Monthly Archives: November 2013

Condo Board Borrowing from Reserve Fund for Operational Expenses

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F.V. from Fairfield County writes:

Dear Mister Condo,

Our HOA board is under developer control.  They are “borrowing” money from the reserve account for operational expenses.  At the end of the year they will put the money back into the reserve account.  Is this legal?  Thanks.

Mister Condo replies:

Answer

F.V., developer control questions are always a bit tricky as there are some rules that only apply during the developer control process. Also, since I am not an attorney, I figured it would be best to ask one of my community association attorney friends who has experience with these issues and others that arise during the developer transition phase of condo governance. Here’s what he had to say:

“Yes this is legal, so long as nothing in the declaration or bylaws prohibits it and the transaction is openly documented.   There is no state law which prohibits moving money between the reserve and operations budgets.  The developer does owe an enhanced duty to treat the finances with special care in the association’s best interests, but if the money is truly needed to fund operations, the developer can transfer funds in good faith for that purpose.”

That sounds about right to me. Thank you for the question and best wishes!

Can a Condo Carnival be Paid for with Common Fees?

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L.E. from New Haven County writes:

Dear Mister Condo,

Can the Board spend our money on picnics or carnivals?

Mister Condo replies:

L.E., in a word, “yes”. While carnivals or other community events are not usually spelled out as routine expenses for a condo association, your Board may decide to hold events throughout the year to build community spirit. Picnics, carnivals, pool parties, cook-outs, pot luck dinners, and just about any other social event you can think of may be sponsored by the association to help build camaraderie within the community. If the expense gets out of hand, the association could always vote to stop future events but, as a rule, the Board is well within their right to plan and pay for the event out of association funds. So, as long as it isn’t too expensive and the community is yielding positive results, I say “don’t stop the carnival”! All the best!

Consequences of a Rejected Condo Budget

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W.C. from Hartford County writes:

Dear Mister Condo,

What are the consequences of a rejected Annual Condo Budget?

Mister Condo replies:

W.C., I have seen condo associations prepare budgets on their own, in conjunction with their property manager, or by simply letting the property manager submit a proposed budget that the Board adopts before presentation to the unit owners at the Annual Meeting. If the budget has been well thought out and isn’t too controversial, most unit owners will vote to approve and the budget is ratified. When unit owners disapprove, the association is basically forced to use the previous year’s budget until a new budget is presented and ratified by the unit owners. The effects of this can range from a simple inconvenience to downright financial chaos depending on what items are included in the budget and what changes to the common fee structure were proposed or needed for operation of the association. And, unlike our federal government, there is no shut down or sequester. Bills need to be paid and common fees still need to be collected during the interim.

While it is not unusual for an Annual Budget to be rejected, the underlying circumstances often require further analysis. The folks responsible for the budget’s presentation are the Board of Directors, a group of volunteer members from within the association who have been democratically elected by the unit owners to serve the best interest of the community. Theoretically, these are the unit owners closest to the action and have the best information at their disposal to know what financial needs and challenges the community is likely to face in the coming year. Preparing an annual budget is part mathematics and part guess work as there is no way to know exactly what things will cost in the coming year. Add to that the challenge of predicting snowfall removal costs and other unpredictable weather-related expenses and you can see where a portion of the budget is derived from a best guess methodology. However, if the Board is moving the community towards higher common fees in order to prepare for a major capital improvement, such as repaving of roads or purchasing adjoining land to increase the common property it is not unusual for unit owners to protest these actions by voting down the annual budget. This may sound reminiscent of certain members of the U.S. Congress who recently voted against funding the government to protest a section of it they wished to prevent. While it is not the same process the ideology is quite similar.

The bottom line is that a condo association is no different than any other municipality when it comes to preparing and living with their budget. Funds need to be collected and funds need to be spent. Instead of taxes, they collect common fees. However, unlike the government who prepares the budget regardless of whether the public likes it or not, Board of Directors face annual scrutiny from unit owners over their budget preparation. If the unit owners agree with the wisdom of their elected representatives, the budget passes. If they don’t agree, they have the power to reject the budget. The previous year’s budget remains in effect until a new budget is ratified. All the best!

