Monthly Archives: March 2015

WHOA, Mister Condo! Not so fast!

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(Editor’s Note: This question references and earlier question which can be found at http://askmistercondo.com/what-steps-does-the-hoa-take-to-place-a-lien-on-delinquent-unit/)

P.D. from New London County writes:

Dear Mister Condo,

WHOA, Mister Condo! Not so fast! March 9, 2015, B.B. in Litchfield County asked how to place a lien on a condo unit. You said a lien for an unpaid assessment is automatic. Fine, but THEN you, well, your attorney friend, said it was good only for three years! Three years go by in a flash! We are holding the bag for $150 that an owner withheld from a common fee payment without authorization to do so and even without documentation of what the $150 was for. That was a little over three years ago. This fact was recorded in the minutes of a subsequent meeting. We thought we had a permanent lien. So what happens after three years? And longer?! What further action can or should the association take?

Mister Condo replies:

P.D., I appreciate you taking me to task on any reply offered in this column, even one offered by one of my attorney friends. There is a big difference between a lien for non-payment of an assessment and collecting an underpaid assessment. Let me give you my opinion on the difference between the two.

I assume your governing documents have rules detailing what happens when a unit owner doesn’t pay the full amount of their monthly common fee or any other assessment in timely fashion. Generally, there is a short grace period (10 days or so), followed by a penalty or late fee. There is also usually a clause that states that any monies received by the association from the unit owner will be sued to pay the amount owed in arrears FIRST, before being applied to any current debt. If that is the case, as I suspect it is, you really are not holding the bag for the unit owner in arrears. In reality they are ongoing in arrears each month by the amount they owe the association. For instance if your common fees are $250 per month and the delinquent unit owner is currently paying $250 per month, the payment should be applied as $150 towards the arrears and $100 towards the current common fee. That way the common fees in arrear are once again $150. That $150 carries over fresh month to month until such time as it is paid.

From what you have told me, you are also missing an opportunity to levy late fees and penalties upon this delinquent unit owner. If your documents allow for doing so, I would suggest you bill for the amount called for in your documents. Further, you may have a case for going back and doing so for each month that this unit owner has been delinquent. However, keep in mind that the late fee is designed to get the unit owner to pay up. It is not an income source for the association. Since you haven’t implemented this policy in the past, I would encourage you to consider implementing it this next month and see if you can’t get the delinquent unit owner to pay up.

One other question I have for you, P.D., is whether or not you are using a collection agent. A qualified collection agent would be familiar with this tactic and would most certainly have had the delinquent unit owner pay up by now. Either way, your lien for the $150 is still intact as long as the payments have been applied properly. For when this unit is sold, if the delinquency hasn’t been paid, it will actually only be one month old which is well within the time allowed by the statute.

Thank you for reading the column and keeping me honest. Good luck collecting the association’s money!

Small Condo, Big Condo Governance Problem

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D.A. from Los Angeles, CA writes:

Dear Mister Condo,

Question: Can I sue another unit owner for financial damage if I can’t sell my unit?

I have a condo in Los Angeles. It is up for sale. One unit owner is contesting the board elections from last September and a special assessment to paint the exterior of the building, which was approved by a wide majority of 12 owners. This one owner has not only relentlessly abused and accused the board and management company wrongdoing, but wants both the board and special assessment elections overturned by the court. This has required the board to hire legal counsel to review its practices and procedures. The attorney has indicated that the board is “substantially compliant”. The board could hold elections again, which would be another HOA expense from a time standpoint and out of pocket costs for mailings, secret ballots, etc. The outcome would likely be the same. The attorney has suggested a petition be signed by owners to the effect that they support the decisions of the board, which will hopefully help strengthen the HOA’s position if this one owner takes us to court.

The HOA has been in existence for 30 years and has spent the last year becoming compliant with the Davis-Stirling Act. The DS election rules were not formally adopted before these two elections, but the rules were followed to the letter. They have since been adopted. In the 30+ years this condo association has been in existence, there was never a formal way of doing business, i.e., 12 neighbors would meet in the common living room and discuss what was needed, vote and move forward. This owner is angry about the decision to paint and is, therefore, as the attorney said, “damaging” the HOA financially, which brings me to the larger question regarding my own unit. My unit is up for sale and buyers are deterred due to the open-ended legal issue with this owner. I have an offer on the table, but the buyer is concerned about this legal issue. Can I sue this owner for financial damage if my unit won’t sell due to this unending situation?

