Monthly Archives: September 2013

Ice Dam Causes Uninsured Damage at Windham County Condo Complex

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J.L. from Windham County writes:

Dear Mister Condo,

An ice dam resulted in my fascia boards rotting. The insurance company says I have no coverage, what should I do?

Thanks!

Mister Condo replies:

J.L., I am sorry for your non-covered insurance damage. Rotted fascia boards may or may not be a sign of underlying damage but are usually a simple repair. As for insurance coverage, it can be tricky as to who is exactly responsible. If you have not already done so, alert your association via mail that you have had damage to your unit caused by an ice dam. Document the damage with photos and include any letter of denial of coverage from your own insurance claim. If the association has a Master policy that covers the damage caused by an ice dam, they may be able to submit a claim to cover the cost of repair. If they do not have such coverage and your by-laws do not address damage caused by ice dams, you may be on the hook for the cost of the repair, which is really no different than any other homeowner with similar insurance. The difference for you is that you may need to allow the association to select the contractor who will handle the repair and replace the damaged fascia with similar material and color so as to maintain the association’s architectural compliance. Good luck!

Condo Reserve Fund Specifics

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S.M. from Fairfield County writes:

Dear Mister Condo,

Is there a specific budget amount required to go to a reserve fund? Also, is there a law or guideline for how much the reserve fund should be?

Mister Condo replies:

S.M., Reserve Funds are determined individually by community associations and should be based on the aggregate value of the common elements, their respective life expectancies, and the best guess as to inflationary effects on the replacement of those common elements over their life span. With an answer like that you can see why it would be very difficult to have a law to determine the amount as it would vary by community.

It is quite common for associations to hire third-party specialists to review and enhance their Reserve Funds. These analysts specialize in community associations, building products, financial considerations, and budgeting. It is not uncommon for them to have some type of engineering background as well. They are in the best position to take an outside look at a community and determine what a healthy Reserve Fund would look like.

A simple example I can think of would be a 50-unit condominium with no amenities like a pool or tennis courts. 50 townhomes, a parking lot, a fence, and simple grounds make up the common elements. If you assume the association is responsible for the siding and the roofs you could simply take the value of the common elements and divide by a usable life span. To keep it simple, let’s say the common elements are worth 1 million dollars and have a lifespan of 20 years. That means each year $50,000 is being used in the form of depreciation. Divide that number by the number of units (50), and you get $1000 per year per unit needing to go to the Reserve Fund. Add 5% or so for inflation adjustment and you have $1050 divided by 12 months or $87.50 per unit per month in common fees devoted to finding the Reserve Fund. This is a very simple example and far more goes into a true Reserve Study and Reserve Fund recommendation but I hope this gives you a basic idea.

A complete list of vendors that provide Reserve Studies for condominiums can be found at http://www.caict.org/?page=Directory#reserve Kindly contact a Reserve Study professional for a more thorough answer and further advice. Good luck!

Board Members Bending Condo Rules

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D.G. from Fairfield County writes:

Dear Mister Condo,

Seems the rules only apply to some and not to others. We have a one and a half inch book we all signed for this condo association and yet the board members are making their own rules. For instance, one can keep his motor home in the driveway and, in exchange for that, the other one can keep his motor cycle on the premises. Is this legal? It sounds to me like they have a conflict of interest when it only pertains to the two of them. I think the motor home is an eye sore and brings down property values. Can we do anything about this problem?

Mister Condo replies:

D.G., I am loathe to hear about Board Members behaving badly. The charge of the Board member is to behave in such a way as to benefit the entire community of unit owners. Bending rules or selectively enforcing rules for their own advantage is a problem and you can take action. However, unless you can document specific actions taken by these Board members you may have to exhibit some patience while you endeavor to fix the problem.

Certain offenses call for the immediate removal of a Board member. These are big items such as theft of association funds, deliberate destruction of association records, and the like. In cases such as this, board members cannot only be removed but may also face criminal charges depending on the severity of their transgressions. You haven’t described anything like that.

