Monthly Archives: September 2017

Condo Audit Requirement Law

A.B. from New Haven County writes:

Dear Mister Condo,

Are there any CT states law that require audits be performed on Condominiums?

Mister Condo replies:

A.B., in Connecticut, I am aware of no such law. Some states, like New Jersey, do require audits at certain intervals as a matter of law. It should be noted that all audits are not created equal so even if there were an audit requirement, it would have to be detailed as to what was being audited and how often. Depending on the amount of money in play, an audit is a prudent decision as it provides relative confidence that no association funds are being pilfered. However, since Connecticut is home to so many smaller associations, an audit might be an unnecessary expense and truly unnecessary. If the Board is doing a good job of keeping an eye on the money as to income and expense, an audit might be one more useful tool. If the Board suspects there is money that has gone missing, an audit would be a great way to get some clues as to where the money has gone. I hope that helps.

Condo Meeting Notice Delivery Requirements

V.A. from Fairfield County writes:

Dear Mister Condo,

What is the law on providing meeting notices to unit owners-re Websites-e-mail, Blogs or Notice boards at the Condominium?

Mister Condo replies:

V.A., there isn’t one specific law about how an association provides or serves notice of meetings for unit owners. Your condominium governance documents usually state that unit owners will be notified by mail. Of course, most of those documents were written long before the proliferation of email and websites occurred. The Common Interest Ownership Act (CIOA) in Connecticut does give the association the ability to use electronic communications to disseminate information to unit owners. However, the unit owner needs to agree to receive electronic notices and the association needs to keep a record of the unit owner’s acceptance of such notification. An association cannot simply stop sending mail because it has a website or decides to use email. There are many times when unit owners don’t have access to these modern tools and many elect to continue to receive mail as their official notice from the association. Check your governance documents to see what is required for notice at your association. If you haven’t given approval for electronic communications, they still need to send you mail. All the best!

Delinquency Usually Leads to Collection Action by the Condo Association

R.A. from Fairfield County writes:

Dear Mister Condo,

I was previously 3 months delinquent on my common charges with no assessments and the condo association attorneys told me that I had to pay a total of $2000 dollars in order not to go into foreclosure. It seems to me that I am being extorted for money and I am on disability. The reason the attorney said I had to pay the $2000 dollars was for title search, legal letters and other fees that I do not understand. My delinquent fees are only $690 and they are trying to tact $2000 on top of that fee. My HOA dues are $230 a month. I was also told by the management Company that I could not talk to the Board because the matter was out of their hands and I had to deal with them or their attorneys. Being an owner in a condo I know I have rights other than to do nothing. I have been paying my common charges with an extra $100 dollars to put toward the delinquent balance. I know I’m being taken advantage of, can you please help me? Thank you.

Mister Condo replies:

R.A., you most certainly do have rights as a condo owner but not paying your common fees is not one of them. I am sorry you find yourself in this position but what choice does the association have? For the three months that you were delinquent, all of the bills of the association were still paid. Your insurance, your grounds keeping, your maintenance, your unit management, all of this and more were still paid. By not paying your fees on time, you triggered a legal action against yourself. The association turned the matter over to the collections folks (the attorney) and they did what they do which is take steps to insure the association gets paid. In this case, that meant lots of legal fees. While I appreciate that you may face special challenges as a disabled person, I am sure you know there are certain expenses of owning a condo that are recurring monthly – mortgage, common fees, utilities. If you don’t pay your mortgage or utilities, what happens? The bank can take your home or the utilities will turn off your supply. It is the same with common fees. I am sure you will always pay them on time in the future so this may just be an expensive lesson in why. You should speak with the collection folks about your $100 per month repayment schedule to make sure it is acceptable. Ideally, you would just pay off what you owe and be done with it. If you feel your rights as a homeowner were violated, you should most definitely speak with an attorney. I am not a lawyer so I cannot offer you any legal advice on the matter. From what you have told me, you were treated the same as any other delinquent homeowner would be treated. Good luck!