Mister Condo replies:

D.A., I am sorry for the ongoing legal battles your association is experiencing. I am not an attorney nor am I an expert in California law regarding common interest communities. However, I can offer some friendly advice that might help you direct your efforts in bring resolution to these issues.

In America, just about anybody can sue somebody else for any reason. The real question is whether or not it is worth the time and effort to do so. In my opinion, you would not prevail against your neighbor as his suit against the association was not brought about to block the sale of your unit; it is an unfortunate side effect. It does speak to the larger issue of how one disgruntled unit owner can do a lot of damage to an otherwise well-run association. This is true not just in California but all across the country.

From what you have told me, the law is on the side of the unit owner who has brought suit against the Board. “Substantially compliant” and “fully complaint” are two different scenarios when it comes to lawsuits. Until your Board is fully compliant with the Davis-Sterling Act (and any other condominium or common interest community laws in California) it is vulnerable to similar suits from this or any other unit owner who doesn’t agree with an action the Board takes. The simple solution is to follow the letter of the law and the association’s own governing documents. Since the association has been run in a “substantially compliant” manner up until recently, I am guessing there are just a few adjustments that need to be made for full compliance. At that time, the actions of the association are bullet-proof and the lawsuits brought against the Board would have no merit. With no lawsuits pending against the association, I can see no reason you and any other unit who wishes to do so would not be able to sell their unit. You just have the unfortunate consequence of trying to sell at a time when there is an active lawsuit against the association.

Of course, I recommend that you seek out a legal opinion from a qualified attorney. However, unless the attorney encouraged you to bring suit against the unit owner in question, I would recommend that you continue to encourage your Board to be fully compliant with all state laws and hold additional meetings and votes as needed to get the actions of the Board (such as the elections and the decision to paint) on the official minutes of the association in such a way as their validity cannot be questioned. All the best!

Nominating Committee for Self-Managed Condo

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N.L. from Fairfield County writes:

Dear Mister Condo,

Do you have information of how to form a nominating committee for a self-managed condominium?

Mister Condo replies:

N.L., that is a very interesting question. The answer lies in your governing documents which may or may not outline the procedure for forming the Nominating Committee. If the documents are silent on the Nominating Committee formation (which would be my guess), the association is then free to create its own rules regarding the formation of the Nominating Committee. There would be a motion to do so at a meeting, a vote to ratify the decision, and so on. Keep in mind that your association is also bound by state laws so be sure to do so in an open forum where all unit owners know what is going on. It should also be noted that the function of the Nominating Committee is to propose, not endorse, candidates. Also, keep in mind that qualified individual unit owners are always free to run for a position on the Board, regardless of whether or not the Nominating Committee has presented the unit owner as a potential candidate.

While not unknown to condominium associations, Nominating Committees are not particularly common and almost unheard of in smaller condominiums. In your letter, you indicated that your association has more than 75 units so it is not surprising to hear you are seeking to form a Nominating Committee. It is important that the Nominating Committee function with the same openness as the Board and other committees. I found the following general guidelines at the CAI National website. I would include these in the resolution to establish the committee:

XYZ Condominium Nominating Committee

  1. Appoint nominating committee members.
  2. Assign number, tenure, and restrictions on committee members.
  3. Determine committee powers and duties.
  4. Solicit nominations in accordance with the resolution.
  5. Verify nominees’ willingness to serve.
  6. Solicit biographical information and platform statements from nominees.
  7. Organize and publish the slate of candidates.
  8. Certify compliance with nomination requirements in the resolution.

Hope that helps! Good luck finding the best candidates to volunteer for Board leadership positions at your association, N.L.!