Board members are freely elected by the unit owners of the association. Your easiest solution is to simply vote them out of office at your earliest convenience. No one is granted a position on the Board (although appointments can happen to fill vacancies). The next time there is an Annual meeting at your condo, may I suggest you be prepared to nominate better candidates to represent the interests of all unit owners. Perhaps you would care to volunteer your time in such duty. If the current members are as blatant in their rule-bending as you claim, you should have no difficulty voting them out of office. All the best!

The Million Dollar Condo Reserve Question

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M.H. from Fairfield County writes:

Dear Mister Condo,

Our condo has a reserve account with one million dollars in it. We are asking to see the accounting transactions that populated the account. We want to know by year what accounts the money came from and the amount. The board gave us high level data but refuses to let us see the detail data that would show the money being moved from account A to account B. I think they have to provide the information.

Mister Condo replies:

M.H., there is a difference between full disclosure and accounting records. The association’s financial information is open to review by any association members. There may be a fee for producing certain records and there may be costs for photocopying and property management personnel’s time in gathering the records. In the case of a million dollar Reserve Fund, my guess is that the contributions to the Reserve Fund were well-documented for each and every year that contributions were made. I am not sure what you mean by high level data versus detail data but unless you suspect some foul play is at hand, the data provided should suffice. A more important question to me isn’t whether individual unit owners have access to the data but is the association conducting regular outside audits? A qualified, independent CPA should most likely be reviewing the association’s finances, including the Reserve Fund, and providing an opinion as to where any inaccuracies or discrepancies may exist. With that much money in play, paying for an independent audit of the association’s finances is simply a best practice that protects the Board as well as the members of the association. Good luck!

Leaking Air Conditioner Creates a Mess in the Condo; Insurance Coverage even Messier!

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J.R. writes:

Dear Mister Condo,

Hi, Mr. Condo, I certainly hope you can help me! The short version is that I had a leak in my condo while I was away on vacation. I live on the lower level of a three-level building. The air conditioning unit owned by the unit owner on the top floor had failed and caused the leak. I called my insurance company, had the cleaning people come out, used fans to dry out the unit, and even took some carpeting out, too. I have engineered wood flooring, on cement, and carpeting in that area, approximately 700 sq ft. all of it, wood and carpet must be removed and replaced, and of course the ceiling and a few walls. My insurance company told me that the condo’s insurance master policy is primary over mine. My management company is playing hardball on the replacement of the wood and carpet. They state the estimate for this is approximately $2,200.00, which my floor guy thinks is just crazy. They state it’s my responsibility to “move” my personal property, which as we all know the installers will be doing. They state that I must use their contractor who won’t contact my floor guy at all. My floor man thinks $2,200.00 is just not a true amount to do the job. It’s been 2 months and this back and forth is bugging me. I can’t understand the statute and found your website! Am I obligated to use their people and like materials to replace what I have? How do I challenge this further? Their estimate is ridiculous and won’t include the moving and disposal, etc. of what is coming out. Thanks, J.R..

Mister Condo replies:

J.R., that is no way to end a vacation! Coming home to find your home damaged and then having to deal with the rigmarole of insurance companies and contractors that may or may not meet your needs and requirements is enough to cause you to need another vacation. I am sorry for your worries but let’s discuss what options you may have.

Who pays for the repair is really at the heart of the matter here. If your association’s Master Policy is being used then you may be limited in your choices. The management company is simply handling the business of the association here so please don’t think of them as “playing hardball”; their hands are tied, too. The Master Policy likely includes replacement of either the originally installed materials or upgraded materials that were installed after the original build. This is a tricky part of the insurance regulations so be sure to ask what is covered if it isn’t made clear to you. You may need to speak with a representative of the insurance policy underwriter to get this information or your property manager may have an answer. The insurance company is under no obligation to work with your contractor. In fact, they will likely have their own company in mind or may bid the work out to the lowest bidder. Their only obligation is to restore to either original materials or “like kind” if the upgrades are covered.

