Monthly Archives: July 2016

Minnesota Condo 10% Reserve Fund Requirement Questioned. Uff Da!

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G.B. from Minnesota writes:

Dear Mister Condo,

What is the requirement for a reserve fund maintained by a condo association? In Michigan the law reads “maintain a reserve fund, which the annual funding, at a minimum, shall be equal to 10% of the association’s current annual budget on a noncumulative basis.” How do you interpret this? Are we required to put in 10% of our budget every year, regardless of how much we accumulate in our reserve, or do we just need to maintain 10% of our annual budget in the reserve?

Mister Condo replies:

G.B., I am not an attorney nor am I an expert in Minnesota community association law so please accept my advice as friendly and not legal. For a legal opinion, I suggest you speak with one of the many fine community association attorneys from your state. My non-legal interpretation of your law is that each year a minimum of 10% of the funds collected need to be deposited in to the Reserve Fund, regardless of previous year’s contributions. This is in line with current federal regulations for associations seeking FHA funds to back mortgages within their associations. While each association is different, I do not know of any that could easily survive with only a 10% annual contribution to their reserve fund. Typically, a 25% to 30% contribution is more in line with what the association will require to maintain, protect, and enhance itself over the long haul. Of course, the only proper way to fund a reserve fund is with the aid of a reserve study which lists all of the association’s common elements, their likely usable life span and a best guess estimate as to how much it will cost to replace these items. Only then can an association know how it is doing with regard to proper reserve fund planning. Your state’s requirement is an admirable step in the right direction, in my opinion, but is likely in place so there is an easy to measure tool for examining the reserve fund. This is exactly what the FHA does and while it is better than not having any reserve fund contribution requirement, it does not fully address the needs of the association with regard to having an adequate reserve fund in place when it is needed. And when there is not enough money in the reserve fund when needed in Minnesota, I expect a mighty “Uff Da” from the unit owners! Good luck!

Condo Unit Owner Correspondence Not Being Read at Unit Owner Meetings

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A.C. from New London County writes:

Dear Mister Condo,

Does the secretary have to read correspondence received at a unit owners meeting?

Mister Condo replies:

A.C., the Board Secretary has many important roles. Sending and receiving correspondence from unit owners and even other folks outside the association is one of those roles. The fact that there was correspondence should be entered into the Minutes of the Meeting. The exact details of the correspondence does not have to be admitted into the Minutes but should be responded to. A synopsis of the letter may be in order, especially if the subject matter was of business importance to the Board. Lengthy letters or diatribes are routinely dismissed by Boards as they do not have actual business implications. For instance, if a unit owner writes three pages about feral cats on the property, the Board only needs to know that a unit owner wrote a letter in favor of removing the feral cats. Should I assume that you have written to your Board and your letter was ignored? Try again, and be brief and describe the association business purpose for your letter. A paragraph or two should suffice. All the best!

Condo’s Percentage of Unit Ownership Formula Not Being Followed

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J.A. from outside of Connecticut writes:

Dear Mister Condo,

I live in a six-unit condo building. Three of the units are 2 bedrooms and 3 are one bedrooms. We have always paid our maintenance, repair and replacement of common elements, and assessments, in proportion to the % of ownership. Recently we had to buy a new boiler for the building and in a casual email the 3 bedroom owners and 2 of the 3 one bedroom owners decided that we should pay for the boiler in an equal split. This means that the one-b’s will be paying about $500 more than they would pay if we divided the cost proportionately. I live in a one-b and don’t think that is fair. I think the minority has rights which can’t be over-run by the majority. What do you think?

Mister Condo replies:

J.A., unless your by-laws state otherwise the percentage of unit ownership is the law of the land for all association expenses. The new boiler is no exception. You should question the Board’s decision on how to allocate the cost and cite your by-laws along with your objection. If the Board refuses to divvy up the cost according to the by-laws, it is time to seek a legal opinion and possibly bring suit against the association for not following the percentage of unit ownership. Good luck!