Condominiums, Security, and Online Deliveries

J.H. from outside of Connecticut writes:

Dear Mister Condo,

I’m actually a Property Manager looking for some creative ideas. Running into a growing issue of granting building access for home deliveries. With the rapid increase of online shopping and Amazon’s move to sub-contracting delivery to what is similar to an Uber driver (think Postmates or Lasership), leaves me in a dilemma. You can’t arrange access as you might with USPS or FedEx with regular drivers. And some buildings want residents to rely on their keys or fobs and not issue the building door code. Some buildings do allow codes to be issued to residents and then that code is included with delivery instructions. I understand the need for security, but would also like to accommodate residents in buildings that want to restrict the use of access codes. (these are smaller communities with no onsite staff). Much thanks for any ideas.

Mister Condo replies:

J.H., thank you for the question and for your forward thinking. Obviously, security systems in condos are designed to keep undesirables out and residents safe. The idea of allowing unfettered access to buildings and units does not jive with that philosophy so many of these newly created delivery services are, by design, incompatible with condominium safety protocols. In my opinion, one of two things would need to happen. Discontinue the security protocols. Allow anyone who wishes access to the property. This will allow the good in with the bad but it may be the only way to allow delivery of such products without providing security clearance. This is a terrible idea because it removes the security that many unit owners want, expect, and purchased when they bought into the community. The second solution is to disallow the use of these services. This, too seems extreme but it allows for the existing security protocols to be kept in place. This was how the community was designed, it is what owners expect, and there was never any such delivery service to content with when unit owners purchased so they cannot realistically expect any changes to their security service. Effective, but neither adaptive or forward thinking. The final solution may be the most practical and it mimics the current protocols for allowing visitors on the property. The unit owner takes responsibility for the delivery company and allows them on to the property just as they would allow any other guest. If that means they need to be home when the delivery comes, so be it. If they can’t be home then they can’t use the delivery service. No need to restrict the delivery service or the unit owner. And, just like any other guest that is one the property at their request, they are responsible for that guest’s behavior. Delivery companies are notorious for parking in fire lanes, blocking driveways, etc.. If they break rules while they are on the common grounds, the unit owner may decide it just isn’t worth the “convenience”. Condominium and HOAs have rules and regulations and security systems for a reason. It isn’t too make life easier; it is to make it more enjoyable and more secure. Home delivery of groceries and condominiums just may not be a match made in heaven. Good luck!

Condo Executive Board Deferring Common Fees as Payment for Service!

B.D. from outside of Connecticut writes:

Dear Mister Condo,

 

Our Executive Board of 5 members has about 80% of their monthly HOA fees deferred as compensation for their time spent working on Association issues. Their contention is that 1099’s need not be issued because the Association is a nonprofit entity as defined by IRS regulations. I believe that is incorrect and that they each should have received a 1099, declared the income, and paid whatever taxes were due to the State and Federal Government. I researched the question and found some information from the National Council of Nonprofits that suggests 1099s should have been issued, but the particular circumstance they cite has to do with charitable nonprofits. I don’t think that makes a difference, but would like clarification before I approach them with the information. Thank you for your time and expertise.

 

Mister Condo replies:

B.D., since I am neither an attorney nor an expert on IRS regulations regarding non-profit organizations, I cannot offer you a legal opinion on this issue. However, I will say it is tremendously unusual for any individual to receive tax-free income from any source and would not likely stand up to the scrutiny of an audit by the IRS. Further, do your governing documents allow for compensation to Board Members? Most condominium association by-laws forbid compensation of any kind to Board Members as it is a voluntary service, meaning the volunteers seek election and then volunteer their time on the Board. If your Board has taken it upon itself to claim compensation for their volunteer efforts, the association may have a legal case to take action against them and have all monies paid to the Board Members returned to the association. Taking funds improperly from the association is theft and punishable with fines and/or jail. It is most definitely time to speak to a qualified attorney from your state to discuss how your Board has decided to conduct business. If laws have been broken, they need to be thrown off the Board and charged accordingly. At the very least, they should return any money they have received in compensation for their voluntary service. Good luck!

