Monthly Archives: July 2016

Deep Question About a Condo Elevator Sump Pump

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J.G. from outside of Connecticut writes:

Dear Mister Condo,

We have a sump pump at the bottom of our elevator shaft. Is there a law or code that says the cover must be metal and able to withstand 300 lbs?

Mister Condo replies:

J.G., I will be the first to admit when I am in over my head and your condo elevator sump pump question has put me right there. I will ask my column readers with expertise in this area to chime in but here is my unqualified but friendly response: Local building codes will very likely dictate the strength and material requirements for your elevator sump pump. I did a quick internet search on the subject and found a surprising (to me) number of answers although most dealt with volume of water the pump could remove versus the material or weight the pump could withstand. Needless to say, this is an item for a civil or property engineer with elevator shaft experience. The answers I found online varied by state so you will most likely need a local interpretation to make sure your sump pump is up to code. Sorry I couldn’t be of more help but I hope I’ve sent you in the right direction for your answer. Good luck!

Condo Association Facing the Music (Royalties, that is!)

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C.J. from Middlesex County writes:

Dear Mister Condo,

Is our condo association required to pay music royalties to organizations such as SESAC?

Mister Condo replies:

C.J., I am always impressed when I get a “first time question”. No one has ever asked me about music royalties as they pertain to condominium associations so congratulations on your “first time question”. Here’s my first time answer! If your condo association has a pool, club house, recreation room, or any common amenity where music is played, the association might have to pay a royalty fee to SESAC, ASCAP, BMI or any one of another of firms that specialize in collection of royalties for musical artists. If the association plays music on the common grounds, these organizations have a right to collect royalties on behalf of their clients – the composers, musicians, and artists who make the music that is being played. I don’t know about you, C.J., but that is not music to my ears! Thanks for the question!

Condo Association Radon Mitigation

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R.F. from Litchfield County writes:

Dear Mister Condo,

Who’s responsible to pay for radon mitigation? Association or Condo Owner?

Mister Condo replies:

R.F., I am sorry you have a radon problem in your condo and that it is unclear who should pay for that mitigation. As with most items that require additional clarity, you should first look to your declaration and governing documents to see if there is any mention of radon detection and mitigation. My guess is that you won’t find anything but it doesn’t hurt to check. The next item to consider is where is the radon found and is the association responsible? My guess is that the radon is found in the air inside of your unit. For the most part, that would make the mitigation of such radon the unit owner’s responsibility. An exception might be if the radon were found in a common area like a storage area or crawlspace, in which case the expense for mitigation may fall upon the association. So if the radon is found in your basement and the basement is part of your unit, the mitigation expense is likely yours as well. Hope that helps!

Who Approves Condo Association Fire Lanes?

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D.S. from Litchfield County writes:

Dear Mister Condo,

Can an association put in a fire lane without a fire marshal approval?

Mister Condo replies:

D.S., if the association owns the roads and parking lots within its boundaries, they are more or less free to designate fire lanes, parking areas, and other restriction on the land as they see fit. It is private property. There may be local building and fire codes to consider when designating such fire lanes and it is probably a good idea to have a fire marshal inspect the fire lanes to make sure they meet the minimum requirement for the local fire department. Typically, fire lanes are established when a property is first constructed. However, provided no local ordinances were violated, I cannot think of any reason the association could not make a determination as to where to put in a fire lane and then enforce the association’s rules for not parking in those designated lanes. Please note that I am not a fire marshal nor do I have knowledge of the local ordinances for your town. If you have concerns that aren’t addressed here, I strongly encourage you to contact your local fire department and pose your question. All the best!

Washington State Condo Lien Conundrum

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J.R. from Washington State writes:

Dear Mister Condo,

A unit in our condominium community foreclosed after the death of the owner; after sale, any outstanding assessment prior to the sale was no longer collectible. Washington State RCW 64.32.200 states, “Where the mortgagee of a mortgage of record or other purchaser of an apartment obtains possession of the apartment as a result of foreclosure of the mortgage, such possessor, his or her successors and assigns shall not be liable for the share of the common expenses or assessments by the association of apartment owners chargeable to such apartment which became due prior to such possession. Such unpaid share of common expenses of assessments shall be deemed to be common expenses collectible from all of the apartment owners including such possessor, his or her successors and assigns.” Can the past due assessment be written off or is the assessment in arrears due and owing from the owners? We are a 20-unit community in Washington State incorporated in the 1980s.

