condo replies:

E.E., is there anything more disappointing to a community than a unit owner who doesn’t pay the common fees they agreed to pay in timely fashion when they purchased their condo?

The short answer is to your question is “Yes”. The Connecticut Common Interest Ownership Act, also known as CIOA, allows condo boards to suspend a delinquent unit owner’s privileges, which the unit owner would then no longer be able to confer to his tenants.  Only non-essential privileges like the ones you mention can be suspended; the board could not deny the tenant access to the unit or terminate its utility services.

More Hot Tub Worries

D.D. from New Haven County writes:

Dear Mister Condo,

A new condo owner has asked to be allowed to install a hot tub on his deck. Our declaration does not address hot tubs. It is a fact according to our documents that all decks are common property.

Mister Condo replies:

D.D., you’ve made my job easy as you’ve, more or less, answered your own question. If the decks are specifically listed as common property then no owner has the right to alter that common element without the approval of the Board. As long as the Board doesn’t give permission to the unit owner, they are prohibited from installing the hot tub. Of course, that doesn’t mean they won’t try. But, if they do install the hot tub, the Board would have full authority to have the owner remove the tub and make reparations for any damage done to the deck. Best wishes!

Condo Needed a Wider Driveway, Gets an Eyesore Instead

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S.F. from Hartford County writes:

Dear Mister Condo,

Five years ago, the drive to our underground parking garage was widened. The excavation for this project exposed areas of poured concrete that were never meant to see the light of day. The project remains in this unfinished state and it’s quite ugly. I’ve offered to pay for a temporary solution which involves hiring a couple of young artists to paint bricks and rocks on the concrete so it looks nice as well as real. When the board has the money to finish the project permanently, it will be easy to do. I approached the board and they have not made a decision but their comments didn’t sound favorable. This building burned down 2 years ago and now we have a nicer looking building than the other 3 on our grounds. Some may be jealous, some don’t like me because I didn’t cow tow to them when I was on the board. I’d like to know if I have the right to hire an attorney and force them to complete this project. Cost is less than $1000. They have the money but, again, I’ve offered to pay for it. What rights do I have as an owner? Five years is a long time to have to look at this ugly wall every time I drive in.

Mister Condo replies:

S.F., why the Board undertook only half of this project is a mystery to me. They would have been well advised to complete the job all at once as it would have been less stress for the community and made for a safer and permanent solution. I can appreciate wanting to pay for the project over time but they should have taken a loan to accomplish the same results. That being said, your question is about your rights to hire an attorney to force them to complete the project. As you know, I am not an attorney so I cannot dispense legal advice but here’s my shot at some common sense.

Everyone has the right to hire an attorney. My guess is that if you consult with an attorney you will likely be told that no wrongdoing has occurred here. Their decision to widen the drive is commendable. As long as they followed proper procedure for awarding the contract and paying for the job, they have the right to spread it out over time and save the community money as they see fit. The only “offense” they’ve committed, from what you’ve told me, is that they created an eyesore. While that may not be enjoyable to look at, it hardly constitutes the grounds for a lawsuit.

Perhaps a far better solution would be for you to seek out like minded individuals and get some of them (or you) elected to the Board so that, at the very least, you can get some traction on your art idea. I’ve seen similar murals and such on buildings and they look spectacular. If the cost is only $1,000.00, the community could generate some publicity and good will by hiring local artists to solve this eyesore problem. The fact that you’re willing to foot the bill should be icing on the cake. Of course, keep in mind, your condo has rules about who can do work on your property (licensed and insured contractors only) so you may have a few hurdles to overcome before your idea can become reality.

I wish you the best in your artful endeavor. I salute your civic pride and community spirit. Good luck!

Can a Spouse of a Condo Owner Serve on the Board?

J.K. from Middlesex County writes:

Dear Mister Condo,

I recently got married and moved in with my wife who owns the condo (mortgage is in her name).  Being that I am not on the mortgage but reside there, what is my status in terms of the condo association? Would I be eligible to serve on the condo board if elected?

Mister Condo replies:

J.K., congratulations to you and your wife on your nuptials! Believe it or not, it’s not the mortgage but rather the deed that matters.  If your name isn’t on the deed, then you’re not a “unit owner”, which means you have no right to vote at the community’s elections and meetings unless your wife gives you a valid proxy and doesn’t attend herself.  (You technically don’t even have a legal right to attend the meetings although most communities wouldn’t stop you from sitting in.)  Still, as a resident, you are nevertheless required to comply with all of the community’s rules for behavior.  The upside is that, as a non-owner, you aren’t personally liable for paying common charges. You aren’t eligible to serve on the board unless the bylaws specifically say that the spouse of a unit owner can do so — and an increasing number do just that. So my advice is to check the condo by-laws and see what it says about spouses of unit owners being able to serve on the Board. Good luck!

In-Law or Outlaw? Can Mom Use My Florida Condo?