Next up is your own homeowner’s insurance policy (in Connecticut, that’s known as your HO-6 policy). Even though the association’s Master Policy is being used as the primary insurance, you may have some additional coverage under your own policy. Only you and your insurer can answer that question by thoroughly reviewing your policy. One example might be that the Master Policy covers the basic repair and the HO-6 policy covers the upgrades. It is a bit confusing but the insurance claims folks are not unfamiliar with this type of claim.

Finally, there is the nastiness of deductibles. Even if one or more of the policies covers the damage, you may still have a deductible. Also, you have a preferred contractor that you would really like to use. My advice would be to find out what it would cost from your preferred contractor to get the unit back to your specifications. Since you have said that he thought the estimate of $2,200 was not high enough, I am guessing that he is thinking more in the $3,000 to $3,500 range. If it is that important to you that he be the contractor who performs the repair, you could ask for the $2,200 from the association’s insurance company and pay the difference to your preferred contractor. You might also be able to claim a portion of the difference against your HO-6 policy if that coverage was included when you bought your policy.

The bottom line is that you want your home restored to the condition it was in before you left for your vacation. Provided you are willing to put some of your own money out to bring in the contractor you want, that shouldn’t be an issue. However, if you are going to rely on the insurance company hiring a contractor and paying for the job in its entirety, you will not have a say in who does the job or whether they include moving your existing furniture so they can access the damaged areas. I’m ready for a vacation just thinking about it. All the best!

Fined for Littering on Condo Grounds without Due Process

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P.L. from New Haven County writes:

Dear Mister Condo,

I am getting sued for littering. They haven’t given me any warning. I do not have any idea when how I did this littering they are accusing me with? What should I do?

Mister Condo replies:

P.L., even if your condo has specific rules about littering (almost all do), your Board still has to follow certain protocol before fining you for the offense. I am guessing your Board is unaware of this so it will be up to you to bring it to their attention, preferably in writing. Pursuant to Connecticut law on Common Interest Ownership (also known as CIOA), the procedure for levying fines upon unit owners requires that a written warning be issued to the unit owner, followed by an opportunity for the unit owner to meet with the Board to discuss the offense. If the Board is satisfied that the offense has occurred then they may issue you a fine. You are free to fight the fine but the dollar amount is usually so small ($25 or so) that it is hardly worth the time and effort to do so. For me, the most concerning part is that your Board has not told you what you are being fined for so you cannot defend against the claim or change your behavior if, in fact, you did inadvertently litter the property. Littering can include items such as pet waste, cigarette butts discarded on the property, improper use of dumpster (trash placed in a dumpster is not the same as trash placed near a dumpster) and, of course, flat out tossing of debris on to the common grounds. If someone witnessed a tissue falling from your pocket and reported it as littering, you certainly have a right to defend yourself. If you have done any of the other aforementioned actions, I’m betting if you change your behavior the fines will stop. Good luck!

Condo Resident Directory Directive

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C.M. from New Haven County writes:

Dear Mister Condo,

Is it against privacy laws in CT to print up and distribute a resident directory?

Mister Condo replies:

C.M., my gut instinct was to simply say that your association is not violating privacy laws by distributing a directory of residents but, as you may know, I am not an attorney and I wanted to be certain. So I reached out to a friend who is an attorney and here is the reply:

“No. State law requires most associations to keep records of the names and contact addresses of all unit owners, and these records must be made available to other owners. As long as the association is not distributing confidential information like a person’s bank account number, there’s nothing illegal about a resident directory.”

Hope that answers your question. All the best!

Leaky Condo Drain Leads to Damaged Drywall

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D.R. from Hartford County writes:

Dear Mister Condo,

Our condo association is fighting to not pay for damage done to our dry wall in our bedroom closet. The damage was done by the drain in the bathroom upstairs. According to the condo bylaws, the drain is considered a common element. Homeowner’s insurance won’t pay for it. They say it is the association’s responsibility as our association tore our bedroom closet apart and damaged our drywall to find the leaky drain problem. Once the leak was repaired, the damaged drywall was left unrepaired.