Disgruntled Unit Owners Upsetting Condo Unity

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S.P. from Hartford County writes:

Dear Mister Condo,

We have a contentious group of condo owners who were voted off of the Board. Now these owners are making unfounded complaints and harass the new board members with Sunday night emails and with spreading rumors. Do we have any recourse to stop their bad behavior?

Mister Condo replies:

S.P., there are times when condo living and condo governance can be a tremendous challenge to one’s patience and common decency. My best advice to you will be to simply refer to your condo documents and follow them to the letter. You cannot stop people from spreading rumors. However, you can keep unit owners properly informed of what is and isn’t happening in their community with regards to community governance and capital improvements. The sitting Board has the advantage of being the official voice of the community. However, if the Board does not take advantage of their authority and the opportunity to properly communicate don’t be surprised if the folks spreading rumors don’t gain an upper hand. It is a political process and should be treated as such. That being said, if Board members are being slandered or can prove libel there may be individual remedies including bringing lawsuits against the perpetrators of such crimes. I would advise anyone who feels they are being slandered to consult with a personal attorney and discuss possible legal remedies.

As for the rules enforcement portion of my solution, I am fairly certain that your by-laws do not allow for individual unit owners to make direct contact via email or other with your Board members and demand immediate action. Complaints, unfounded or otherwise should be logged and discussed at the next regularly scheduled meeting of the Board. If they are truly unfounded, they can simply be acknowledged and tabled. The folks raising the complaints are free to continue to complain but unless they can document where rules or by-laws have been broken the Board is not required to take any further action other than acknowledgement that a complaint was filed.

I do have one question of concern for your association. It is not uncommon for community associations to have unit owners with differing opinions. It is also not uncommon for factions to arise within communities as individual groups tend to unite over shared complaints (too many renters are being allowed, club house fees are too high, and so on) or over shared desires (let’s purchase the neighboring acreage and add a park, let’s install vinyl siding and modernize the look of our buildings, and so on). It is not common that people band together just for the sake of being annoying to each other. Is there an issue dividing your community that cannot be resolved? It might make sense for each group to try to understand what the other group is trying to accomplish. Let me be clear; I am not saying to give in to unreasonable demands. I am suggesting that there may be some common ground for folks to work on together that can help unite the community. I can only imagine this general discord spills into other areas of common interest living that can make for a mighty unpleasant condo living experience. Sometimes a simple olive branch can prevent a war. It’s certainly worth looking into. All the best!

FHA Condo Recertification Lapsed; Refinancing No Longer An Option

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P.O. from New Haven County writes:

Dear Mister Condo,

Last year, my condo association was FHA certified. Now there are new people on the Board and they let the FHA certification lapse. I am trying to get a 2nd Mortgage on my unit and the bank says it is a “no go” because of the lack of FHA certification. That doesn’t seem fair to me. How do I make this new Board get our FHA certification back?

Mister Condo replies:

P.O., I feel your pain, friend. FHA certification, or lack thereof, has become the single largest bone of contention between well-meaning condo Boards and the unit owners they represent over the past few years. FHA certification poses a challenge on many levels but most associations can achieve it and most will benefit from it because it creates happy unit owners who have an easier time buying, selling, or as is the case for you – refinancing their units within the association. The fact that your association was previously certified may work in your favor of convincing the Board to seek recertification now that the previous certification has lapsed. Believe it or not, the Board is under no legal obligation to seek FHA certification. The decision is entirely theirs to make and they may decide not to pursue it. However, that’s what elections are for. If you are well-informed and can convince your fellow unit owners to do so you should elect representatives to serve on your Board who will seek the FHA certification you need to secure your financing. Good luck!