Property Management Firm Not Performing to Association’s Expectations

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K.C. from Fairfield County writes:

Dear Mister Condo,

Help! We have a new property management group at our condominium complex. My concern is that they do not seem to realize that they are working for us. They are attempting to run the show. They need to be reeled in but we have a new Board and they are doing their best. However, the question at hand is this. We have asked for the exact break down of our budget….what amount was actually spent on the services versus amount that was allocated. For example; we are informed that $500 a month is used towards snow removal / landscaping (not a lot of grounds). Be informed as to what services they are providing and are accountable for. They are not providing us with this financial information but rather just a nondescript copy of a budget with no other information. What are we entitled to and be more informed of our rights? Thank You!

Mister Condo replies:

K.C., a new Board and a new Property Management company both at the same time? No wonder there is some confusion. Let’s talk about what is likely going on here and how you and your community can survive and thrive during this transitional period. I can assure you that the property management firm knows it is working for you. May I assume that the previous Board was the one that hired this firm? They were given their current marching orders from folks who no longer serve on your Board of Directors. My guess is it will take some time for the new Board to get up to speed and take back whatever control they wish from the Property Management firm. The Property Management firm is very likely doing its best job at running the association in light of new and inexperienced Board members.

I assume that you are a unit owner and not a member of the Board of Directors. Is that correct? This may sound strange but the Property Management firm is not accountable to unit owners. The Property Management firm reports only to the Board. If the new Board requests the information you have suggested and is denied the information, they very likely have the right to terminate the agreement with the Property Management firm. Of course, that may require the community association’s attorney to get involved because the management contract is a legally binding instrument for the association and the management company.

As a unit owner, you have the right to inspect records of the association, including paid invoices to vendors. However, you do not have the right to do so at will or free of charge. You may contact the management company and schedule a time to review whatever public records of the association that you wish. The management company does have a right to charge you a fee for doing so. To be honest, unless you know exactly what you are looking for, I do not recommend you waste your time or money doing so.

What I do recommend is that you hold your new Board accountable for the work being done on behalf of the association by the Property Management Company. If you suspect wrongdoing on the part of the management company, you have every right to request the Board look into it and report back to the entire community. However, if the Board is satisfied with the work and accounting of the management company, you should be prepared to accept their findings. The Board was elected by you and your fellow unit owners to conduct the business of the association. I am not sure why the entire Board is new but that usually signifies there are numerous problems within the association, especially if the entire previous Board resigned or was voted out of office. New Board members require training so that they can do a good job of governing the association and managing the association’s assets and business service providers like the Property Management Company. If the new Board doesn’t perform to the satisfaction of unit owners, they, too, can be voted out. The problem may be finding volunteers from within the community who are eligible and interested in serving.

Whose Insurance Pays for Condo Damage from Upstairs Burst Pipe?

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J.M. from outside of Connecticut writes:

Dear Mister Condo,

I live in a second floor condo (3 floors). A pipe broke in the guy’s unit above mine and flooded my unit. I had to replace sheetrock, carpet, hardwood, and some fixtures. Am I responsible for the cost of repairs or are he and his insurance?

Mister Condo replies:

J.M., I am sorry that you experienced such damage. There are several possible answers to your question depending on the circumstances that caused the pipe to burst. Assuming there was no malicious act or complete negligence on the part of your neighbor, the association is likely to put in a claim to repair any common elements that were damaged. It is possible that there are association-owned walls, insulation, floors, etc. that need repairing. The association’s insurance should cover that. Your homeowner’s insurance is likely going to be the insurance coverage that pays for the interior damage to your unit. The same is true for the unit owner where the pipe broke and any other unit owners that were affected by the pipe break. Your insurer may go after your neighbor’s insurer if there are any potential liability issues on the part of your neighbor. For instance, if your neighbor was a snowbird and left the heat off in the unit which caused the pipe to burst. That is a battle best left to the underwriters. You should pursue your own insurer for repairs to your unit. Good luck!

Condo Garage Door Assessment for Unit Owner with No Garage!

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D.F. from outside of Connecticut writes:

Dear Mister Condo,

I live in a condo with 11 units. Only 10 of the units have garages. I am the owner of the unit that doesn’t have a garage. A special assessment has been voted to replace garage doors. Do I have to pay the assessment? The 10 units are deeded.