 

Mister Condo replies:

J.R., that is a great question. Unfortunately, I am neither an attorney nor an expert in Washington State community association law so I can only offer you my friendly opinion on this matter. As a general rule, assessments are levied against the unit owner at the time the assessment is levied. So if the unit owner was alive at the time of the assessment, in theory, that unit owner (or that unit owner’s estate) is liable for the assessment. The foreclosure on the unit throws in an interesting wrinkle because now it is not only a case of collection but also of liquidation. Did the association make its claim during the foreclosure process? I did a quick internet search and it would appear that your condo would be governed by Washington State’s Horizontal Properties Law, also referred to as the “Old Act” because it applies to condos built before July 1, 1990. From what I have read the lien order is any governmental agency, followed by mortgagees, followed by the association. If this unit was liquidated through foreclosure, I would expect the association has collected all that it is going to collect. If those collection efforts failed to recoup all of the owed monies, it may be time to consider taking a write-off on the uncollected funds. There may also be a situation where the association placed a lien on the actual unit for the assessments. In that case, different rules may apply and the lien may still be in effect on the property. All that being said, this is a clear case for employing the association’s attorney to make sure no money is left on the table. Any loss incurred by the association will ultimately be passed on to the remaining unit owners. In a small community like yours, that may not be unsubstantial. Good luck!

Condo Board Service or Amenity?

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S.J. from outside of Connecticut writes:

Dear Mister Condo,

I am an original owner of a townhouse condo since 1987 in a Florida condominium of more than 100 units. Ever since conception of this condominium in 1987, every unit has had a security system monitored and paid for through our association maintenance fees. This is $16.99 of our $425 monthly maintenance fee. Our security system contract is up in January of 2016. At the October board meeting last year, five of the six directors of our present association board want to vote to stop the bulk package monitoring. The board wants individual owners to pay out of their own pocket maintaining that the board is doing their job in the fact that each unit has security equipment and the association should quit subsidizing owners that use the security monitoring. One of the board members has been negotiating with the company and our association and our association can get anywhere from $12 to $20 per unit for a seven-year contract. The five members of the board that are against this bulk monitoring state they feel it is not right to subsidize the bulk rate since many owners do not use monitoring (almost half do according to the company).

I strongly maintain that the condominium association has been providing monitoring service as a common expense since the inception of the condominium and therefore the board is obligated to maintain and continue to provide the service unless and until a vote of 75% of the membership is secured to terminate or otherwise modify the service from the level originally provided by the association.

I can predict that the board of directors have consulted an attorney; however, I can tell you, according to the board member that sides with me, that the way the board president presented the problem, the attorneys do not know the whole story and the board president is using semantics to push his agenda. I also have a letter from the attorney a past board of directors used in 2006 that also sides with me – that the bulk monitoring security is an amenity and cannot be changed without a 75% vote by all unit owners. What do you think? How can I convince the board at the meeting? I will only have three minutes speaking time at the beginning of the meeting.

Mister Condo replies:

S.J., even if you were to present an impassioned 3 minutes about how the Board should provide this service for the association, I would say it is a foregone conclusion that they will not. Unless your by-laws specifically state that the association is responsible for providing this amenity and that it is part and parcel of your common fees, the Board may very well have discretion at whether or not to continue to provide or let unit owners fend for themselves. You mentioned one half of the unit owners do not use the service. That number alone would indicate that there is a lack of demand from at least half of the unit owners in the association to continue the service. If you are convinced that the bulk monitoring is an amenity and is provided for in your documents, you may wish to pursue a legal remedy (lawsuit) to see if you can persuade the Board to see it your way. I am not an attorney so I only offer friendly advice here. If 5 out of 6 Board members don’t want it, it is likely going away. Of course, you can always replace the Board members during upcoming elections who may reinstate the bulk monitoring as their reason for running for the Board. Either way, the Board is elected by the unit owners and they are the body empowered to make such decisions. Good luck!

Lack of Condo FHA Certification Prevents Mortgage Approval

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T.S. from Virginia writes:

Dear Mister Condo,

I am trying to sell my condo townhouse that I have owned for many years. I found a buyer and accepted his offer. Right before closing the lender said that they could not complete the mortgage for the buyer because the condo HOA is not FHA compliant. I have never heard of anything like this. Can you explain it to me?

Mister Condo replies:

T.S., I am sorry you find yourself in this predicament. It may be of no consolation to you but you are not alone in your struggle. The Federal Housing Administration (FHA) is the single largest underwriter of homeowner mortgages. Banks and other lenders that provide mortgages count on the FHA to back the mortgages they write as long as they follow the guidelines laid out by the FHA. Since maintaining FHA compliance is considered a best practice for mortgage-originating banks, you will find that almost all require FHA compliance when providing mortgage funds. Condominiums are different that single family homes when it comes to qualifying for FHA compliance. In order for any individual units within a condo association to be eligible for FHA-backed mortgages, the entire association must be FHA certified. This is a fairly simple process but it does require the association to seek this certification. The FHA does not simply grant it. The association must apply and it must also meet certain guidelines to be approved. The most common reason association either don’t qualify or choose not to try to qualify is an underfunded Reserve Fund. Current FHA guidelines require no less that 10% of the common fees collected each year be deposited into a Reserve Fund. While a great deal of associations exceed that amount, many do not and cannot qualify for FHA certification because of it. There is a myriad of other reasons associations choose not to get FHA certification but the bottom line is that without this certification, traditional mortgage lenders cannot offer individual unit mortgages to borrowers within the association. In this case, it might even cost you your sale unless your buyer can find another method of mortgaging the property or pay cash. You can and should petition your Board to get the association FHA certified as I am sure you are not the only unit owner facing this challenge when trying to sell or refinance their condo. Good luck!

