Monthly Archives: December 2014

Are Condo Reserves Required by Law?

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P.D. from New London County writes:

Dear Mister Condo,

Are reserves required by law? If so, what level?

Mister Condo replies:

P.D., it may surprise you to know that there are no laws in our state that specifically require condos or HOAs to contribute money to their Reserve Funds. I am not an attorney so please consider this a friendly opinion only. If you require a legal response, kindly contact a qualified attorney. That being said, the condominium’s governing documents may address the issue. Even if they don’t most associations and boards will come to the conclusion on their own that establishing a Reserve Fund is just common sense and that capital repairs and improvements will become a reality in any community association and the money will be needed to make those repairs and improvements. The Federal Housing Administration (FHA) does have suggestions for condominiums and HOAs that wish to have their mortgages within the association eligible for FHA-backed loans. (FYI – the majority of mortgages are purchased by the FHA these days so it is important to follow their guidelines and maintain certification if a community wants to keep mortgages available to its members.) While the guidelines have fluctuated in recent years, the FHA has suggested that 10% of the common fees be set aside as a contribution to the Reserve Fund. In reality, I think the number needs to be closer to 20% or more based on the information provided in the community’s Reserve Study. Since every community is different there isn’t a “one size fits all” approach to funding the Reserve Fund. For this reason, I recommend that communities either conduct their own Reserve Study or higher a Reserve Specialist so that they have a handle on how much money should be contributed to the Reserve Fund on a regular basis. Hope that helps. All the best!

This just in… for Ask Mister Condo readers outside of Connecticut, CAI has published a very useful infographic detailing Reserve requirements by state. You can check it out here.

Condo Dog Walking No Longer Possible

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M.A. from New Haven County writes:

Dear Mister Condo,

Our condo association allows dogs, but they can only be walked on the rear yard in the grass, and cannot be walked on the street within the community.  I have asked the Board for an exception to this rule because of a recent medical problem that has left me partially disabled.  My doctor has written a letter stating that I need to walk on a flat surface only.  The Board turned me down and suggested I get rid of the dog.  My dog is my main emotional support.  I have no family in this area and she provides me with comfort and support.  Do I have a case against this Board through either the Fair Housing Act, or the ADA?

Mister Condo replies:

M.A., I am not an attorney so if you need a legal opinion kindly contact a qualified attorney who can best answer your question. I am sorry that you were not successful with petitioning your board as to where you can walk your dog. I can empathize with both parties here. You need your dog and you have every right to have a dog as per your association rules. However, the board needs to maintain order within the community and once you are seen walking your dog in a non-designated area, other residents are sure to follow. The Americans with Disabilities Act (ADA) is not likely going to help you here as the association is private property and the ADA primarily deals with access issues on public property. The Fair Housing Act (FHA) may offer you some relief but since your board has already ruled that the dog cannot be walked outside of designated areas, I am not sure what else the board can be forced to do. They have already made reasonable accommodations in that the dog is allowed and that they provide an area for the dog to be walked. These conditions were in existence and known to you before you became a member of the association. That being said, it is in your best interest to speak with an attorney to see if you have a case. Perhaps there is a friend or neighbor nearby who wouldn’t mind providing you with some dog-walking assistance from time to time? That would likely solve your issue and allow the board to keep order within the community and keep the rules in place and enforceable. Good luck!

Condo Board Unresponsive to Owner

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S.J. from New Haven County writes:

Dear Mister Condo,

The Board is not responding to my requests like putting windows on the garage door as other units in our complex have.

