Monthly Archives: August 2016

Condo Board Discontinues Irrigation Program; Risks Curb Appeal for Savings

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A.W. from outside of Connecticut writes:

Dear Mister Condo,

Our Association Board proposed decommissioning irrigation system in order to avoid raising our dues. We have 88 units, older population on a fixed income, but one of the nicest Condo Associations in the city. Our dues have not been raised for 5 years. While this looks like an easy fix, it is a temporary solution which would eliminate (damage or deteriorate) our property (assets). We were attracted to this place because of the impeccable condition that it was in… Bylaws state that the Board is authorized to make decisions and inform all occupants later. But, this may directly impact the value of our property. Is there anything we can do? Thank you.

Mister Condo replies:

A.W., you are correct in your analysis of the situation. The Board will save money in the short run and likely watch the property drop its impeccable condition as plants fail to thrive and green turns to brown. That being said, your question is what can you do about it? You can certainly petition the Board to keep the irrigation system in place but it would appear they’ve already made the decision to discontinue irrigation. The Board is made of elected volunteers from within the community association. Their job is to maintain, protect, and enhance the association’s assets. If they aren’t doing that job to your liking, you need to find volunteers that will. If enough of your fellow owners feel as you do, that shouldn’t be too difficult. Of course, that may mean you will need to consider running for the Board to make sure the irrigation system and other assets of the association are kept in place and maintained properly. That may also mean raising common fees to keep those assets properly running. If you are in the minority on this issue and the bulk of unit owners are against raising fees (as is often the case), you may just be stuck with the Board you have and their short-sightedness on this issue. All the best!

Small Condo Reserve Fund Basics

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S.B. from Chicago writes:

Dear Mister Condo,

I live in a Chicago 4-unit condo building (there are hundreds of these in Chicago). Our building is worth approximately $2 million, and was built in 2005. Total square feet is approximately 6000. We have no elevator. Insurance makes up almost half our annual spend. I am treasurer. Our reserves grew to about $30K two years ago, and have been depleted down to $20K in last 2 years (not via spending on capital projects…or very little on that). We are too small to pay for a reserve study, and I am fine with trying to do a makeshift one. I was hoping to get a “rule of thumb” for targeted levels for reserves (we have done a decent job of maintenance). I had read a couple years ago that a good minimum level would be $5,000, and of course as the building ages we would want to save more. We are now trending other direction. We are a simple property. Garage and driveway down (2 park inside, 2 outside). We do pay for snow removal on the driveway. We are all concrete construction (recently did some foundation crack repair). We have the roof resealed every 5 years. No elevator. Our principal issue has been leakage into the duplex down unit (our historical sump pump was not adequate). I know there is no “right” answer to this question, but if we had $1,000 I know everyone would say we were under-reserved. If we had $500,000 we would be too high. Where is the normal range? Thank you.

Mister Condo replies:

S.B., the correct answer to your question is there is no correct answer to your question. However, I have to agree with you that $1,000 is definitely too little! I can understand the association avoiding the expense of a professional Reserve Study but you can certainly “do it yourself”. Basically, you need to look at all of the elements owned by the association. You have already listed many – concrete foundation that needs crack maintenance, garages, driveways, roof, a sump pump, etc.. In theory you would list all of the association’s common elements, assign a useable life span to each element, and approximate its replacement cost adjusting for a guess at inflation. Once you have those numbers, you come up with how much depreciation is actually occurring each year. Let’s take your roof and assign it a $50,000 replacement value and a 20-year life. That means every year $2,500 needs to be set aside for the roof. After 20 years, you would have saved the $50,000 needed for the roof repair. If that were the case, the Reserve Fund would grow every year until that money were needed. The fund is dynamic meaning it changes every year. As one element comes up for replacement (the driveway, for instance), the fund will be drawn down. In a year when no items are replaced, the fund simply grows larger. The key is to never stop contributing or just relying on a gut feel that the association has saved enough money. Smaller associations like yours have very limited means of raising capital if the Reserve isn’t strong. A special assessment could be financially devastating to a unit owner who gets stuck for a common element replacement that should have been saved for by previous owners. I think you are on the right track, Mr. Treasurer. Complete your do it yourself Reserve Study and see how well you are doing. All the best!