Questionable Dialogue Deleted from Condo Association Board Meeting Recording

J.J. from Florida writes:

Dear Mister Condo,

I serve on the Board of Directors as Vice President of a Florida condominium. Recently, the Secretary of the Board relayed via email that she had deliberately removed from tape dialogue between the President and Property Manager during a board meeting. Is this an illegal or actionable matter?

Mister Condo replies:

J.J., since I am not an attorney, I cannot offer you legal advice in this column. You should speak with a qualified community association attorney in your state (there are many!) for a legal answer. Let me offer some friendly advice instead. Do you know what kind of statements were deleted? For instance, “How about that Marlins game last night?” and the associated banter that accompanies such a statement is hardly scandalous or of interest to the association. Even off the cuff remarks about anything other than association business are hardly of interest to unit owners or other Board Members. If the dialogue was specifically about association business and you suspect foul play is going on, you should certainly speak to an attorney and describe what you know to have happened. Presumably, you were at the Board Meeting and know what was said. Minutes of Board meetings are the official record of what happened. Motions, votes, and so on. If it isn’t in the Minutes, it never happened. If you suspect foul play, take action. If not, let it go, and keep an eye on the situation. If this is an ongoing problem, there may be more to it than meets the eye. All the best!

Difference Between Condo Committee Member Versus Board Member

C.C. from Florida writes:

Dear Mister Condo,

If I am on a committee (not board member) in my condo, am I allowed to solicit a rule that our committee may want to change? Should a particular change of a rule (not statute) go for board approval, then said board approves rule change, then it goes out to owners for a vote. Prior to owner’s vote, can I solicit facts or opinions as a committee member?

Mister Condo replies:

C.C., thank you for the question. However, since the question is kind of vague, I cannot give you a definitive “yes” or “no” answer. Committees derive their existence from the Board, the group of democratically elected leaders from within the community. Unless the charter of the committee gives the committee power from the Board to solicit rule changes, I would say that “No, you cannot solicit a rule change or solicit owner’s opinions or try to influence their vote in any way”. However, if your charter is to actually solicit owners’ opinions on rules and regulation that might need changing, then my answer would be “Yes”. Let me suggest the following hypothetical. Let’s say my Board asks me to serve on the Beautification Committee. I don’t care for the pine trees on the property and I think we should have oak trees instead. My job would be to offer a report to the Board on why Oak trees would be better than the pine trees. If the Board agrees, it would draw up the resolution and make the decision. If I went around and asked my fellow unit owner if they would support my desire to have Oak trees replace the pine trees, I am overstepping what was asked of me when the Board appointed me to the Beautification Committee. I hope that answer suffices and guides you in the right direction. Given your level of interest and activity, my guess is you would make a fine addition to the Board, C.C.. After all, getting involved on a Committee is the most common path to a position on the Board. Good Luck!

Condo Board Weighs in on Allowing Double Parking for Motorcycles and Cars in One Space

J.S. from Chicago writes:

Dear Mister Condo,

I was recently elected to my HOA board. Some residents have been inquiring about a rule that we have (in our rules and regulations) regarding parking motorcycles/Vespas in a parking spot WITH a car. So long as they fit within the lines and do not cause an issue for neighboring parking spots. The garage is enclosed and unit owners own their parking spots. The board is willing to change the rule, but does not want to be breaking some type of fire code, city (Chicago), or state (IL) law or ordinance by allowing this type of double parking. Do you know if there would be any issue with us removing this rule to allow people to park a car and motorcycle in one parking spot? Thanks!

Mister Condo replies:

J.S., welcome to the Board! As a rule, parking lots are owned by the association, a private organization, and are free to do with their parking areas as they see fit. City fire codes and ordinances are another matter altogether so before you go changing any association rules, I would encourage you to speak with a local expert (a fire marshal, perhaps) who can give you the lowdown on what, if any, ordinances you may be violating by changing the parking rules. If you read my column on any type of regular basis, you will see that parking issues are always a concern at condominiums and other high-density housing areas. Too many vehicles, too few spaces. Once you have the OK from local officials, think long and hard about making any change to the parking rules. Folks that purchased into your association do so with a certain set of rules in place. While I appreciate the desire of motorcycle and Vespa owners to park their bikes within their spaces, there was never an expectation that they should be able to do so when they purchased. Even well-intentioned residents will occasionally “go over the line” with a wheel or handlebar or make it difficult for a neighboring parking space to be easily accessed. My advice to you is to leave well enough alone and leave the parking rules as is. However, if the number of bike owners is a majority and the rule needs to change, so be it. Either way, I wish you the wisdom of Solomon and Good Luck!