Mister Condo replies:

D.F., unless your condo documents state otherwise, common elements are the property of the condominium association and there repair and maintenance falls upon all members of the association. Regardless of the nature of the item, the repairs and maintenance are paid for from monies collected in common, using the percentage of unit ownership formula, which is the same formula used to determine the percentage of common fees each unit pays. Just because your unit does not have a garage does not exempt you from paying your fair share of the upkeep of the rest of the units’ garage doors. If, by chance, your documents are worded in such a way that the individual units own their own garage doors, you may not have to pay but that is unlikely. Take a look at your association’s governing documents and see what it says about garage doors. If the documents do not specifically state that garage doors are individual unit owner responsibility, it is very likely that they are common elements. All the best!

Florida Condo Association Restricts Use of Boat Docks

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A.R. from Florida writes:

Dear Mister Condo,

I own a condo in Florida which I rent out on an annual lease. My question relates to common element boat docks.

The documents state:

1) only unit owners shall be allowed to keep boats.
2) Renters, Lessees, and guests are not allowed to keep boats on condominium property.

Why can’t I allow a person who rents from me to use the boat docks? I pay for it and I am not going to use it so why can’t I transfer my use of the boat dock to my tenant?

Mister Condo replies:

A.R., individual associations have the right to handle the management of common assets, such as boat docks, in any way they see fit provided they are not in disagreement with local, state, or federal laws. The association’s governing documents using spell out how the association rules are made and/or modified. If unrestricted use of a particular boat dock is part and parcel of the deed to the unit, there may be some additional use rights attached, but, as you have stated, the boat docks are common elements, which means they are owned by the association as a whole and not by individual unit owners. As long as no laws are being violated, the association can restrict the use of the common elements in any way they see fit, including limiting their use to unit owners only. You can always put forth a request that the Board consider allowing the use of the boat docks to tenants but the Board does not have to take action. If enough unit owners share your sentiment you may be able to pressure the Board into changing the rule. Otherwise, the rules should be obeyed and only unit owners should use the boat docks. Good luck!

Condo Sump Pump Thump and Bump!

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D.H. from Fairfield County writes:

Dear Mister Condo,

There are sump pumps below my unit. They are in the cellar below my unit and are very noisy. They cycle on and off every 15 minutes and at end of each cycle, vibrate the floors loudly. I’ve complained to the BOD and the head maintenance guy and his main assistant but nothing has been done. I’ve put my attorney on stand-by notice. He will write the above, plus the Management company about this breach to the “disturbance of the enjoyment of my home”. A week ago, I gave the assistant maintenance manager a printout on expert plumbers’ suggestions on resolving ‘noisy sump pumps’ to no avail. Can I go down in the cellar and legally, UNPLUG, the most offensive pump, as I’ve given more than enough notice about this matter?

Mister Condo replies:

D.H., I am sorry for your sump pump noise disturbing your living situation at your condo. Since you have already retained the services of an attorney, I would ask you to ask him the same question. I don’t know if you can legally unplug any of the sump pumps but my guess is that you shouldn’t for a whole lot of reasons. First and foremost is that the sump pumps are likely there for a reason and unplugging any of them may cause damage to you or your neighbor’s units. Since you would have willingly been the direct cause by unplugging the unit, you would very likely be held liable for any resulting damage. You certainly don’t want that!

You are on the right path to correcting the problem. The noise is a nuisance and you very likely have protection from such nuisance in your condo documents, which your attorney will reference when he asks the Board to remedy the situation. Chances are, the letter from the attorney will motivate them to take action. If not, your attorney will likely advise you to bring suit against the Board. If you prevail, the problem will be fixed and there is no need to take action like unplugging the sump pumps. It really should be that simple. Good luck!

Increase to Condo Common Fees Means No More Special Assessments

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A.S. from Hartford County writes:

Dear Mister Condo,

With the inception of our new budget and an increase of 18% increase in monthly condo fees, the board of our condo association, stated arbitrarily that there will no longer be special assessments and that such issues would be rolled into the budget as line items. Does that mean such items will stay in the budget and the residents will continue to fund these items? Or if when these items are paid for and removed, will the residents monthly fees be adjusted downward accordingly?

To sum up my question can our board due this and is it legal? Thank you!

