Monthly Archives: June 2013

Monthly and Annual Condo Treasurer’s Report Inclusions

S.Z. from New Haven County writes:

Dear Mister Condo,

Exactly what should be included in monthly and annual Treasurer’s Report to board members?

Mister Condo replies:

S.Z, that’s a great question! There are no legal requirements that I am aware of that dictate what should be included but my experience has been that the most successful communities have great fiscal management and a Treasurer who openly shares the information regarding the association’s finances.

Board members need as much information as is reasonably possible to make the best decisions for their communities. Treasurer’s Reports are critical to the fiscal success of the association. First off, financial statements from the previous meeting and, where applicable, year to date should be included. This may include a Treasurer’s Report, a Profit and Loss (P&L) statement, and current bank statements. Much of the work performed by the Board is managing the association’s assets, chief of which is money.  The Board members should be provided the supporting documentation behind any summary financial reports created. Seeing the supporting source material (i.e. invoices, cancelled checks) will help the Board ask the right questions to be sure Association policies are being followed and funds are being spent as approved. However, it is unusual for every Board member to get copies of every check or invoice. Discussions on cash flow, common fees, assessments, loans and other financial considerations requires Board members to be fully informed of the association’s finances. Updates on pending litigation should also be included so as to keep Board members informed of the association’s legal standing and potential liability in court cases.

I answered a similar question this past April if you care to take a look – http://askmistercondo.com/required-monthly-reports-from-the-condo-board-treasurer/ All the Best!

Buzzing Transformer Ruining this Condominium Unit

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J.J. from Fairfield County writes:

Dear Mister Condo,

For over two months now there has been a humming/vibration coming from the utility and transformer rooms that borders my condo. CL&P has sent transformer techs twice and said they were working fine. The hot water heater techs came and said their system is fine. In the past two weeks, two CL&P meter techs have suggested that possibly it is the transformers after all. CL&P refuses to send transformer tech guys again to confirm. The management company says their hands are tied so I should call the CL&P emergency line whenever the sound wakes me. This sound is inconsistent in strength, vibration, volume and time. Whenever someone comes to observe, the buzzing is usually at its quietest and least disturbing. I understand that we are waiting for CL&P but in the meantime can’t the management company call some outside expert to study this issue? Can they really be this passive? This sound is so bad my husband sleeps elsewhere and I am considering moving out as well.

Mister Condo replies:

J.J., I am sorry for your problems. It certainly sounds like a transformer problem to me as well. Of course, like you, I am no expert in the matter so no one is going to take action on what we think. You definitely need an expert to assist with your problem and I have a few ideas for you. Your reasonable and polite actions are admirable but they just aren’t getting results. That means it’s time for more aggressive action. Step one is to consult with an attorney to describe your situation. You are likely going to be advised to bring action (lawsuit) against CL&P and your association even though I really don’t think this problem is your association’s doing. Once served, CL&P is likely to give your problem the attention it deserves. Talk to your attorney about what reasonable costs you can include in your suit (attorney’s fees, physical and emotional illness from sleep deprivation, cost of living elsewhere until this problem is fixed for you and your husband, etc.) Don’t hold back. The time for polite conversation has passed and the problem was not fixed.

As a side note, once this problem is resolved, I might consider selling my unit and moving. Your unit will always border the utility and transformer room which gives me cause to wonder if there may not be future problems. Transformers have a useful life cycle and then they buzz and act up and can even pose physical danger in the form of fires or explosions. I don’t want to sound alarmist but I wouldn’t personally want to subject myself to their proximity if I didn’t have to.  Best wishes!

Dream Condo; Nightmare Neighbor

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M.D. from Hartford County writes:

Dear Mister Condo,

Hi Mister Condo! I am just celebrating my 1 year anniversary in my dream condo – yay! Only one problem; my downstairs neighbor. Let me start by giving you the layout. I live in a 2nd story garden unit and my neighbor’s living room is right next to my stairway. My living room has a half-wall that looks over my stairs. My neighbor is retired and loves to play his music/TV all the time. When this happens, I can hear the bass from the music or show in my unit. I don’t know about you but bass is almost worse than actual music. When I first moved in, I attempted to speak with him about the volume of his music and he denied the problem and turned it around on me saying I was loud.

Nothing was accomplished and afterward he started pounding on the walls when I walked and started leaving me nasty, condescending notes, basically threatening to tell the condo association that I was loud.