M.H. from Hallandale, FL writes:

Dear Mister Condo,

I have a question regarding the use of a condominium in Hallandale, Florida. The ownership is divided between my wife and her mother, each owning 50%. My wife and I have been married about 19 years. My wife’s 50% ownership of the condominium was purchased about 5 years ago. Her mother has owned her share for 20+ years. My mother would like to use the unit in September but the association claims that the by-laws only make the unit useable by parents, children, grandchildren and siblings of the unit owners. Since my name is not on the deed, she is excluded from using the unit. This is not a rental situation, she is just borrowing the unit.  Are they correct?

For the record my wife and I file a joint, married tax return. (I’m told that may be important.) Thank you.

Mister Condo replies:

M.H., glad to hear from you! As you know, I am not an attorney so I knew I would need to ask a friend with some expertise in Florida condominium law to lend a hand with this question. Fortunately for you, I know one of the best! I asked Attorney Donna DiMaggio Berger, of the prestigious firm of Becker & Poliakoff, Inc.. Here’s what she had to say:

Dear MH:

Your starting point is to review the guest occupancy restrictions in your association’s governing documents. Some associations do restrict guest occupancy to only the immediate family members of an owner. Whether or not a mother-in-law would fit within the definition of an immediate family member depends on the wording of that restriction.

The purpose for such a guest restriction is to ensure that the community is secure by cutting down on transient occupancy. Often these kinds of occupancy restrictions not only try to limit who can visit but also the length of time a guest can stay.

If your association’s governing documents do contain an occupancy restriction that excludes your mother from occupying the unit as a guest, you should see if the documents are silent on rentals and if so, perhaps your mom should rent the unit for the time she wishes to visit in September. Typically, these kinds of short-term or seasonal rentals are prohibited but not always. Again, it all depends on your individual governing documents.

Good luck.

Donna DiMaggio Berger, Esq.

http://www.becker-poliakoff.com/dberger

New Condo Owner Caught Off Guard by a Special Assessment

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Y.D. from Tolland County writes:

Dear Mister Condo,

I recently purchased a condo. It hasn’t been two months for me in the condo and I have received a notice from the Board of Directors saying that I need to pay for my share of repairs that needs to be done to the building. My share is 13,000 dollars, which I need to pay by October 31, 2012. Since I recently paid the down payment for this condo I can’t pay that amount. I need your good advice as to how I should go about telling the Board that I can’t pay the full amount at this time. What would be the repercussions if I do so? Thanks!

Mister Condo replies:

Y.D., what a terrible way to learn about special assessments and a potential problem of purchasing a common interest property like a condo! I am sorry for your financial concerns but, hopefully, I can give you some advice to ease your burden.

First off, I assume you used an attorney for the closing of your real estate purchase. You should contact that attorney to discuss this assessment and whether or not it is your responsibility or the previous owner of the condo. You mention that you just moved in so the date that special assessment was levied is critical in determining responsibility for the payment. Also, if the special assessment had already been announced to the community before you purchased, was that information disclosed to you? You may have recourse against the previous owner. However, even if you do have recourse, that doesn’t stop the association from moving forward with the special assessment so let’s call this plan the possible light at the end of the tunnel for you.

Special assessments can occur for many reasons in a condo. The bottom line is that the association ran out of funds for a major renovation project on your building. The good news is that you will enjoy these renovations for years to come. The bad news is that, once passed, the special assessment is due to the association as soon as it is levied. You are wise to contact the Board of Directors and discuss your situation at everyone’s earliest convenience. If you were to simply not pay the assessment, you could face a lien on your property and eventual foreclosure by the association if the assessment were not paid. That is a worst case scenario so there is no need to panic about that now.

Many associations offer short term payment plans for special assessments. Perhaps you can ask if you can spread the payments out over the next year, or however long you think it will take you to make the payments. The shorter the term you propose, the more likely the Board would be to accept it. Keep in mind that during this repayment period you are also expected to make your regularly scheduled common fee payments. Be careful not to propose more than you can reasonably afford.

Believe it or not, this same situation befell me shortly after I bought my first condo almost thirty years ago. The special assessment was $5,000 to all unit owners as the money was needed by the Board to sue a developer who went bankrupt, leaving the association several dozen undeveloped units. The lawsuit lasted years with little relief back to the community at its conclusion. As no payment options were offered, I found myself borrowing the money from my father which was a very humbling experience. It took several years for me to pay him back but I learned my lesson.

There are always risks when purchasing real estate and a few extra risks when buying into a common interest community. Always take a good look at an association’s finances before deciding to purchase. Communities under construction run the risk of default by the developer. Older communities run the risk of necessary or emergency repairs that may not have been properly budgeted for, which sounds like what happened to you. Any community can find itself on the wrong end of a lawsuit or with a dearth of foreclosures and bankruptcies disrupting normal financial activities. I wish you all the best as you learn this lesson about special assessments. Good luck!