Monthly Archives: February 2013

Condo Residency Questioned in Florida

A.L. from Florida writes:

Dear Mister Condo,

Hello, I live in a Florida condo. I have had a boyfriend for about 10 months now. He lives in Sorrento but he works in Altamonte and Orlando, FL. So I knew that he was driving a long way to go home. He works 2 jobs. He finally broke down and told me that the days he works both jobs he sleeps in his car. I made an arrangement that the days he works both jobs (which is 4 days a week) that he can stay with me since it will only be for a few hours as it is too far to drive home. I don’t think I have to explain this bad economy that forces him to work two part-time jobs just to make ends meet. He parks in a guest parking spot when he is here and he bothers no one. They are placing notes on his car when he is here saying he needs to get a resident permit or they will have his car towed. What do I do? He doesn’t get mail here; he does not have any clothes here; he doesn’t have any pictures hanging up. He is not a resident. Is there anything I can do? This is clearly harassment. I pay my dues. Who can I report them to? The notice said he was illegally parked. And he’s not illegally parked.

Mister Condo replies:

A.L., greetings to you in the Sunshine State. Sorry to learn of your problems. I need some clarification as to who “they” and “them” are with regards to the notices and threats of towing being left on your boyfriend’s car. For the purposes of this answer, I’ll assume “they” and “them” are either the management company or the condo Board. First off, have you reviewed the rules, by-laws, etc. of your condo? Many Florida condos (and others around the country, too) have numerous rules about who can park on association grounds, especially in the parking spaces designated for visitor use. There are many reasons for this but it usually comes down to too many people trying to park in a confined space where the space quickly runs out. It sounds like the perception of the management company or the Board is that your boyfriend’s car is observed several days per week occupying a visitor parking space. The repeated use of a visitor space by the same vehicle has triggered a reaction. In this case, the reaction is to inform the visitor that the space is for guests only and seeing as his car is there quite often, he no longer falls under that category of guest. Unless you can get the Board to agree with you that he is a guest and not a resident, you will likely see this situation escalate to the point of the car being towed. Of course, there is no reason for things to go that far.

Since the Board has suggested that your boyfriend get a resident permit, why not do just that? Ask for a resident permit for your boyfriend. If they deny you the permit, you can say that you tried to comply with their request. Do you also have assigned parking at your condo? Perhaps your boyfriend could park in your space and you could park elsewhere when he visits? Can he park nearby but off property? If you exhaust all of these options and still can’t find a solution, I might suggest you consult a local attorney who can better tell you what your rights are. If you feel you have been harassed and have a legal case against the condo, by all means, hire an attorney and bring a suit. I wish you a successful resolution and a happy ending.

How Often Should a Condo Association Be Audited?

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J.S. from Fairfield County writes:

Dear Mister Condo,

Is there a statute that governs how often a condo association needs to be audited? If so how often does this need to occur?

Mister Condo replies:

J.S., as you know, I am not an attorney. However, I am unaware of any statutes that require a condo association to be audited, other than in the initial stages of developer transition when the developer actually stops overseeing the condo and turns it over to the homeowners association for their own governance. In a larger association such as the one you live in, it would just make sense to have third party perform an audit every so often just to assure all unit owners that the money is going where it is supposed to. I have heard every other year and even every third year as reasonable suggestions. I have also heard of associations that conduct full audits if there is to be a change in management. This is done to protect not only the association but also the incoming and outgoing management company. CAI recommends an independent audit “every few years” according to their handout entitled “Preventing Fraud and Embezzlement”. You can download a free copy at http://www.caionline.org/info/help/Documents/Preventing%20Fraud%20and%20Embezzlement.pdf.

Window Air Conditioner Is Not Cool With Condo Board

M.M. from Middlesex County writes:

Dear Mister Condo,

Can the association charge me for landscaping fines and, also, for putting in window air conditioner when I was originally told they were allowed?

Mister Condo replies:

M.M., I am sorry for your problems. It sounds like there has been a failure of communication between you and your association. Unfortunately, it is not all that uncommon. I am not sure what you mean by landscaping fines but if you altered or violated a landscaping rule, you may be subject to a fine. Were you initially given notice or a warning that you were in violation of a rule? Were you asked to appear before the Board to explain the violation? If not, you may have a case for not being subject to the fine. As for the window air conditioner, that is another story. Do any other units in your condo have window air conditioners? If so, then your condo allows air conditioners or has a plan in place for owners to ask to install association-approved air conditioners. If no other unit in your complex has a window air conditioner, then it is most likely not allowed. If you haven’t already done so, consult your by-laws to see what, if anything, is stated with regards to window air conditioners. In my experience, most condos do not allow them. I am not sure who told you that it would be alright to install one but that person may have been mistaken. Even if that person was a member of the Board, they likely didn’t have the right to overrule an association rule on the use of window air conditioners. For future reference, always ask in writing and wait for an answer in writing when contemplating any upgrade to your unit that might be considered questionable in the eyes of the association. Otherwise, you may get into a “he said, she said” type situation which can cause exactly this type of problem. Good luck!