We had it out at a condo meeting and basically nothing happened. I have bought white noise machines, I try to keep my volume at a reasonable level but he seems to get enjoyment out of pushing me. If my TV is “too” loud, I notice he will turn the sound up on his TV to compensate. Now the light at the end of the tunnel is that he does leave for a few months during the winter but still leaves me with 6+ months of anxiety. Is there anything I can do to my side of the wall to lessen the noise? I am afraid I am going to have to sell the place because it is so bad. I have lived in apartments for 6 years and never dealt with a problem like this before. Help would be appreciated!

Mister Condo replies:

M.D., I hear you, loud and clear! The situation you have described here is all too common in apartments, condominiums, and other places where humans live so closely together. Basically, you and your neighbor have begun a feud. There is no simple solution because neither of you are wrong and neither of you are right. Your Board or Property Manager is not likely to get in the middle of two grown adults who are going at each other over noise wars. Clearly, your condo documents spell out what types of noise behavior are allowed. They may even go so far as to spell out hours of the day when it is required to keep quiet. If these rules are being broken by either of you and the other wishes to report it, you are both within your rights to do so. Otherwise, you are on your own to work things out between yourselves.

You may wish to speak with an acoustic wall or curtain specialist who may be able to help you deaden the offensive sounds by modifying the interior of your unit. There are modern materials that can help. Of course, you need to make sure that any modifications made to your unit are in accordance with your association rules and by-laws. Or, you could sell your unit and move to another unit within your complex if one opens up. You may have a dream condo but you have a nightmarish neighbor. Unfortunately, there are no rules mandating that neighbors behave politely or considerately. All the best!

Upstairs Condo Neighbor Creating Water Runoff Onto My Deck

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R.G. from New Haven County writes:

Dear Mister Condo,

My neighbor is throwing water over my balcony every time they clean their balcony. How can this be stopped by the association?

Mister Condo replies:

R.G., that is mighty unneighborly behavior by your upstairs neighbor! It is a shame when condos need to create rules that basic human decency should address. Is your upstairs neighbor even aware of the problem they are creating? Maybe a simple conversation would stop the behavior. Assuming this person doesn’t care to be a good neighbor there are a few things you can do. First, check your condo rules. Many have rules prohibiting water runoff of any kind onto a neighbor’s deck. This usually carries a fine per occurrence. After a few fines, the behavior usually stops. If there is no rule, you should ask your Board to adopt one at their next meeting. State your issue plainly and clearly as you have done here and ask them to bring the issue to a vote. Once the rule is in place, be sure to report each and every violation to your Board or Property Manager. Best wishes!

Squeaky Upstairs Subfloor Driving this Condo Hoosier Crazy!

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D.M. from Indiana writes:

Dear Mister Condo,

We recently purchased a condo from FHA (foreclosure). It soon became clear the upstairs neighbors were heavy footed, but upon some further investigation, and cooperation with them, that the fibrous concrete subfloor between the units is cracked and causing very loud squeaking and creaking when they just walk on that part of the floor. The noise in their unit is minimal, but in our unit it is deafening. Would this be a structural issue that the association should be responsible for? Who should I call? What kind of contractor if association isn’t responsible. This is a living nightmare sounding like herds of elephants are stomping overhead and they are only walking and living in their unit.

Mister Condo replies:

D.M., greetings to you and all our friends in the Hoosier state! Congratulations on your recent condo purchase. Sorry to hear about your troubles with the subfloor of the upstairs unit. I would begin by discussing the problem with your Board or Property Manager. Chances are your unit isn’t the only one that has had this problem. If it is a true construction defect (floors not installed to code or specification at the time of development) it may be something the association can pursue with the original developer. Assuming your unit is a little bit older and that the developer is long out of the picture, you would really need to consult your condo docs to determine who is responsible for the subfloor. Generally speaking, the floor and subfloor are the responsibility of the current owner. Even though it may not be bothering them, the owners of the unit above you have a responsibility to keep their unit, including the subfloor in proper working order, which includes repairing it if it is broken. On the other hand, if it is determined that the subfloor is part of the common element, the repair may fall on the association.

Once you determine who is going to pay for the repair, I would imagine any qualified flooring contractor could do the job. The finished floor would have to be removed in the area where the subfloor repair needs to be done. Then the finished floor needs to be reinstalled. If it is carpet, this is a quick job. If it is stone, laminate, or hardwood floor there will be significantly more time and materials needed. If this expense falls to your upstairs neighbor and they are unwilling or unable to pay for the repair, you might want to offer to help out just so you can get some peace and quiet in your unit. My guess is you don’t care who pays for it as long as it gets fixed.

If neither your association nor your neighbor agrees to assist in this repair, I would contact an attorney to see what your legal rights are in the matter. I’d hate to see you have to sue either your association or your neighbor but you do have the right to peaceable enjoyment of your property. Good luck!