Mister Condo replies:

S.J., if the board has agreed to a change in an architectural style for an item like a garage door for one unit owner, they very likely have opened themselves up to the possibility of other unit owners, like yourself, wishing to implement the same change. That being said, you are wise to seek approval before installing the garage door because you don’t want to find yourself at odds with the board over an architectural compliance issue that could end up costing you extra expense if you install a garage door that isn’t approved. Your condo documents likely spell out the procedure for requesting the new garage door. My guess is that you need to submit, in writing, the request along with the specifications (size, material, photos, etc.) and the license and insurance information of the contractor you will hire to complete the work. Once the board receives the request, it should be placed on the agenda for the next board meeting where they should take action or request more information if they require it. If they deny your request where they have granted others, ask why. If you are not satisfied with their reason or feel you were discriminated against, you are free to pursue legal remedy in the form of a lawsuit. Let’s hope it doesn’t come to that. Good luck!

Condo Fireplace Vent Improperly Installed

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M.B. from Fairfield County writes:

Dear Mister Condo,

We have a gas fireplace in our condo. Recently we were notified that the fireplace vent outside has warped the siding around it. Our association had told us to get our fireplace cleaned and checked. We had a reputable company come and service it. They found it to be very clean and working perfectly. They said the vent was too close to the siding and should be extended a bit out. Our association is telling us that even though it is outside our unit and that was the way it was built, it is our responsibility to pay for changing the vent. Is this our responsibility?

Mister Condo replies:

M.B., in a word, “yes”, it is your responsibility to make the repair. That being said, the initial developer may bear some responsibility as well but that will entail you asking for the builder to make it right and/or bringing suit against the developer for a construction defect. Depending on how old your unit is and whether or not you can easily track down the developer that might prove quite challenging.

My larger concern is for your safety. If your fireplace vent is generating enough heat to warp siding, it might be capable of starting a fire as well. That would be tragic for you and your fellow unit dwellers. I strongly urge you to cease using your fireplace until you get this matter resolved.

Do you have an estimate for the repair? If it is for a large enough amount of money you should seek counsel from a qualified attorney who can better inform you if it is worth bringing suit against the developer. If the repair can be done for less than $2500, I think I would just advise you to get it done so that you remain safe and your fireplace vent is not longer a threat to the safety of you and your neighbors. Best wishes!

Condo Conveyance and Rental Fees

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T.M. from New Haven County writes:

Dear Mister Condo,

Can the condo board/property management company charge $350.00 dollars when you either rent or sell your unit? I can understand a certain fee for documents but that seems quite high. One owner said it was $100.00 for administrative fees and $350.00 for conveyance fees for renting a unit. What rights do owners have about these additional fees?

Mister Condo replies:

T.M., boards are free to charge whatever they choose with regards to rental and transfer of title fees. Many associations discourage renting and keep the fees quite high for doing so as a discouragement. If you refuse to pay these fees, the association could take collection actions against you, which could be quite costly. You are free to petition the board to ask them to consider lowering or revising their fee schedule for such transaction but as long as they are uniformly applied, I cannot see any reason for them to do so. I know of some states where fees are much higher than what you have described here. There are some current legislative actions under way to change them (in Colorado, for instance) but to date, these efforts have failed. So unless new legislation is passed here in Connecticut, the only way you can avoid these fees is to choose not to purchase into the community. Good luck to you!

Second Hand Smoke Ruining Condo Life

E.G. from Litchfield County writes:

Dear Mister Condo,

Second hand smoke is coming into our unit from our neighbors unit since they moved in over a year ago. I have personally told them it was coming into our unit and asked them to please smoke outside. This made the chain smoking of multiple chain smokers worse! My son and I presented our case to the board and in front of the board my neighbor challenged the board, stating “how do they know it’s from his unit?” then, later, offered to seal up and install an exhaust system in his unit. This never happened. I have to live elsewhere for the summer and have to come back for the school year with this issue. The board did a follow up to see where neighbor was with changes but his reply is he quit smoking (not true) and that it’s not coming from his unit (12 units have shared attic space). I knocked on his door when smoke was coming into my unit – he insisted he was not smoking even though he and his unit smelled like smoke when he opened the door. He complained to the board that he feels harassed. Now, it his word against mine. I have only been to his front door 3 times since September, per his request, in front of the board at the June, 2014 Meeting. I cannot sell since load is upside down and I do not want to foreclose or short sale at this time. What are my options?