Second Floor Added to Condo Being Reported as a Second Condo!

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T.C. from outside of Connecticut writes:

Dear Mister Condo,

I own a condo in a four-unit complex. I am bidding out insurance. A woman at one insurance company, told me she insures my neighbors two condos in our complex. He only owns one condo, although his second floor does have its own entrance. They were all originally one story units, but he added a second floor. Zillow lists his place as two condos. How does this work with our encompassing insurance? And is it illegal if he is claiming to have two condos?

Mister Condo replies:

T.C., the answers to your questions likely lie in some agreement between the unit owner and the association back when the unit owner in question added the second floor to his unit. I am not an attorney nor can I comment about the legality of his claim of two units. Speak with an attorney if you require a legal opinion. My friendly observation is that he petitioned the Board to add the second floor and the Board said yes. Zillow is not a legal authority on how the condo is listed with your local town’s real estate records. You can visit your city hall or wherever else land records for your town are available to see how the property is legally described. It is highly unlikely that the second floor constitutes a separate unit but you can investigate if you need to know. The insurance agent may also be confused as to exactly what is being insured and, again, is not a legal authority on how the unit is listed in local land records. The association’s encompassing insurance is based on the replacement value of the association’s buildings and aggregate assets (common elements). When this unit owner added a second floor, he did increase the association’s responsibility to insure additional building material. You would have to look back at the association’s records detailing the transaction to see what was agreed to by both parties. In theory, the unit owner adding square footage to his unit should have had his percentage of unit ownership adjusted upwards and other unit owners adjusted downward to reflect the change in square footage and the resulting increase in expense to the association for insuring the unit as part of the association’s overall replacement value for its buildings. However, it is also possible that these records are no longer easy to find or that no such adjustment was ever made. The association’s original governance documents, however, should be easy for you to locate and review. See what they say about unit owners modifying their units. Typically, it is not allowed. However, in a small association like yours, it is not uncommon for rules to be modified and accommodations to be made to suit the small number of unit owners involved. Good luck!

How Do You Hold a Condo Annual Meeting?

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P.S. from Hartford County writes:

Dear Mister Condo,

What is the process for holding an annual meeting?

Mister Condo replies:

P.S., the Annual Meeting is the most important meeting of the year for condo unit owners. Two very important pieces of business need to be done here. Board Members need to be elected and a budget needs to be ratified. The Annual Meeting is where both of those things should be done.

Notice is of paramount importance. Once a date and location for the Annual meeting has been selected, all unit owners of record need to be given proper notice of the meeting. Unit owners should also be given the opportunity to vote by proxy. Between proxy votes and attendees, a quorum must be achieved before any business can be conducted. Your condominium governance documents outline the procedure for giving notice and calling the annual meeting as well as proxy and quorum requirements. Keep in mind that the State of Connecticut also has laws that deal with governance issues such as these which may supersede your governance documents so check with your association’s attorney to make sure you are operating in accordance with state law when you hold your Annual Meeting. All the best!

Adverse Possession at the Condo?

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M.H. from Michigan writes:

Dear Mister Condo,

My family has been in possession of a condo in Michigan since 1969 at which time the parking spots for this unit and the unit of my neighbor were switched per an agreement. In September, 2000 the neighbor died and gave a written note to my new neighbor discussing the switching of the parking spots. At this time the new neighbor agreed. Now in November 2015 my neighbor wants to switch back the space. I have added a finished roof and trim to the space and at the time asked if she wanted to pay something to finish above where she was parking as well, she didn’t; however, I partially finished it as well to make it nicer. She wants now to park in that space and not pay for the improvements nor add them to the other space. We have been parking in that spot for the past 46 years, 15 of which are while she has been the new neighbor. Do I have a case of adverse possession to keep the space? In the Condo documents it states that each unit is assigned a designated parking spot, but we have switched that 46 years ago and I would like to keep it that way. Do you have any advice? Thank you.