Clarification on Defecation at this Cromwell Condo

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J.N. from Middlesex County writes:

Dear Mister Condo,

Thanks for answering my question about town ordinances and dog walking (http://askmistercondo.com/town-ordinance-allows-for-dog-walking-on-condo-property/)! I live in Cromwell, and here’s a link to the ordinance in question in case you were interested: http://ecode360.com/8826014

It reads as follows: It shall be unlawful for any person owning, keeping, or walking or in control of any dog to permit such animal to defecate upon any private property owned by another person, the common elements of any condominium or other common interest ownership community (unless such area is designated and authorized for that purpose by the bylaws of such community) or public property, unless such person shall remove all feces so deposited by such animal before leaving the immediate area.

Our board of directors is planning to clarify the rules, stating that dogs are allowed to be walked anywhere on common property as long as they’re picked up after. The biggest issue is that the condo grounds extend more than 1/4 mile from the dog-walk area, which isn’t lit or shoveled in the winter. We believe it’s unreasonable to have to walk a dog to that area multiple times per day (since the complaining residents are against both dog poop and dog pee).

Mister Condo replies:

J.N., you are welcome for my previous answer and thank you for your follow-up and clarification. The town ordinance basically restricts all pet owners from allowing their pets to defecate on any property, private or public, without removing the feces. The ordinance does not allow for the general public to trespass upon your property for the purpose of walking their dogs. Your association-owned property is private property. You have the right to restrict non-owners from your common grounds. That would solve the problem quite quickly.

As for the rights of unit owners to disobey the rules of their own association, that is a sticky wicket at best. In this case, I do believe that the rules of the association would stand up in court and the dog owners would be forced to comply. However, it sounds like your Board is responding to you and your fellow dog owner’s requests that the restrictions be eased or lifted. That is community association democracy at work and is exactly how your association was intended to be governed. All the best to you and Fido!

HOA Common Fees Doubled. No Explanation Given.

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K.M. from Fairfield County writes:

Dear Mister Condo,

I live in and serve on the Board of a modest-sized shoreline HOA community in Fairfield County that was established in the 1950s. Our neighborhood has always been very close with many of our residents born here, schooled here, and raised here. The past few years have seen escalating costs slowly erode the camaraderie of the community with many homeowners crying foul over increased HOA dues. Admittedly, dues have almost doubled in the past seven years but so hasn’t the insurance on the community clubhouse and the cost to keep the playground in good order. We can’t even afford to have the parking lot and road leading to the clubhouse replaced even though it desperately needs to be done. At a recent association meeting, one of the owners suggested it is time to dissolve the association because he can’t afford to live here any longer. I am at wit’s end of trying to keep the homeowners happy and keep the community maintained as is my job as a Board member. Do you have any ideas?

Mister Condo replies:

K.M., escalating costs are a burden to community associations everywhere. The fact that yours have doubled in the past seven years does not surprise me and really doesn’t tell me anything about the community other than it is possible that seven years ago the fees were too low. Low fees are popular but, as you can attest, the community suffers in the long run because it cannot afford to properly maintain itself without raising fees or placing special assessments on owners.

In my opinion, the real problem is communication and transparency. Since your community is an HOA, there is very likely a charter and documents that detail the association on file with your city or town. You would do well to get yourself a copy of that document and see what the charter has to say about fees and the responsibility of the association. Chances are the original fees were quite small. Of course, things cost a heck of a lot less in the 1950s. Homes have likely increased in value at a far greater pace than the common fees have increased. You certainly can’t pave a parking lot or build a clubhouse for what you could in the 1950s. It is even more expensive than it was 6 years ago, let alone 6 decades!

The Board should develop a list of all of the common elements that the association is responsible for. This includes tangible items like roads, parking lots, clubhouse, recreation equipment and whatever else is included for HOA members to use. It should then look at all of the other expenses of the association. This will be items like insurance, taxes, property management fees, etc.. The common elements that will wear down over time (they all will) should have a dollar value assigned to them based upon the likely usable life of the element. For instance, if the parking lot should last 25 years, take the cost and divide by 25 to determine how much is used each year. If you determine that your common elements are worth $100,000 and have a 25-year lifespan, then it is reasonable to budget $4,000 per year towards their inevitable replacement. If you have another $10,000 per year in management fees and insurances, then the association needs to raise $14,000 per year to make ends meet. Divide that by the number of HOA members and you arrive at your annual dues. So if I assume you have 100 homes in your HOA and each pays 1% of the budget in fees, then the annual common fee would be $140.00. This is very simple arithmetic and easily understood by your residents. However, if you simply tell homeowners that their fees are going from $70 per year to $140 per year without this type of detailed explanation, don’t be surprised if they call for your head on a platter.