Has This Condo Board Overstepped Its Authority?

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S.G. writes:

Dear Mister Condo,

I have two unknowledgeable people living in a condo complex where I own a unit. One of the folks is the condo president and the other is an elderly woman. Recently, they held a meeting and determined that:

  1. There would be no Trespassing on Unit #1, Access to Rear Entrance, Deck. They claim the deck is private and no one but the owner is permitted use although it is a common egress for 2 of the 4 units in the building. Is that lawful?
  2. Each unit shall contain one family or not more than 3 unrelated persons. Currently there are (4-5) people, all with different last names who are being asked to provide proof they are a family or are related. This seems discriminatory to me. Is this lawful?
  3. The condo owners must be allowed access to the Fuse Box Room in the basement which has been designated as exclusive storage for unit #3. Does the association have the responsibility to designate a new area for exclusive storage?

Thanks for your help!

Mister Condo replies:

S.G., sounds like your Board is struggling with a lot of issues right now. Without knowing the specifics of your association, it would be impossible for me to give you detailed advice. Suffice to say, if all that you are stating is true, it would appear there is room to question the Board’s rules. You may need to seek the assistance of a competent attorney to guide you and your fellow unit owners to bring action against the Board if they won’t listen to reason. Let’s start with your opening sentence. Unknowledgeable or otherwise, a Board President and an elderly woman do not compose a Board. Who else is serving on your Board? What do your by-laws demand as to a quorum of Board members before a Board meeting can be held? If no quorum was achieved, any business conducted at this so-called Board meeting should be discarded as it was not a legitimate Board meeting.

The second thing that comes to mind is what are the rights of the unit owners as decreed in the declaration and condo documents? Entrance and egress are most certainly stated and assured. The Board cannot take any action that blocks entrance or egress without providing alternate methods of entering and leaving the buildings. Also, you may have local fire laws or zoning laws that supersede such a rule by the Board. You may not have as much luck with the Fuse box access but I doubt that an entire Board of Directors would make such a decision without creating an alternate method for owners to reach their fuse boxes. Common sense should dictate their actions.

Finally, no Board is above the Fair Housing Act. If you think FHA laws are being violated, contact HUD at http://www.hud.gov/complaints/. Discrimination is illegal. However, carefully worded rules about how many occupants and rules about renters are not. Adopting policies that create and ensure a successful and harmonious community are not illegal. Again, if you are unsure as to whether or not the Board has crossed a legal line, you would be well advised to seek legal counsel. Best wishes!

Condo Insurance Expense Accounting Treatment Questioned

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M.A. from New Haven County writes:

Dear Mister Condo,

What is the proper accounting treatment for insurance expense? Our CPA firm debits prepaid insurance and credits insurance liability for the full amount of our three year cancelable policy with no penalty. Each month, insurance expense is debited and prepaid insurance is credited. Insurance liability is then debited and cash is credited. I disagree with this treatment since we pay monthly pro-rata with no penalty. Our balance sheet, in my opinion, should not record the prepaid insurance or the liability. No expenditures were made and therefore we should not account for insurance on the balance sheet. Who is correct?

Mister Condo replies:

M.A., I love a good condo accounting question. Since I am not an accountant, I asked Sam Tomasetti, CPA of Tomasetti, Kulas & Company, P.C. to give us an answer. Here’s what he had to say:

“As well thought out as your question is and with all the details you provided, I have several questions I would need to ask in arriving at an answer that fits your situation exactly so I think the best way to be of help is to describe the acceptable methods to use in accounting for insurance cost which will depend on the facts at hand.

First, I agree with the treatment of recognizing insurance expense only if the premiums are being paid in 36 equal payments and you can cancel the policy at any time.

Second, you can record all of the payments you make on the policy to the prepaid insurance account and on a monthly basis you would reduce the prepaid insurance and record the insurance expense over the 36 month term of the policy.