Mister Condo replies:

M.H., I am not an attorney so I cannot offer you any legal advice or comment on adverse possession. I will say that 46 years is an awfully long time for this parking arrangement to have withstood a mutual agreement between neighbors, even with the neighbors turning over. I am not sure what you mean by improvements to the space and what exactly happened 46 years ago to lead you into this predicament but unless there is a large sum of money involved in the improvements, it may be best to simply start parking where your correct space is located and be thankful that you had use of the space for the past 46 years. My guess is that you are talking about deeded parking here (not owned by the association, but rather the individual unit owners). If that is the case, the deed would likely prevail as the document that dictates ownership of the space. Improvements made on a space you didn’t own would not give you right to the space as far as I know. You weren’t squatting in the space, you had an agreement. You may want to speak with qualified legal counsel for a legal opinion and consider if it is worth pursuing a legal remedy. Keep in mind that you will effectively be suing your neighbor if you do so. That isn’t a very neighborly thing to do in my opinion, especially when you have to live and see this person on a regular basis as you come and go from your condo. I hope the two of you find an amicable solution. Good luck!

Is It Up To The HOA Board To Decide What Is or Isn’t Acceptable?

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C.B. from outside of Connecticut writes:

Dear Mister Condo,

If something is not specifically allowed or disallowed in our HOA bylaws (we are a site condo), does that mean it is up to the board to decide whether it is acceptable or not?

Mister Condo replies:

C.B., the short answer is “it depends”. What it depends upon is the governance document of your HOA, which in your case is further defined as a site condo. It also depends on local, state, and federal law. The HOA Board, generally speaking, is charged with enforcing existing rules and regulations as well as adopting new rules and regulations as situations develop that require additional governance. However, that doesn’t mean the Board has unilateral powers to simply pass rules as they wish. They must follow the rules for making the rules. Also, the unit owners within the HOA have the power to vote leaders into and out of office at Annual Meetings. The HOA Board is made up of democratically elected volunteers from within the association. They are there to protect, maintain, and enhance the community association’s common elements and quality of life for unit owners. If a Board were to push a new rule onto the community that was unpopular enough amongst unit owners, Board Members who supported the rule might soon find themselves voted off the Board at the next election. That is HOA democracy at its finest. Good luck!

Condo Board Requests Removal of 40-Year-Old Decorative Gates

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B.S. from outside of Connecticut writes:

Dear Mister Condo,

I have had decorative gates on my front door for 40 years. Does the condo board now have the right to force me to remove them?

Mister Condo replies:

B.S., the decorative front gates that have adorned your condo for the past 40 years fall under the guidelines for architectural compliance for your association. Enforcement of the architectural compliance guidelines falls under the jurisdiction of the Board so, technically, the Board has the right to “force” you to comply with guidelines that you agreed to abide by when you purchased a unit within the condo association. However, since these guidelines have not been enforced for 40 years, you may have protections outside the condominium’s rules and regulations. In California, for instance, the courts have held that associations have 5 years from the date the violation was discovered or should have been discovered through the exercise of due diligence to enforce the rules. If you live in California, I would think you could successfully argue your decorative gate has been in clear sight for more than 5 years! You should speak with an attorney knowledgeable of community association laws in your state to see what rights you have to keep your gates. If you have no additional protections, you may have to succumb to the rules of the association if the Board chooses to enforce them. Good luck!

Condo Parking Lot Repairs Leaves Unit Owner Without Nearby Parking

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R.L. from outside of Connecticut writes:

Dear Mister Condo,

I have lived in a condo for four years and was assigned two parking spots; one in the front, and one in the third row assigned numerically. They just assessed the owners for repairs on the parking lot. After they finished they reassigned my spots with none in the front and my second spot the furthest away from the apartments. In most cases, both owners had two spots assigned in the front. They gave me the worst spots available. I called the president of the Board. He made believe it was no big deal. Please advise. This is inconsolable. I pay my dues on time, and try to stay away from the hassles which are numerous.