Mister Condo replies:

E.G., I am sorry that you find yourself in this unpleasant situation. Battles over second hand smoke rarely go well as it brings issues into play that many community associations aren’t prepared to handle. At the very core is where does one unit owner’s rights end and another’s begins? The unit owner who smokes feels he is right to smoke inside of his own unit. The unit owner who doesn’t smoke feels he has the right to enjoy a smoke-free environment within his own unit. To some extent, both have valid points. However, most condo documents are silent on the particular act of smoking within units. For this reason, the many boards are uncertain how to protect the rights of both unit owners and what steps need to be taken to secure the peace and maintain decorum within the community.

I applaud you for trying to work out a solution with your neighbor. Clearly, those efforts have not succeeded and I recommend that you try a new strategy. The State of Connecticut Department of Public Health is going to be your best friend in this situation. They have published an excellent guide to help folks like you enjoy a smoke-free condominium living experience. Visit their website at http://www.ct.gov/dph/  and, in particular, their page at http://www.ct.gov/dph/cwp/view.asp?a=3137&Q=486714&PM=1 which is their page on Smoke Free Housing for Condominium Owners and Homeowners Associations. You and your Board can follow the guidelines for adopting smoke free policies which are fully enforceable. Both you and all of your fellow unit residents have the right to a smoke free environment. This guide will show you how to get it done.

If you do not seek relief from the board, you may need to escalate the situation by filing a lawsuit against the board for not taking action to ensure a smoke free environment. This will most certainly get their attention and keep the process moving forward. It may take some time and perseverance, but you should prevail and end up with the smoke free environment you are entitled to. All the best!

Does the Condo Board Have to Answer My Question at a Meeting?

M.W. from Hartford County writes:

Dear Mister Condo,

My son lives out of state and wants me to represent him at board meetings. The board told me they don’t have to answer my questions because I’m not the owner, even if I get an affidavit stating my son’s wish for me to represent him. Please advise how to resolve this.

Mister Condo replies:

M.W., believe it or not, the Board doesn’t have to directly answer any questions from you or any other unit owner at Board meetings. Unit owners should contact the Board or Property Manager outside of a meeting to ask questions, make complaints against fellow residents or unit owners who have violated rules, or make a request for information that is public record to unit owners. For further clarification, I reached out to an attorney who practices community association law, who offered the following:

“Boards never have to answer questions from anyone during a board meeting, even from unit owners. Unit owners have the right to comment during board meetings, but nothing in the law entitles them to transfer that right to someone else. Your son can give you a proxy to vote in his place at unit owner meetings, but the board is correct that he can’t force them to answer your questions at a board meeting.”

So if you or your son who is the unit owner has a question for the Board, my advice is that you commit it to writing and submit it directly to the Board or Property Manager for their consideration at a future Board meeting. All the best!

Action Against Condo Problem Tenant Sought

D.L. from Fairfield County writes:

Dear Mister Condo,

One unit owner’s son is residing in the unit where he gets drunk and leaves the stove on. Last evening he passed out and the gas was on but not lit causing the evacuation of the building. This is the 4th time the fire department has been called regarding this behavior. Is there any action we can take?