Can The Board Remove a Fellow Member of the Board for Breaking Rules?

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J.P. from New Haven County writes:

Dear Mister Condo,

How can you remove a Board of Director member who consistently breaks the rules?

Mister Condo replies:

J.P., the process for removing a Director is likely outlined in your governing documents. Typically, the Board is not empowered to do so; the unit owners are. It requires a special meeting of the unit owners, properly noticed, to hold a recall election. It is an ugly process that requires proper noticing so that the director that is recalled cannot question the validity of the vote. It is a little more common for the other Board members to speak with the “maverick” Board member and try to reign him or her in before it comes to an actual recall. If the Board member refuses to comply, the recall may be your only option. I hope that helps.

Can a Board Member from outside the Association be Contracted to Serve?

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T.R. from outside of Connecticut writes:

Dear Mister Condo,

Are you aware of any circumstances in which the board of a community association has a “contract” board member?  Specifically, a person who is serving as a treasurer, does not own a property in the community, and presumably is paid for his “contract” services in his capacity as treasurer? What is propriety of the “contract” treasurer’s wife assisting him with the association’s books, such as cutting checks, for the “contract” treasurer to sign?

Mister Condo replies:

T.R., I am not aware of any circumstances that would require an association to “hire” a Board member. By definition, in the case of all association governance documents I have read, Board Members need to be duly elected owners from within the association. To have a vendor in a “contract” role on the Board creates tremendous opportunity for conflict of interest and would open the Board to lawsuits from unit owners within the association. Officers are either elected by the Board members or the unit owns at the Annual Meeting as per the association’s governance documents. There are two occasions I can think of when this may not be true. The first is during the development phase, before the governance of the community has actually been turned over to the association. The second would be if the community has been placed into some type of receivership by a court. This is rare and is usually the beginning of dissolution and bankruptcy. The numerous functions of the treasurer for the association (bookkeeping, budget preparation, tax filings, and so on) is often contracted to a property manager or an accounting firm.

Assuming that the vendor is paid by the association to perform the duties of the Treasurer (versus actually serving as the Treasurer), the contract with the vendor would reveal who can handle these tasks. If the contract is with “John Smith” and only “John Smith”, then it would hold that “John Smith” is the only person who has been hired to handle these tasks. If the contract is with “Smith Accounting Services”, then it may be possible for any employee, including Mr. Smith’s wife, to handle these tasks.

Keep in mind that just because I haven’t seen it before doesn’t mean it can’t happen. Boards make crazy decisions all the time. It’s part of what makes our industry so interesting (and entertaining). If this Board has, in fact, entered into a contract with a vendor to serve as their Treasurer, they should probably speak with another paid vendor, namely their association attorney, to see what the potential liability they have created. If a contract was signed, they may own the decision until the contract expires. If they can get out of such a contract, I would recommend doing so at once and renegotiating with the vendor to provide the services of the office and not the assume any of the governance responsibilities that come with being an elected member of the Board, let alone serving as Treasurer. Good luck!

Condo Common Fees Raised Unevenly

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A.A. from outside of Connecticut writes:

Dear Mister Condo,

My condo building consists of 50 units in varying sizes: 2 bedroom, 1 bedroom and studio. The current monthly fees already cover expenses with a surplus for Reserves. However, based upon a recent audit, the board desires to build an even higher reserve and proposes to raise monthly fees by 10%. Currently, a studio unit pays $60 less per month than a 2 bedroom. The increase results in an additional $32 per month for a studio but only $28 increase for a 2 bedroom. This would shrink the difference between studio and 2 bedroom to only $56 per month. I was wondering if there was a way to verify the calculation method used because I find it extremely interesting that all of the board members own 2 bedroom units, which are the units facing the smallest monthly fee increase.

Mister Condo replies:

A.A., the answer lies in your condominium’s governance documents. The typical common fee is calculated using the percentage of unit ownership formula which takes into consideration 100% of the expenses and then allocates those expense according to the formula. The formula is most certainly outlined in your documents and usually has a decimal number like “.0215” to describe the cost assigned to any particular unit. If common fees are increased, to build a Reserve or for any other reason, they should be done so in accordance with the percentage of unit ownership formula, unless the condo documents specifically state otherwise. I cannot think of any reason that the fees would not go up unilaterally under the circumstances that you have described. I would ask you to review the Minutes from the meeting where the fees were raised and see if there was an errant calculation. It should be as simple as pointing out the mistake and waiting for the Board to correct it. Good luck!