The bottom line is that life in Connecticut is expensive. Life along any of our beautiful shorelines is even more so. There are less expensive places to live but if you expect to live in a flourishing shoreline community, you should expect there to be a cost to doing so. As long as that cost is explained and justified, HOA residents should not be surprised. And if they truly can no longer afford to live there, at least they will have the opportunity to understand what has caused the increased expense. Best wishes!

Special Assessments 7 Years in a Row!

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D.M. from Hartford County writes:

Dear Mister Condo,

Is it legal to have a special assessment for 7 years in a row? It has caused 2 foreclosures and 2 more units to go up for sale.

Mister Condo replies:

D.M., I don’t think it is a question of legality as much as it is a question of financial competency and questionable budget preparation. Special assessments are used when the Board is faced with expenses that cannot be paid for from monies that are available in the operating fund. Unit owners contribute to the association’s operating fund in the form of monthly common fees. Special assessments are used when the budget falls short of the expenses. Ideally, the budget is developed with enough elasticity that regular and known expenses can be planned for ahead of time and common fees adjusted to handle the future expense. For special assessments to be needed seven years in a row, I have to question whoever is preparing the budget and ask if they have been surprised all seven years. It is more likely that the community applied pressure to keep the common fees too low at a time when they should have been higher. The resulting foreclosures and homes for sale are not surprising based on what you are telling me. The good news is that the community has a chance to stabilize and avoid these costly mistakes in the future now that these expenses are behind you. I would think a Reserve Study and some budgeting expertise are called for here to avoid a repeat of this unpleasant and fiscally dangerous practice of annual assessments.

Why is There a Negative Amount in the Condo Operating Fund Reserve?

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B.D. from Middlesex County writes:

Dear Mister Condo,

Under the reserve section of the condo balance sheet there is a Negative amount noted for “Operating Fund Reserve”.  What would that negative amount be the result of?

Mister Condo replies:

B.D., I know better than to tackle an accounting question without checking in with one of my expert friends. I reached out to my friend Sam Tomasetti, CPA of Tomasetti, Kulas & Company, P.C. for his advice. Here’s what he had to say:

B.D., with the sparse information provided it is a little tough to give you a definitive answer.  However, the most likely reason is that over time your operating fund liabilities have exceeded your operating fund assets and thus have resulted in a negative operating fund reserve.  Remember the operating fund on the balance sheet is an accumulation of activity from the inception of the association.  On the income statement you may have a year where there is a profit, but when this is added to the activity of prior years, you can still have a negative operating fund on the balance sheet.

You should work to understand this negative as it could be a symptom of financial difficulties such as poor budgeting and borrowing from the replacement reserve to cover negative operating cost variances or poor collection policies regarding account receivable.  On the other hand it could be that the your association has a significant loan outstanding that it plans to pay down over time with common charges to be collected in future years thus restoring the fund balance to a positive.

Understanding this negative can be confusing, but please keep trying!

No Board Members to Serve at this Illinois Condo – What Now?

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I.K. from Illinois writes:

Dear Mister Condo,

What happens to the management of a condominium when there are not enough board members to serve? Does management of the association get turned over to the State? Does this vary by state? I live in Illinois.

Mister Condo replies:

I.K., rules about condo governance do vary from state to state. You would be well advised to check with your local chapter of CAI (http://www.cai-illinois.org/) or a qualified attorney for a more detailed explanation of what can happen. I can give you a brief overview of what would likely happen if your condo had no governing body.

There are certain matters that are the responsibility of the association; maintenance of the condo and common grounds, insurance, tax reporting, and such. Without a governing body, these things start falling through the cracks and before long a lawsuit would be brought against the association. It could be a vendor looking to get paid for previous work. It could be a homeowner suing over lack of maintenance or insurance. Whatever the cause, lawsuits end up in court. If the association did not defend itself, it would lose. The court could order a receiver (very likely an attorney) to take over and begin dissolving association assets to make good on the debt. This receiver would function as a governing body over the association and unit owners would find themselves responsible for the bill, including the receiver’s cost for service, which would likely be quite significant. The receiver could order special assessments, increased common fees, whatever it took for the association to conduct its business.

In case you couldn’t tell from my description of what would happen if no volunteer leaders came forward, it isn’t a pretty picture. It costs unit owners dearly when there is no volunteer governing body. It is far better for the community to manage itself than to have the court appoint an outsider to do the job. Of course, your local laws may vary but I’ll bet their spirit, intent, and end results are quite similar. Best to rustle up some volunteers. Good luck!