Seeking Board’s Approval for New Condo Windows AFTER They Were Installed

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J.J. from Fairfield County writes:

Dear Mister Condo,

I had new windows installed two years ago. The ones I replaced were original to the building and they looked really bad with hazing and water in between the panes. The new windows look great but I just got a letter from my Board informing me that they never approved my new windows and that the trim that the installer used isn’t a match to the rest of the complex. They want me to submit the plans for the new windows so they can approve them and they want me to have the contractor come back and replace the new trim with trim that matches what used to be there. This is going to cost me a fortune! Can they make me do this? What are my rights?

Mister Condo replies:

J.J., congratulations on the new windows! It sounds like you are about to get a lesson in architectural compliance and it might be a fairly expensive one at that. Unlike individual homes, condo units are required to be of certain conformity forever from the time they are built. What’s more is that you agreed to this when you purchased into your condo. Check it out. It’s in your condo documents.

So now you are getting notice from the Board that you didn’t play by the rules. In the worst case scenario, the Board can compel you to remove the unapproved windows and replace them with approved windows. That could be quite costly. It sounds like they are trying to work with you and review the windows you did install so that they might consider approving them. The issue with the trim is on you. You must replace the existing trim with an approved style and material as what was previously there.

You can fight this if you wish but you would likely just prolong the inevitable and rack up additional legal bills along the way. My advice is to get the Board what they need and hope that they approve your new windows. Offer to have the trim replaced as soon as they make a ruling on the new windows. And, for future consideration, do not even think about altering any element of your condo without first seeking Board approval. Once they approve your project, you are free to proceed. Begging for forgiveness will not work. You need to get permission first. Good luck!

Stray Animals Being Fed on Condo Grounds!

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A.F. from Tolland County writes:

Dear Mister Condo,

I have a neighbor who is always putting out food for wild and stray animals. Over the last few months we have had a problem with stray cats and raccoons. We live in an area where there is abundant wildlife and I am afraid that if she continues to offer food to these animals it is only a matter of time before we have larger and perhaps more dangerous animals on the property. I have reported this behavior to the condo Board but so far they haven’t done anything that I know of. Do you have any thoughts?

Mister Condo replies:

A.F., it is easy to admire your neighbor’s compassion for wild and stray animals. However, you are absolutely correct in being concerned for the safety of your community that she is compromising by breaking the rules and feeding the stray animals. Since you have already brought this matter to your Board’s attention, I encourage you to be patient and work with your Board to correct your neighbor’s behavior. Stray animals bring all sorts of disease and pestilence into human living areas. Almost all condo associations have rules banning the practice and also fining the rule breakers. My guess is that your Board will follow the proper procedure of writing a warning letter to your neighbor, followed by a request for her to appear before the Board who may then fine her if the problem continues. There really isn’t too much other than that that you can easily do. If the feeding continues and you want to take real action, you could hire an attorney and bring suit against the association for not taking steps to correct the problem and/or your neighbor for violating the rules of the community and putting your safety at risk. Hopefully, it won’t come to that. The last thing your community needs is neighbor fighting like cats and dogs just to bring about a little animal control. All the best!

Battle of the Big Vehicles at This Condo

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B.D. from New Haven County writes:

Dear Mister Condo,

My neighbor and I have a shared driveway to our two parking spaces in front of our garages. We both drive larger vehicles (mine is an SUV, his is a pickup truck) and there is barely enough room for us to fit in the spaces because the area where we turn in is very narrow. Whichever of us gets to their parking space first has little difficulty in getting in. The second person in (usually him) has to maneuver back and forth to park. From time to time he has accused me of parking at a slight angle making it very difficult for him to get into the parking space. Is there any way we can get the association to widen our parking spaces? It is only a matter of time before one of his hits the other’s vehicle.