Mister Condo replies:

R.L., for the most part, parking lots are private property owned by the association and under control of the Board of Directors of the condo association. There are rare exceptions where specifically numbered or ordered parking spaces are deeded and are actually part of the condominium unit but those instances are rare. You should consult your deed to see if particular parking spaces are assigned or if it alludes to a more general concept of two parking spots. You have been given two parking spots, just not the two that you want. Since the designation of the parking spaces is most likely at the Board’s discretion, you have very little choice but to accept the new arrangement. Calling the Board President has not proven helpful and I suggest that you write to the entire Board so that you can have your complaint noted in the record. It is possible that you are not alone in feeling that you have been treated unfairly and if enough unit owners complain, the Board may take action to return the parking spaces to the way they were assigned before the repairs were made to the parking lot. Remember that your Board members are democratically elected by you and your fellow unit owners. If they are not getting the job done to your satisfaction, you might want to look for new leaders that will. Maybe you should consider running for the Board, R.L.? Good luck!

Does the HOA Have a Say in Who I Hire for My Own Basement Repair?

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B.R. from outside of Connecticut writes:

Dear Mister Condo,

Can a condo HOA force me to use their maintenance person as a contractor to repair something inside my own unit? I have a problem in the basement with moisture on the wall. It is not clear whether it is coming from my unit, another unit, or a common element. It’s not a very big spot, but I am concerned that it be repaired correctly and safely as to not create a bigger problem. I’d prefer to hire a licensed contractor that I trust to investigate the problem. The HOA keeps acting like they can tell me I can’t do this or that I need some sort of approval unless I use their person. It is my understanding that as long as my investigation/repair doesn’t involve something clearly indicated as a common element, they really have no say in this? Am I mistaken?

Mister Condo replies:

B.R., determining who has ownership of the basement and all of the components that go into a basement within an HOA can be challenging. Does your basement abut to a neighbor’s basement where you share a wall? Do common utilities run through your basement? Do you have a sump pump that dries more than your unit? Depending on the nature of the work being done, it is possible that the HOA does not have a say other than to require you to provide a license and proof of insurance for the contractor before work begins. Sometimes, it is just simpler to use their preferred contractor because the contractor has inside knowledge of how the buildings were built and how they run best. Your water spot may be something their contractor has seen a dozen times and knows what the likely culprit and remedy are. In that case, they HOA may actually be doing you a favor by having you use their contractor. One final caveat is to review your HOA governance documents. It should spell out when you need to use an association-approved contractor. My final piece of advice is just practical. If this is not a very big spot and likely a small repair, if any, why not just go with the HOA’s suggested contractor? I can’t imagine this is going to be a very big deal one way or the other. Hope it all works out for you.

Condo Unit Owner Damages Garage Door. Who Pays?

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B.C. from outside of Connecticut writes:

Dear Mister Condo,

If a unit owner damages his own garage door and the rails hinges or moving parts is he responsible for his own repairs?

Mister Condo replies:

B.C., the short answer is “it depends”. Typically, any owner who intentionally damages any common element id liable for the cost of the repairs. If the unit owner has insurance that covers the damage, the insurance might cover the cost or there might be a deductible expense to the unit owner with insurance picking up the rest of the tab. I am assuming that the damage to the garage door was accidental, meaning a unit owner or guest pulled in to close and hit the garage door and damaged the door and the hinges. There are now a few different insurance claims going on here so let’s think about what happened. Driver error caused the damage. The driver is responsible. If the driver has insurance that covers this driver error and resulting damage, the automobile insurance might pay. If there is no insurance and the unit owner is still responsible for the damage, the unit owner is likely to have to pay, less any homeowner’s insurance coverage (not too likely as the damage is outside of the unit). The association may have control over the building exteriors and insist that they handle the repair and bill the unit owner for the damage. It is possible that the association has a preferred vendor for their garage doors and require that vendor to work for them when doing this type of work. I am sorry that a unit owner did this damage to their own garage door. I hope it all works out and no one was injured. Good luck!