Mister Condo replies:

D.L., I am glad no one was hurt and that there was no fire at the condo. You have no doubt seen news stories over the years where careless or reckless behavior inside of condo units leaves all residents in danger. Recent news stories have included space heaters, smoking in bed, and your story of a potential natural gas explosion caused by leaving an unlit stove running. These are all dangerous and possibly deadly activities conducted in the privacy of the unit, outside the eyes of law enforcement and community association governors. Depending on the association’s governance documents, there may be some remedy that can be sought although it is very likely going to require consultation with a qualified attorney as there is a fine line between what condominium residents can do inside of their units versus what they can do in common areas. Many association by-laws have rules against any type of potentially dangerous activity being conducted inside of a unit. Letting the unit fill with natural gas would certainly qualify under that definition. However, the penalty for doing so may only be a fine. That isn’t your goal; you want the behavior to stop completely. That may involve evicting the unit owner’s son from the property which will most certainly require the assistance of an attorney. My advice is that you should speak with a qualified association attorney to see what steps you can take as an association to have this resident evicted. Also, you should see if he has broken any laws that have led to the 4 calls to the Fire Department. Most Fire Departments have no interest in continually responding to the same emergency as it puts local citizens as well as firefighter in harm’s way. The Fire Department may be your ally in having this individual arrested or evicted of they have broken any local laws with their behavior. I wish you speedy success in remedying this situation, G.S.. You are very likely saving lives in the process and it may help this individual get the help they apparently need to overcome this destructive behavior. Good luck!

Years’ Worth of Uncollected Common Fees Asked to Be Paid

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G.M. from New London County writes:

Dear Mister Condo,

Hi, Mr. Condo! I live in a small condominium community and none of the unit owners have paid association fees since moving in. The Declarant has essentially been paying these expenses and only now wants to collect the fees that he hasn’t collected over the years. Can he do this, and how? Is it your opinion that we as unit owners have any defense to his demand for payment?

Mister Condo replies:

G.M., the fact that the unit owners have not paid common fees since purchasing their units is most unusual and quite disturbing. I am sure this isn’t the news people want to hear right around the holiday shopping season. I asked a friend of mine who is an attorney who specializes in community association law and the issues that occur during the developer transition period where control of the Board is transferred to the unit owner’s elected Board of Directors; Here is what the attorney had to offer:

“I assume the reason the declarant is involved at all is because he still owns enough of the units to control the board. The board can and should enforce the unit owners’ obligations to pay common charges. Unit owners must pay these in order to fund the annual budget, assuming one has been validly passed each year.  There is no time limit on enforcement except that the foreclosable lien on each unit for unpaid charges expires after three years.”

That should give you some clarification, G.M.. All the best!

Condo Balance Sheet Out of Balance

B.V. from New Haven County writes:

Dear Mister Condo,

We do not have professional book keeper. I find in the balance sheet generated by the accounting software our grouping of operating fund, reserve fund and equity is possibly not correct resulting in very huge account payables though in reality the amount is almost zero. What mistake are we doing in our grouping?

Mister Condo replies:

B.V., it must be upsetting to find a large accounts payable amount showing in your balance sheet. The only time that should happen is when there are actually large amounts of active debt incurred by the association. The balance sheet is used to show current assets and current liability. It is a very important tool for the Board to use and it is important that it be prepared properly. A professional bookkeeper is not required to prepare a balance sheet but it might make sense for your association to turn to one for help and guidance in the proper preparation or for advice on which software is ideal for your association.

You need to understand the most basic principal of the balance sheet which is to keep assets and liabilities plus equities in balance. With that understanding, the next step is to list all of the assets – cash on hand, in reserve, or invested in interest-bearing instruments like CDs. Also, accounts receivable (unpaid assessments, common fees). To balance that amount, all of the association’s liabilities are listed, including accounts payable.

The difference between assets and liabilities is equity. Hopefully, your assets outnumber your liabilities and the community is in a positive equity position. If liabilities outnumber assets, then the community is in a negative equity position.

I cannot say for certain that you are making any mistake in your grouping from what you have told me but it is possible that whoever is preparing the balance sheet is overstating the liabilities by not adjusting downward the accounts payable as payments are made. If the money has already come out of the cash on hand an entry adjusting the assets has been made. To set off that entry, the accounts payable should also be adjusted, which would keep the balance sheet in balance. That’s why it’s called a balance sheet after all! Good luck!