Mister Condo replies:

A.S., I am not an attorney but I don’t think your question really has to do with legality as much as budget process and ratification. I have to assume that your association has been subject to special assessments in the past and that the Board is now trying to remove special assessments by incorporating a large enough contribution to the Reserve Fund to handle those items which were being paid for by special assessments in the past. Is that correct?

Two things come to mind to answer your question. The first is that all unit owners have a say in the Annual Budget when it is presented for ratification at the Annual Meeting. If unit owners like the budget and it is passed, the Board is then bound by that budget for the next 12 months, until the next Annual Meeting. There could still be an emergency of some sort that required extra funds to be raised and they still have the special assessment at their disposal if the need arises. However, as you know, special assessments don’t just automatically happen. The Board must still go through a set procedure to levy the special assessment and, if it is large enough to set off certain rules, unit owners have to approve the special assessment with another ratification vote.

Special Assessments should not be the norm at any community association. There are lots of reasons for this but, most importantly, they can create a real hardship for unit owners who aren’t prepared to pay the extra money on top of their mortgage and regular common fee expense. There is also the concept of fairness. Today’s unit owners are benefitting from all of the items that are wearing out. If they leave the community before the funds needed to replace those wearing elements have been collected they are not paying their fair share of the depreciation. Future unit owners will be left to pay for this in the form of special assessments. Seems a bit unfair to me, wouldn’t you agree?

Well-managed and well-funded community associations use important tools like Reserve Studies to properly fund future capital repairs. They know that the roof will need replacing in 20 years so they set 5% of its expected replacement cost in Reserve every year. That way in 20 years, the new roof gets paid for and everyone who used the previous roof has paid their fair share. What a great idea! The same is true for all of the other common elements that are going to wear down and need replacing.

It sounds to me like your Board is committed to doing it the right way. They are going to include a healthy contribution to the Reserve Fund each year as part of the Annual Budget. That should assure that special assessments are rarely needed, if at all. As an added benefit, the Reserve Fund may earn some interest that, over time, the contributions can be adjusted. The Annual Budget will still get voted on every year so unit owners will have a say on how much is contributed to the Reserve Fund. Sounds like step in the right direction to me, A.S.. Good luck!

Which Insurance Coverage Covers Condo Ice Dam Damage?

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W.M. from Tolland County writes:

Dear Mister Condo,

My daughter lives in a condo and she has leaking in her living room from an ice dam on the roof. The wall and ceiling above the sliding door are soaked. She recently received a letter from the condo management company saying they would not do regular snow removal but would take care of individual problems. She called the management company and they are giving her a hard time saying “there is nothing much we can do, but we will try to send someone to remove the ice”. They also told her to contact her insurance company. Isn’t the condo insurance primary in this case as the problem started on the roof?

Mister Condo replies:

W.M., I am sorry for your daughter’s ice dam and resulting water damage. This has been a long, drawn out winter and there have been plenty of water intrusion events caused by ice dams throughout the Northeast. There may not be too much the management company can do about the ice dams unless they are directed to do so by the condominium’s Board of Directors who directs the work and agrees to pay for the ice dam removal. The insurance claim is another story.

Damage resulting from ice dams may or may not be a covered loss under the association’s insurance policy. As you can imagine, anything that happens on the roof is the responsibility of the association, and, theoretically, covered by the association’s master policy. However, that doesn’t mean that damage to the interior of the unit is covered. In fact, the homeowner’s insurance policy (HO-6, here in Connecticut) may be the correct policy for handling claim to the interior of the unit. The Master Policy may cover damage to the roof or exterior walls. Furniture, flooring, and belongings may be covered by the HO-6. There is also the issue of the deductible and who is responsible for that cost.

I have seen numerous outcomes from these insurance complexities. The good news is that your daughter is likely covered. The challenge may lie in exactly which insurance will cover the loss and who will be responsible for the deductible. If your daughter isn’t happy with the outcome from the insurance settlement, she may wish to hire an attorney or a loss mitigation firm to review the claim and settlement. If it is any comfort, she won’t be alone. There are hundreds, if not thousands, of condo residents in the Northeast who will be facing the same struggle. All the best!