Monthly Archives: August 2018

Streamlined FHA Rules and Condo Ownership Requirements

M.W. from Tolland County writes:

Dear Mister Condo,

With regards to the condominium approval process for FHA, I have heard that since HB 3700 was passed. My understanding is that the changes would streamline the application process (possibly extend approval periods), increase investor owned units from 50% to 65% and ease restrictions related to transfer fees. Are you aware of the status?

Mister Condo replies:

M.W., I am neither an FHA expert or a great source for the latest news on FHA. However, I can tell you the full text of this bill is available online at https://www.congress.gov/bill/114th-congress/house-bill/3700/text. Section 301 deals with insurance requirements for FHA. Here are some highlights:

Requirements for Mortgages for Condominiums

(1) Project recertification requirements.—Notwithstanding any other law, regulation, or guideline of the Secretary, including chapter 2.4 of the Condominium Project Approval and Processing Guide of the FHA, the Secretary shall streamline the project certification requirements that are applicable to the insurance under this section for mortgages for condominium projects so that recertifications are substantially less burdensome than certifications. The Secretary shall consider lengthening the time between certifications for approved properties, and allowing updating of information rather than resubmission…

(i) 35 percent requirement.–In order for a condominium project to be acceptable to the Secretary for insurance under this section, at least 35 percent of all family units (including units not covered by FHA-insured mortgages) must be occupied by the owners as a principal residence or a secondary residence (as such terms are defined by the Secretary), or must have been sold to owners who intend to meet such occupancy requirement…

To my eye, M.W., it looks like you are correct on both counts. Of course, with legal matters such as FHA, I always refer condo folks to the experts. In Connecticut, check out https://www.caict.org/page/Directory#FHAfor a list of FHA condo financing experts. All the best!

Unusual Items Paid for by Condo’s Reserve Fund

E.I. from writes:

Dear Mister Condo,

Are Condominium Associations permitted to use Reserve Funds to purchase and install items within units such as intercoms or programmable thermostats. Are these items considered common or non-common items? Each unit receives their own separate electricity bill for which they are responsible for. Would this be different for the purchase of low-flow shower heads where the water bill is paid for by the association and thus receives the savings?

Mister Condo replies:

E.I., just about any common element owned by the Association is eligible for Reserve Fund funding. Each and every asset of the association comes with a cost and a repair or replacement estimate. If the intercoms, thermostats, and low-flow shower heads are owned by the association, then they are common elements (limited or otherwise) and can be included in the list of Reserve Fund items. However, if these items are not owned by the association then the association should not be paying for them, Reserve Fund or otherwise. The bottom line is who owns the asset. As long as it is the association, it is their responsibility. Putting money away today for tomorrow’s repairs and replacements is exactly what the Reserve Fund is for. All the best!

Can the Condo Board Chair Make Motions at Condo Board Meetings?

R.B. from Hartford County writes:

Dear Mister Condo,

Can the chair of the board meeting (usually President), make motions? Board is less than ten members. Thank you!

Mister Condo replies:

R.B., ideally the Chair of the Board or Board President “presides” over the meeting. That’s the meaning of the word “president” – one who presides. However, board meetings should have agendas and motions that require presenting and seconding can get a bit tedious, especially on a smaller Board. With less than 10 members, it might make sense for the Chair to make or second motions and then call for discussions and votes. Unless your governing documents specifically prohibit the Chair or President from doing so, I can’t see why they can’t make or second motions. It would be better Parliamentary form for the President to call for a motion from another Board Member and also a second but given the nature of the all-volunteer Board and the size of the Board, I don’t see a problem. All in favor? Aye!

Should Condo Owner Get Paid for Condo Gardening?

G.W. from outside of Connecticut writes:

Dear Mister Condo,

Can you volunteer to do gardening at a condo without pay?

Mister Condo replies:

G.W., the very nature of volunteering indicates that there will be no pay. If pay is offered, it is employment, not volunteerism. Typically speaking, it is bad policy to hire condo residents to work for the association. Why? Because it leads to question of impropriety, favoritism, unfairness, and so on. Many associations have Gardening Committees where the committee members routinely donate their time to maintain the association’s greenery and gardens. If the work is extensive enough that it requires paid workers to manage, it is time to have the Board hire a caretaker. That way the work gets done by a licensed and insured professional, guaranteeing no claims of impropriety and offering the association the peace of mind in knowing they are insured in the event of injury. All the best!