Mister Condo replies:

B.D., big cars and small condo parking spaces are never a good combination. The situation you are describing is all too common. You can certainly petition your Board to widen the parking space but they are under no obligation to do so and, in my experience, they probably won’t. The reality is that the parking spaces were created when the property was first built. You were both aware of the parking spaces when you purchased your units. I assume you both realized that the parking would be tight. In my opinion, the problem lies in the size of your vehicles more than it does in the size of the parking space allotted. Are there other places either of you would consider parking? Is there a nearby lot where you can park? Does your association allow you to park in a nearby visitor space? If my car were in daily danger of being struck by another vehicle I would be sure to keep it out of harm’s way. You mention parking “in front” of your garage. Is there a reason you can’t park “in” your garage? That would sure get rid of the problem of the vehicle being struck. All the best!

Second Shift Worker Creating Condo Noise Problem

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B.N. from Hartford County writes:

Dear Mister Condo,

I feel I am being unfairly singled out by the Property Manager at my building. I work second shift and don’t get home until after midnight. I like to relax and watch TV before I go to bed, usually around 2:00 a.m.. My next door neighbor has been complaining about the noise from my apartment keeping her awake at night so she has called the Property Manager who has called me and threatened to fine me if I do not stop watching the TV at night. I don’t think anyone else is being asked to do this so why should I be the only one who is getting harassed?

Mister Condo replies:

B.N., who doesn’t want to relax and blow off a little steam at the end of a long day at work? In America, that usually means watching TV. The problem here is that your lifestyle is incompatible with your fellow condo residents who have a reasonable expectation to peaceable enjoyment of their units as do you. For most associations, 10:00 p.m. is “quiet time” meaning loud noises must be avoided. Check your condo documents for the rules in your community but it is likely that they exist if the Property Manager is threatening to fine you for noise disturbance. Watching your television isn’t the problem, it is the sound waves vibrating from your TV through your walls that is causing a problem for your neighbor (even at a normal or low volume). If you’re like me, watching TV with the sound down low isn’t that enjoyable. However, there are some pretty good compromises I encourage you to consider. The easiest solution is headphones. If you have your TV connected to your stereo system, simply use headphones to listen to your television. The sound will be crystal clear and you will disturb no one. You can even get wireless headphones that sound terrific. There is also a device called TV Ears which works in a similar fashion. You can find them online at Amazon.com among other retailers. Same idea – you hear the sound but no one else has to. This is another practical solution.

The bottom line is that it doesn’t sound like you are being singled out. It sounds like you just need to think like a person who sleeps while you are working or relaxing after work. You wouldn’t want loud neighbors in the middle of the night and neither do your neighbors. I always say the best way to have good neighbors is to be one. Go ahead, make the first step. Good luck!

Unbearable Noise from Second Floor Neighbor Who Has No Carpet

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P.J. from New Haven County writes:

Dear Mister Condo,

I have an upstairs neighbor who wear heels and makes very loud noise when walking around. I thought that 2nd floor unit owners were required to have carpeting to keep the noise down. What do you think?

Mister Condo replies:

P.J., I am sorry for your noise problem and I can assure you that you are not alone in dealing with unpleasant noises coming from a neighboring condo unit whether it is above, below or alongside. The answer lies in your condo docs which I advise you to review as soon as possible. In many condo associations there are specific rules about the type of floor coverings that are allowed. In buildings where neighbors reside above and below each other it is quite possible that carpeting is the only flooring that is allowed and for the very reason you are describing. However, that doesn’t stop some folks from deciding that they would like a modern look with hardwood or laminate floors.

If your condo docs prohibit any floor covering other that carpet, you simply need to alert your Board who should take action against your upstairs neighbor. They should issue a warning letter, followed by a fine if the flooring is not corrected.

If your condo docs do not address this issue then you may have a bit of a problem. The Board can vote to change the rules about flooring but that could take a while and may not solve your problem. If you know the neighbor in question you could explain your situation and see if you can find a way to work together to solve the noise problem. Short of that, you have described a living situation most people would find intolerable. It would certainly have me rethinking my choice of where to reside.

I am hopeful that your condo docs address the issue and that you can solve this problem. All the best!