Unit Owner’s Fiancé Banned from the Community Association

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P.S. from New Hampshire writes:

Dear Mister Condo,

I have lived with my fiancé for over 5 years. At times we have fought and screamed at each other for many different reasons and I know that we live in a Condo with close neighbors and that our fighting at times was heard by them. We have never harmed each other or any property, we just yelled and screamed at each other for various reasons. Well, to make a long story short, I moved out about a year ago and have not been with my Fiancé for a year although we have talked on a regular basis. We have since decided to give our love and our life together another chance and everything has been going great. I think we both grew up a little and we really missed each other, so, as I was at her home in which so owns visiting her and her son, the police came and told us that the Management Company and the Board of Directors put a trespass warrant on me that I was no longer allowed on the property and that I was to leave at once. My Fiancé told the police that this was her home, that she owns it and she did not want me trespassed from her home. I understand if they do not want me in the common areas such as the pool and the club house, but, my future wife’s home, can they do that by law? Do they have the right to ban me from her home without her agreeing with them? We live in Hillsboro County in New, Hampshire. Before I contact a lawyer and spend the money that we do not have at the moment, are they able to do this to us? Any help or advice that you can give me would be greatly appreciated.

Mister Condo replies:

P.S., I commend you for changing your behaviors and I hope that your fiancé and you have a long and happy life together. Unfortunately, you have made yourself a “persona non grata” within the association because of your previous actions. Since you are not an owner within the association, you have absolutely no rights on association property as it is private property and your previous behavior was so abhorrent the association took the drastic steps of filing a trespass warrant against you. While the association may not be able to prevent you from spending time with your fiancé they can certainly keep you off the private property the association owns. I am not an attorney nor am I an expert in New Hampshire community association law so you I do have to recommend that you spend the money on speaking with an attorney to see what rights you and or your fiancé have when it comes to providing you with entrance / egress to the unit that she owns. My guess is that unless the association agrees to remove the trespass order, you will not be able to visit her at the property. Perhaps she can come visit you instead. If you were to have your name on the property, I would have different advice as a unit owner clearly has the right to access his or her own unit. Good luck!

Condo Special Assessment is Due but Repairs are Not Made!

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P.F. from New York writes:

Dear Mister Condo,

I live in a condo in NY and we have a special assessment in progress to repair leaks since February of 2014. I have made many attempts to contact the board but they have done nothing to repair my leak. Can I withhold my assessment and maintenance until they make the repair? Please advise.

Mister Condo replies:

P.F., I am sorry that your condo is dealing with multiple leaks and that your unit has not yet been repaired. I am also sorry to learn your association did not have adequate funds on hand to handle the repair and that a special assessment was necessary to raise the funds. You may not withhold paying your special assessment as the association will likely take collection efforts against you which could be quite costly for you. Even though it might seem to you that you are paying for repairs to your unit, that just isn’t the case. Once the assessment is levied, it is due from all unit owners. If it isn’t paid on time, the association can, and likely will, begin collection procedures against any delinquent unit owners. This can include hiring an attorney or collection agency and passing those costs on to you. In the worst cases, it can even include a foreclosure action against unit owners who fail to pay up. You don’t want to add insult to the injury of water damage by not paying your assessment. What you can do is be a squeaky wheel to make sure your unit is repaired in timely fashion. If the process drags out too long, you should speak with an attorney to see if you can sue the association for not making the repair in timely fashion. Those are really your only options. Good luck!

Condo Developer Transition Complete; Or Is It?

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R.D. from outside of Connecticut writes:

Dear Mister Condo,

Hi! I purchased a building and developed 3 condo apartments and sold them between 2006 and 2008. I was the original member of the condo association as we were selling them. Then the 3 owners took over the association and never filed the 1120H from 2009 -2014 as I had originally done in 2008. Now I haven’t participated in the association because the owners wanted to take over the association on their own. Two questions. 1) Am I still responsible for these unfiled tax returns 2) how can I get my name off everything to do with the association. Thanks!

Mister Condo replies:

Hi, R.D.! Developer transition issues such as this are best handled by a qualified attorney. There are many attorneys that specialize in condominium development and transition. The unit owners don’t govern the association because they wanted to do so “on their own”, They manage the association as a matter of law once the conditions for doing so were met by you and by them. At the time those conditions were met the association became a self-governing entity and you were no longer the controller of the association. Regardless of who controlled the association, the tax forms should have been filed. What you will likely need is a legal opinion on who actually governed the association from 2009 – 2014 to make a determination of responsibility. My guess is that the newly formed association, governed by the unit owners, simply didn’t file the forms and must now face the consequences for not having done so. It is certainly possible that the developer transition never happened or wasn’t recorded properly, in which case you may be on the hook. Finally, if the developer transition has not yet been completed properly, kindly speak with a qualified attorney to get it done. Being on the hook for the tax filings may be the least of your problems if that paperwork wasn’t handled correctly. All the best!