Who Pays to Repair Condo Vandalism?

M.N. from outside of Connecticut writes:

Dear Mister Condo,

I serve on the board and had my property vandalized who’s responsible, me or the Condo?

Mister Condo replies:

M.N., I am sorry you had your property vandalized. Regardless of your position on the Board, if a crime has been committed against your own personal property, it would typically be your responsibility to repair it and, hopefully, your insurance would cover the damage. If association property were damaged, then it is the association’s responsibility to repair the damage. Whatever the damage, I hope you contacted the police. Vandalism is a crime. The Board isn’t the Police Department. The Board governs and enforces the covenants of the association; the local police handle criminal matters. Good luck!

Condo Board Enforces Parking Rules After 20 Years!

J.M. from Florida writes:

Dear Mister Condo,

I have been living in my community for the last 20 years. Never have I had a problem with parking before. All of our units are single building divided into three town homes with a three-car, three-door, non-divided open garage. My garage section isn’t very big especially being completely open on the inside, it would be impossible to have three vehicles parked inside with the ability to get in and back out. I have things stored in my garage as any normal town home living person does leaving me unable to put a vehicle in the garage. There has been a new resident that moved onto our street in our gated community. Since his arrival he has joined the board for parking reasons and is causing nothing but problems this past year. I live in a two-bedroom unit with my wife and son. We have always parked one vehicle behind the other putting two in our driveway. The Board is trying to tell me that I can’t park two vehicles together anymore, one behind the other or they’re going to tow it. They even went as far as to paint yellow lines for parking limitations only for my building and the adjacent neighbors building. The rest of the entire community has no painted lines. There is a very big parking lot one street over from us that is guest parking for the pool and the clubhouse. They are telling us that we cannot park in guest parking. There is no other overflow owner vehicle parking anywhere else in the community. Even if I clear my garage that only takes care of two vehicles. Having three vehicles they’re trying to tell me there is no place I can park it that is acceptable. It has gotten to the point that me and my family are being severely harassed over this matter. Since I have been here for over 20 years does any kind of grandfathered rules apply? Don’t they have to provide some kind of overflow parking for residents since all the guest parking spots they say are not usable for resident vehicle? I am close friends with my neighbors in our building that are only here 4 months out of the year and they allow us to use their two spaces when they’re not here. They’re coming back very soon and before this turns into a huge legal matter, I want to know what my options are and how to fight back. Thank you so much for any kind of response or information you can provide me with. We are located in St. Petersburg, Florida (the Sunshine State).

Mister Condo replies:

J.M., I feel your pain but I don’t think you’re going to like my reply. Generally speaking, the association owns the parking areas in most condominium associations. That means that they make and enforce the rules dealing with parking. I am painfully aware of the notoriously small parking spaces you speak of. Maybe two cars and a golf cart would fit but three full-sized cars are not likely to fit. That being said, that isn’t the Board’s problem or concern. notoriously small parking spaces you speak of. Maybe two cars and a golf cart would fit but three full-sized cars are not likely to fit. That being said, that isn’t the Board’s problem or concern. You have what you have, no more, no less. The association is under no obligation to provide you with any additional parking and your deed likely doesn’t guarantee it either. Additionally, many associations prohibit the type of open storage of belongings you describe. In other words, carports and garages are for parking only. I wouldn’t be surprised if the Board enacts and enforces a rule prohibiting storage in the garages so be ready. The bottom line is that the Board has many powers given to them by the association’s governance documents and state law. If you feel they have overstepped and can back it with provisions of your governing documents, you should seek legal counsel to see if you can fight back. Other than that, your 20-years of using the parking garage as you saw fit rather than how the by-laws read was a bonus for you. I am not aware of any provision that grandfathers in breaking of the rules because it suits you. You can always seek out a seat on the Board yourself as your neighbor has done and see if you can make the changes you seek from within the Board but understand that service on the Board involves much more than just your personal parking issues. I wish you all the best!