Third, the one apparently used by your CPA firm, takes a balance sheet approach which is to record the full 3 year premium as an asset (“prepaid insurance”) and as liability (“insurance payable”).  The asset is reduced over the 36 month period by the portion of the expired policy (“Insurance expense”) and the liability is reduced as payments are made during the 3 year policy term.  Although, the prepaid insurance and the insurance payable presented on the balance sheet don’t fit the standard definitions of an asset and liability, the net amount of the two accounts, as compared to the other method, often differ by an immaterial amount.”

Hope this helps!

Handicapped Parking Space Reclassification Questioned at Condo

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D.L. from Florida writes:

Dear Mister Condo,

Hi, one of the two visitor parking spaces in front of my building was recently changed to a handicapped parking space. This decision was made by one person who is part of the board committee because it is convenient for him. There is already a large handicapped parking space at the beginning of the row. The visitor parking space that they changed to a handicapped space is a normal parking space and does not even have a separated aisle to offload a wheelchair. My question is: does the “management” have the right to change a regular parking space to a handicapped parking space? I thought all spaces in a complex were registered with the city.

Mister Condo replies:

D.L., I am sorry you lost your visitor space. I am sure that is quite inconvenient. However, in my opinion, it would be very difficult for you to prove your assertion that one person made the decision strictly for their own convenience. An action like that should require a vote of the Board or conveyance of power from the Board to the Committee that made the decision. As far as registering handicapped spaces with the city, most condos are built on private roads that are not required to register their spaces with the city. If your town has specific rules that require condos to register their handicapped parking spaces with the city, you may have a case there but I don’t honestly think such a rule exists. Also, do you really want to be the guy who goes up against a handicapped person to make them relinquish their space? I am guessing you already know how that would turn out. My advice is to grin and bear it, my friend. Best wishes!

Limo Parking Not Allowed at the Condo

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D.Y. from Fairfield County writes:

Dear Mister Condo,

Can a board fine us for my husband’s work car after 13 years of parking it in our spot? The vehicle is a 2013 Cadillac Sedan with CT license plates that have an “L” in the beginning & end of plate number.

Mister Condo replies:

D.Y., sounds like your husband’s work car is a registered livery vehicle which is how it gets the clearly identifiable “L” designation in our state. Depending on the rules for parking in your condo, the Board may be well within their right to fine and even tow your husband’s work vehicle. You could argue that they never did before but I doubt that fact would carry much water. Most condo by laws state that just because a rule is not currently enforced it does not prohibit the association from enforcing a rule in the future. In fact, some could argue it was an oversight on the part of the Board not to have banned the commercial vehicle from association property sooner. There are many reasons condos don’t allow anything other than passenger vehicles on their common grounds. The most important, in my opinion is liability. Insurance companies do not want the added liability of commercial vehicles parked on association property that they insure. The Board is charged with enforcing the rules and keeping the insurance liability to a minimum. There is a potential added risk with having a commercial vehicle parked on the common grounds. If you have a garage and can garage the car at your condo; that might be one way around the challenge. Otherwise, I would advise your husband to keep his livery vehicle parked off property to avoid further fines and to minimize the association’s insurance risk.

No Quorum, No Budget!

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J.M. from New Haven County writes:

Dear Mister Condo,

We have a board made up of condo owners. The board presented a budget for ratification. The budget was not feasible as they would not develop a realistic budget to meet annual expenses because, as homeowners, they did not want to increase their dues. However, and sadly, only two owners attended the meeting and refused, after a long debate, to ratify the budget. The board, however, said they outvoted us as they were three votes out of five.  Can a board, even one composed of homeowners ratify their own budget?

Mister Condo replies:

J.M., budgets are the single most hotly debated topics amongst condo owners at their annual meetings. It’s really one of two things that must happen at the annual meeting. Elections of Directors must be held and the budget must be presented and voted upon. To make sure everyone is represented, most association by-laws require a quorum of eligible voters to participate, either in person or by proxy. 3 votes to 2 only equal 5 votes. Since you live in a 25 to 50 unit condo, I have to assume that a quorum was not achieved. In that situation, a unit owner could protest the entire meeting – elections, budgets, and any other business that was conducted as a quorum was not achieved. How sad that so few unit owners attended such an important meeting.