Condo Renter Smoking Out Other Unit Owners

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B.D. from outside of Connecticut writes:

Dear Mister Condo,

We are a small association, 4 units. Our current bylaws do not prohibit smoking on our common property–deck, parking areas, etc. One of the owners has rented his unit to a smoker, and did not put a no smoking clause in the lease. If our board now votes 3-1 to add a “no smoking on the common property” clause to our bylaws, will the owner be forced to have the renter comply with this?

Mister Condo replies:

B.D., unless you have state or local laws to the contrary, it is very likely that the renter will have to comply with the “no smoking” rule of the association. If the renter does not follow these rules, the unit owner (not the renter) is the one who gets fined for the rule violation. This may create tension between the renter, the unit owner, and the association, but that is truly not the concern of the Board. Smoking is generally considered “nuisance” in condominiums and can be prohibited by the association. Even if the current landlord did not ban smoking in the rental agreement, the agreement likely obligates the renter to follow the rules of the association. This is just one more rule to be followed. All the best!

Condo Heating Season Starts Too Late!

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C.P. from outside of Connecticut writes:

Dear Mister Condo,

When are they supposed to turn on the heat each year? This past October was very chilly in my condo. People are complaining about not having any heat. When does the heat have to be turned on?

Mister Condo replies:

C.P., unless specifically outlined in your condominium documents, the time of year the heat is turned on is likely determined by the Board or the management company. You should let the Board know how chilly it was this past October and that you would like the heat turned on earlier. If enough of your fellow unit owners feel the same way, the Board should grant the request. If the Board isn’t responsive to the needs of the majority of the community, it is time for a new Board. Keep warm!

Fellow Unit Owners Creating Unbearable Condo Rooftop Noise!

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M.M. from outside of Connecticut writes:

Dear Mister Condo,

I live on the top floor of a 60-unit condo building. The noise from the roof deck is unbearable. I have lived in the city for several years and have a reasonable expectation of noise levels. The noise was not disclosed in the purchase and apparently nobody was on the roof when I initially saw the unit. Is the HOA responsible for helping to control this noise issue, since the nuisance is originating from a common area?

Mister Condo replies:

M.M., I am sorry that the roof deck noise is unbearable. Your association’s governance documents likely spell out what is acceptable and what is not when it comes to noise. If you have registered your complaint with the Board, it is up to the Board to determine if your complaint carries enough merit for the Board to take action against the unit owners who are responsible for the noises. However, if your condo documents are silent about noise regulation and instead use the term “nuisance”, the Board may not have enough definition of nuisance on which to act against the noisemakers. I would encourage you to work with your Board on determining which, if any, rules are being broken and then ask the Board to take action to enforce the rules. These action may include fining the rules breakers or restricting their use of the common area for repeated offenses. Then again, the Board may not have any action to take if no rules are being broken. It is unfortunate you were not made aware of the noise issue before making your purchase but this sounds like a case of “buyer beware”. If so, and the noise cannot be controlled, I might suggest you also sell to an unsuspecting buyer during a time of year when the noise doesn’t exist. Good luck!

Delinquent Condo Common Fee Statute of Limitations

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C.B. from New Haven County writes:

Dear Mister Condo,

Is there a statute of limitations for collecting outstanding condo fees?

Mister Condo replies:

C.B., common fees should be collected as they come due to the association. The association has by-laws in their declaration that outlines what happens when a unit owner does not pay those fees in a timely fashion. The traditional remedies are late fees, followed by collection fees, and ultimately repossession of the unit through a foreclosure liquidation. That being said, if no action is taken against a delinquent unit owner, it is possible that the association could wind up being shortchanged because a unit owner files for bankruptcy protection and the uncollected common fees in arrears go beyond the 9 months that the state of Connecticut grants as a super lien on the condominium unit. In other words, if 24 months of fees are owed and the unit is foreclosed, the association is only guaranteed 9 months of fees plus reasonable attorney fees at the settlement. The remaining amount is up for grabs and is usually written off as mortgages and other liens against the property are settled. I am not aware of any statute of limitations when it comes to when the association can take action against a delinquent unit owner. The reality is that if the association is paying attention to common fee collection, there is no reason action shouldn’t be taken as soon as possible against a delinquent unit owner. Good luck!