Condo Unit Owner’s Grievances Go Unenforced by Board

J.C. from outside of Connecticut writes:

Dear Mister Condo,

I have filed many grievances with my condo over four years and they did state they received them with no response. Is this discrimination? How long do they have to respond to my grievances?

Mister Condo replies:

J.C., I am sorry that you have found reason to submit may grievances with your association over the past four years. Many unit owners enjoy their condo living experience and never have to file even a single grievance. The Board is obligated to acknowledge receipt of your grievance, which they have. Your grievance is actually now a record of the association. Any actions they take (or don’t take) are supposed to be reflected in the Minutes from the Board meetings where the grievance was received. However, the Board is not typically under any obligation to take specific action on your (or any other unit owner’s) grievance. It is at their discretion for the most part. That can be particularly annoying for folks like you who have purchased into the association with an expectation that rules will be followed by fellow unit owners and violations will be enforced by the Board. As democratically elected representative of the association, Board members are subject to removal from office either at an annual election or as part of a recall election. However, that requires a majority of unit owners to want them out of office and new members elected. If you are a minority of one in your grievances, you might find it difficult to garner support for new Board members, especially if your fellow unit owners are happy with the way things are. Now, if the Board is enforcing rules against some, but not all, unit owners, that is a different story. If you feel you are being discriminated against, I would suggest you speak with an attorney. Other than that, you are certainly free to continue filing your grievances but I wouldn’t expect the Board to behave any differently until there are some new Board members more motivated and willing to take action against the rule breakers. All the best!

Condo Unit Owner Hit with Legal Fees for Asking Non-Legal Question of Board

M.A. from Georgia writes:

Dear Mister Condo,

I received a letter from an attorney hired by the association of the condo I live in. In the letter, the attorney states that per condo law in Georgia, the condo can assess me any legal fees they incur at their whim in regards to anything. For instance, I wrote the association to find out when the monthly meeting is, and I was ignored, but received a letter from the association attorney accusing me of intimidating and threatening behavior plus telling me the association is under no obligation to publish or inform of when the meetings are. Is it legal for them to assess me legal fees of any amount for any reason at their whim, even though they are the ones hiring the attorney and creating expenses that are created by the association expressly to intimidate me and hurt me financially as there is no other reason for their behavior?

Mister Condo replies:

M.A., I am neither an attorney nor an expert in Georgia community association law so please accept my answer as friendly advice. For a true legal opinion, you should contact an attorney from your state, which I would certainly do if this abusive behavior from the Board continues. All associations are bound by their own governance documents as well as state and federal laws. Typically, notice of meeting is required for all associations under both their own governance documents and state laws. After all, these are corporations and as a unit owner, you are a shareholder in the corporation. Proper meeting notice should be mailed (or emailed if allowed) to all unit owners declaring time, place, and agenda. This does not require an attorney to do, just a simple notice. You also have the right to write to your Board. Their decision to use an attorney to reply is unusual but I suspect there may be more to the history between you and the Board then I am hearing about in this letter. Fight fire with fire if you need to. Hire your own attorney and challenge the expense and need of them hiring an attorney. It will cost both you and the Board money but just might make some Georgia attorneys happy. Good luck, M.A.!

Condo Owner Wants to Sell Condo Carport Space Without Deed

R.R. from Missouri writes:

Dear Mister Condo,

I own a condo in St. Louis County, MO. The condo has 2 carport spaces that we thought were deeded to me however they are not actually on my deed. My neighbor wants to buy a space but I am not sure they are mine to sell. The association thought they were deeded to me as well. Any advice?

Mister Condo replies:

R.R., if you rock the boat hard enough, it just might tip over. Real estate deeds are very specific and legal documents. Right now, you don’t have a deed to your “deeded” carport spaces. How can you convey a deed to your neighbor that you don’t have? You can’t. My guess is that the spaces are actually owned by the association but are for your exclusive use, meaning they are a limited common element and you don’t own them and you can’t sell them. If your deed says otherwise, thane you can do as you see fit. However, from what you have told me, you can’t sell what you don’t own. A better solution might be a friendly handshake and understanding that your neighbor can use one of your spaces. And if he wants to offer you some money for that favor, who’s to say what is happening. All the best!