Condo Owner Seeks Access to Reserve Study

G.H. from Fairfield County writes:

Dear Mister Condo,

Is the most recent Reserve Study that the BOD uses to determine owner’s monthly contribution to the HOA reserve fund one of the business documents that any owner has the right to review and/or have a copy of?

Mister Condo replies:

G.H., as a shareholder in the corporation, you have the right to review any and all official records of the association. The Reserve Study is prepared for the association at the Board’s request. Unlike Minutes of a meeting, it is not created by the association but, rather, for the Board to be used as a guide to make sure the proper level of Reserves is being collected to keep the association fiscally sound as the years go by and the common elements deteriorate. It can be argued that since it is a tool for the Board and not an actual record of the Board, it may not be freely available to association members. However, if you request a copy (at your expense), I would think most Boards would allow it. There may be a record inspection fee and there might also be a “per page” copy fee. Reserve studies can be lengthy so it could get a little pricy. Do you know what firm performed the study? You might be able to request an electronic copy of the document which would save you both time and money. If you are fully denied access to the document, you might want to speak with an attorney and see if there is any other way to compel the document from the association. I might also ask you why you need it. If you trust the sitting Board members to properly care for the association’s fiscal needs, the Reserve study is simply a tool to help them do so. Your annual budget, which you most certainly have a right to inspect, will show you what they are doing with that information. I would guess a healthy Reserve Fund contribution would be somewhere around 30% of common fees. If the Board is simply using a 10% number, then it is likely they are following FHA guidelines and not the Reserve Study. Kudos to you for paying attention. Most condo owners simply submit their common fees and hope for the best. Good luck!

Condo Developer Transition Turmoil

S.C. from Litchfield County writes:

Dear Mister Condo,

Our Board does nothing. No communication, they don’t respond to our questions very well, they are not transparent when they communicate among each other (which is not too often) and my biggest beef, they refuse to fix our crumbling infrastructure (roads, outside siding, fascia boards, etc.). It’s one delay, one excuse after another and this has been going on for almost 3 years. Money is tight, they do not properly fund our community yet they are raising the dues and still operating with a negative balance. No one on the board lives here full-time and the president and one other member work for the developer. Clearly, their priorities are not in sync with the homeowners. Most residents will not say a word for fear of being the bad one or simply a case of extreme apathy. I want to round up the troops and have all the board members (well, 3 out of 4) removed. Having been the president of the association and property manager, I have plenty of experience.  I do not know what kind of reaction I will get but I do know there will be some support. Any response from you would be great and I look forward to it. Thank you.

Mister Condo replies:

S.C., I am sorry that your condo Board is not performing to your expectations. However, from what you have told me, the association is still under developer control so the Board truly has limited power during this time period. Once control is handed over to the association, things will change because no one will be beholden to the developer. The association governs itself and many of the items you discuss can be addressed through democratic elections of interested and able volunteers. Now, if the developer has broken covenants with the owners and you think a lawsuit is in order, you might want to discuss your situation with an attorney. However, new owners like you describe may not go along with spending money to sue the developer so you may just need to wait until the developer transition period is complete. If I have misread your letter and the developer transition is already complete, you simply need to elect new leaders for your community. You will need volunteers ready, able, and willing to serve. They will need training and support. You should also consider hiring a community association attorney verse in developer transition, and accountant, and a property manager if needed. The developer’s team was there to support the developer, not the community association. Getting the right folks in place is vitally important to your association’s success. Your local CAI Chapter can help you find the resources you need. Visit http://caict.org to learn more. Good luck!