The reality is the situation you are describing underlies a far greater problem for your condo, in my opinion. If less than 10% of unit owners care to attend your annual meeting, what does that say about the future of your community association? You can only challenge the Board if you are prepared to replace them. Otherwise, he who shows up makes the rules. Democracy only works if the people perform their duty. In this case, one day out of the year owners are asked to either attend or submit a proxy to exercise their right to vote. If they don’t do either, they really have no basis to complain about the decisions that are being made on their behalf. My advice to you is to rally your neighbors and let your voice be heard. Run for office at the next election and muster the troops to action. And if apathy continues to run rampant, consider getting out of that community. An association that does not exercise proper stewardship in the form of a practical budget that takes into account future expenses is heading for financial disaster. Best wishes.

Condo Pick Up Truck Parking Dilemma

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J.D. from New Haven County writes:

Dear Mister Condo,

I have a water main in my garage that is 32 inches off my back and side wall. I am not allowed to park a pickup truck in my lot or driveway and it won’t fit in my garage because of the water main. I am being fined $25 a day for violating the association’s parking rule. What can I do?

Mister Condo replies:

J.D., there is no easy solution for your parking conundrum. Unless you can get the association to agree to let you park your truck in the parking lot (most would not), I would advise you to park your truck off site. As long as the rules were in place before you began parking your truck in the parking lot, I don’t see where you would have a case to contend the rule. As long as the water main was in place when you purchased your unit, your inability to park your truck in your garage really isn’t the association’s concern either. I knew of a similar situation in a condo where a limo driver rented a neighbor’s unused garage to house his limo when he was off duty as the association did not allow livery vehicles parked on the common grounds. That solution might work for you if you know someone in the complex who isn’t using their garage and might rent theirs to you. Other than that you would have to either sell your truck, park offsite, or keep paying the fines for parking in the common area. Good luck!

Feeling the “Pane” Over Condo Window Replacement Costs

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K.G. from Fairfield County writes:

Dear Mister Condo,

My condo association has presented a “special assessment” that will increase “all” units approximately $200 additional a month bringing our combined monthly fee to $700 for dues & assessment. I understand that due to the age of the complex there are some important things to be considered in order to maintain the complex but why should all units be charged the same? Is there a law stating increase and/or payment based on square footage?  Understanding monthly association dues are based on overall complex finances to include insurance, grounds maintenance, etc., but one of the highest expenses anticipated are for window repair and/or replacement. The townhomes have windows that make up entire walls from second floor ceiling to first floor baseboard. As a single bedroom condo unit owner, I have one third of the window coverage. Why should the single bedroom units be responsible for that huge expense? Please advise. Thank you! Regards.

Mister Condo replies:

K.G., you have a lot going on in that question so let me break it down to its basic elements and try to shed some light on what is likely happening and where you and your fellow one bedroom condo owners may seek some relief. The first place to begin is with your condo documents. Back when you purchased your condo, you or your attorney were provided with a big old stack of papers that included all of the condominium documentation that was required back when your condo was originally built. You’ll find things like the declaration, the covenant, and the original by-laws of the association inside this packet. You’ll also find the governing documents that determine things like common and limited common elements, the per centage of unit ownership formula or other methodology for determining who pays for what and to what extent they pay.

If windows are considered common elements and are owned by the association, then the cost of replacing those windows is on the association, regardless of how many windows any one unit has. If the windows are considered limited common elements, then a different method of paying for the replacement may be outlined. If the windows are considered to be owned by the unit owner, then the expense lies entirely upon the individual condo unit owner. However, if the documents are silent about who owns the windows, then they are generally treated as common elements, meaning the whole association is responsible for their upkeep and repair or replacement.

More than likely, your common fees and other assessments are determined by using the “per centage of unit ownership” model. That means the total square footage of all units is added up and then divided by the individual square footage of the units that make up the whole. So if the one bedroom units are less square footage than the two or three bedroom units, their percentage of association financial burden is also smaller. For instance if a 50 unit condo is made up of 25 units of 1000 square feet and 25 units of 500 square feet, the total square footage would be 37,500 square feet. The 25 units of 1000 square feet would each carry 2.7 % of the common fees while the 25 units of 500 square feet would each carry 1.3% of the common fees. That same formula would be applied to special assessments as well.

Of course, if your condo documents specifically spell out a different formula for determining the method for arriving at common fees and per centage of burden for special assessments then you are likely bound to that formula. My experience is that most associations are governed by the “per centage of unit ownership” model and while that model may not be perfect, as with your description of the window replacement costs at your complex, it certainly is efficient and makes financial sense and fairness for the vast majority of condo owners.

If you do not understand this answer or if you feel you need further clarification, I strongly encourage you to consult with an attorney who is verse in community association law. All the best!