Uncollected and Unaccounted Condo Common Fees!

T.N. from outside of Connecticut writes:

Dear Mister Condo,

I’ve lived in a 3-unit condo for almost 2 years. For the first year I tried to get in touch with its only Trustee—I wanted to become involved in the HOA and help plan an annual meeting—but he continually put me off (he lived elsewhere and rented his unit). A week or two before a new owner closed on his unit, this guy asked me to take up the mantle as Trustee (this was also the first I was finding about him selling!). He cancelled 2 meetings with me, and then on the day of his closing, texted me that he was in the city and could I take a long lunch to settle business. At this lunch meeting (which took 2hrs!), we got my status as Trustee notarized, my name on the bank accounts, and I got a giant bag full of paper records.

To say the least, I was completely unprepared for being the Trustee. After spending 8 weeks going through these incomplete and disorganized records, I came to find that for years the common bills and landscaping were paid late or not at all (apparently 2 companies quit over non-payment). I intervened with the electric company terminating our service and the city issuing a lien. After doing what I could with the records, I hired a forensic accountant to do some triage, and she was appalled at what she found. For years the association has increasingly been coming in hundreds of $$ under budget, and the reserves have been being drained and not replenished to compensate (basically as an association we have $600 to our name).

It’s also clear that he didn’t keep track of HOA dues—there is no ledger to speak of and some of the “deposit notes” are written on napkins and sundry receipts—and, from what I can tell, over the past 7 years we’re missing nearly $4K in HOA dues mostly from the unit owned by an elderly couple.

The accountant and I had a long discussion and we decided that since we have no records proving who owes what and since it’s been years, we should forgive the HOA dues, but put them on a payment plan for the 10K they owe in back assessments. The elderly couple had been claiming we were not a legit association and thus not under the same governing rules as one, so I dug up the declaration of trust and the master deed I got during my purchase for them to see (5 months in and we finally all agreed on a payment plan).

When I closed I had my lawyer look over the docs and synopsize them for me, but I didn’t really read too much about the duties of a Trustee at the time. Now I’m seeing that according to the by-laws we *have* to have 3 Trustees, each one a rep for each unit. I want to eat my own face. The new guy is busy with a PhD and has no interest in taking on this responsibility, and the elderly couple has no idea how an association is run or how HOA fees or assessments work (they called me each time they received a monthly HOA fee invoice, asking me what this bill was; they also don’t know why I can’t “get a guy” to repaint their unit, for example).

Right now, I feel like the only interested, sane, informed person trying to make sure the association doesn’t collapse (I’ve contacted several property managers who have haughtily told me they don’t manage associations this small). How terrible would it be if I remained as the only Trustee for another year, just until I get us out of this financial mess and put processes in place to ensure it doesn’t happen again?

Mister Condo replies:

T.N., I would love to tell you that yours is the first horror story I have heard from very small (2 or 3 unit) associations but, unfortunately, the situation you describe is far too common, although not always as financially shocking to read about. The phrase “Buyer Beware” comes to mind when I read your list of wrongdoings by the previous Trustee and unit owners. I admire your realistic approach at fixing the problem but, honestly, you are the only person who can correct what is going on and, perhaps, right this sinking ship. Or you can abandon the ship by selling your unit to an unaware individual. There seems to be an endless demand for these units in smaller associations although, personally, I would never own one unless the other unit owners were family. As you have seen, most property managers are loath to manage these small associations. How can they make any money doing so? Even a modestly sized association would yield several thousand dollars per year for the efforts. Your association would have numerous management issues and they would be lucky to make a few hundred dollars a year for their time. Not going to happen. As far as you remaining the only trustee, technically, you are operating outside of the scope of the governing documents. However, who is going to challenge you? The PhD candidate with no time or the elderly couple with no understanding of what they own? I think you are free to do as you see fit. If it were me, I’d sell and consider this a lesson in something to never do again. Good luck!