Mister Condo replies:

D.R., I am sorry to learn that neither your insurance company nor the association’s insurance company is willing to pay for the damage done to your drywall during the repair of this common element. Insurance coverage can be tricky when it comes to which insurance is responsible for damage done to individual units. A leaky roof may be covered by the master policy but the damage done to the interior of the unit is usually the unit owner’s responsibility, or in this case, the responsibility of the homeowner’s insurance. However, the damage to your unit wasn’t caused by the leaky drain but the contractor who was hired to repair the leaky drain. That may be where the confusion lies. Either way, you are getting a bum deal here and my advice is to either hire an attorney or make a small claim against the association for causing the damage. Do you have an estimate on the repair? Hire your own drywall contractor to get the repair done. You will be out of pocket on this expense but I don’t think it will be too expensive. Once the repair is complete, submit the bill to your association for payment. If they refuse, file a claim against them in small claims court (or civil court if the amount is large enough). I would think you would prevail as there is ample evidence that the association caused the damage. Hopefully, they will just pay the bill or convince their insurer to pay the bill rather than deal with being sued. It would likely cost them more to pay for an attorney to defend against the suit than it would be to just pay for the damage they caused. Good luck!

One Unit, One Vote

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P.D. from Massachusetts writes:

Dear Mister Condo,

I own 1 out of 5 apartments in a condominium.  Would the larger apartments have greater voting rights or is it 1 vote per apartment?  I recently did a real estate course (Massachusetts) which stated this.  Thank you for any advice you can give.

Mister Condo replies:

P.D., unless the condo declaration or by-laws detail otherwise, one vote per unit owner should be the law of the land. In Massachusetts, your best resource for getting a definitive answer is as close as your browser. Head over to the New England Chapter of the Community Associations Institute’s website at http://www.caine.org/ where you’ll find a wealth of information related to condominiums in your state and be sure to check out their legal directory if you need a more thorough answer or an attorney to review your condo docs to confirm your voting power. All the best.

New Haven Condo on the Verge of Fiscal Collapse

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S.Z. from New Haven County writes:

Dear Mister Condo,

We have three buildings of four units/townhouses in each built in 1986. The majority of owners have not and will not approve major improvements that are necessary for the complex including new roadway and walkways, flat roof redesign and repair, major water damage to structures due to vinyl siding installed incorrectly and over rotted wood, reengineer drainage, replace outside lighting, replacing 25 year old heating/cooling systems, etc.  The BOD was wondering if we can convert the condo association into individual homes with a home owner association that will take care of snow removal, lawn mowing, and trash removal only.  If this is possible, how does the BOD do so?

Mister Condo replies:

S.Z., I am truly sorry to learn that your condo association has fallen into such a sad state of disrepair. It would appear that the Board has not been effective at carrying out their charge to “maintain, protect, and enhance” the association’s common elements. I am not an attorney so my advice here should be considered friendly and not legal.

Since your buildings each contain four units and were clearly designed to be condominiums, I think it would be far more practical to put a plan in place to address the aging common elements and combat the decay. I know that money is a sticking point for your association members but there really is no other solution that I can think of but to begin the process of raising revenue. The Board could call for special assessments. It would appear that the common fees have been far too low for far too long so a significant increase to common fees is very likely in order. Your association may also be eligible to seek financial assistance in the form of a loan from a bank or other lending institution. Other than striking oil on the property, I don’t know of any other way for your association to raise the funds it should have been collecting all along.

A very serious plan needs to be put in to place. Not only do the damaged common elements need to be repaired but a plan to replace them again in the future needs to be discussed and budgeted for. The same roof you replace today will need to be replaced in 20 to 25 years. Why not start saving for its inevitable replacement now so you can avoid this problem in the future. If the association can afford it, I would order a Reserve Study to guide future Boards down the proper path to fiscal responsibility.

If you cannot get enough support from community members to make these repairs and plan for the future, I would get out while the getting is good. This condominium appears to be heading for failure. If you are an owner of record when that happens, you could find yourself on the hook for a great deal of money. I had a similar question posed recently and did get an opinion from an attorney. You might find this article useful as well: http://askmistercondo.com/house-to-condo-condo-to-house-question/