Category Archives: Board

Condo “Marketing Fee” Forces Unit Owners to Use Condo’s Designated Realtor

S.Y. from outside of Connecticut writes:

Dear Mister Condo,

Our condo board discriminates against unit owners who want to list their unit for sale outside the condo realtor. If you list with the condo’s realtor, the realtors commission of 6% is paid from the condo’s 10% “marketing fee” levied when a unit sells. If you use your own realtor, you pay the 10% condo “marketing fee” plus 6% to the realtor.

Many of us want to use our own realtors because the condo’s realtor shows preference to Board members and their friends. If you’ve ever been in a disagreement with the Board, look out, your unit will never sell.

We have considered legal action but this will damage sales prospects for our units.

 

Mister Condo replies:

S.Y., damaged sales prospects aside, I don’t see any other way to remove this obstacle to using a realtor other than the “selected” condo realtor. That being said, I am not sure there is a true legal issue here. The 10% “marketing fee” is a condition for anyone who sells. While I think that 10% is an exorbitant amount to pay for “marketing fees”, from what you have told me it is a rule that has always been in place. Perhaps the Declarant wanted to monopolize all initial sales and resales so the clause was added? Whatever the reason, the 10% is currently the law of the land for your association. How do you and your fellow unit owners feel about this? If there is enough dissent, why not simply vote to have the rule removed? The fee paid by a seller to a realtor is typically negotiated by the seller. Here, the association has already negotiated a permanent seller’s fee of 6% to the realtor, which the association is essentially rebating back to the seller because it is coming out of a 10% “marketing fee” the seller agreed to abide by when he or she originally purchased in to your association. While I will agree that it is a bit questionable, I am not certain it is anything that can be undone by bringing a suit against the association. You have the power to correct the situation by simply eliminating the “marketing fee” or making it 4% (10% – 6%). Either method would leave the unit owner free to select their own selling agent at whatever fee they negotiated. 6% is common but I know of many markets across the country where listing fees are far less. Many times, the real estate market dictates what is a reasonable fee versus a “set in stone” flat rate. Good luck!

How To Enforce Condo Building Renovation Requirements

S.O. from outside of Connecticut writes:

Dear Mister Condo,

When a new owner renovates – without any discussion with the board/management and does things that should not have been done – what can board do? Can they make them halt, and make them put it back to the way it was, and if so how?

Mister Condo replies:

S.O., the short answer to your question is “yes” but it depends on the condo’s governing documents. Typically, interior renovations are subject to less scrutiny than exterior renovations but there are still rules that need to be observed. Common problems include replacing carpeted floors with hardwood or laminate flooring, creating an undue noise burden to unit owners above, below, or on either side of the unit. Regardless of the type of violation, the Board needs to issue a letter to the unit owner and explain which rules they are violating. If the unit owner complies, there is no problem. When they don’t comply, it is usually lawsuit time so get the association attorney involved. If/When the association prevails on court, a court order to return the unit to its previous condition is issued. If the homeowner still refuses to comply, the association attorney can then take further action to enforce the court order. It can be a quite a bit of ugliness but that is the nature of enforcing the rules at a condo. You can’t have unit owners deciding on building modification for their personal unit that effects the uniformity of the community and the enjoyment of neighboring units by their owners. Good luck!

Condo Reverse Mortgage Woes

R.H. from Wisconsin writes:

Dear Mister Condo,

I am president of a condo association. Currently we have 11 existing buildings that are occupied (2 units per building). There still are 7 more buildings that will be built in the coming years. We basically have 58% of the project built and completed. I understand that you need a certain per cent of buildings completed before you can qualify for Reverse Mortgage as an association. What is that percentage?

Mister Condo replies:

R.H., there are a number of factors that go into determining if a Reverse Mortgage can be granted to a condominium unit owner. Since many reverse mortgages are also FHA backed, the entire association must be FHA approved before any one FHA backed reverse mortgage can be granted. That can be tricky enough when the project is completely built but it is even trickier when the association is still under construction as yours is. Have you sought FHA approval for your condominium association yet? There are pros and cons in doing so but my guess is that you will need to do so if you are getting requests for reverse mortgage eligibility. Rather than go it on your own, may I suggest you work with an industry professional to walk you through the process? Otherwise, I think you will spend an inordinate amount of time on the project and still may not get the approval you need. In your state, there is a local chapter of the Community Associations Institute (CAI). I found an interesting press release on FHA at their website you might want to read – https://www.cai-wi.org/news/cai-government-affairs/ The article deals with the shifting requirements for condominium associations. In other words, today’s answer may be different tomorrow.

If you are seeking a local resource to help, may I suggest you get in touch with them the Wisconsin Chapter of CAI and ask about companies that specialize in FHA approvals for associations like yours? That way you can get a local expert opinion on the feasibility for your association. Good luck!

Ownership of Burst Condo Water Line Questioned

T.G. from New Haven County writes:

Dear Mister Condo,

If a hot water line bursts in an outside wall who is responsible, the unit owner or the board? Also, the line was not where the Board said it was. Our kitchen sits above our neighbor’s garage. The board said both hot and cold lines are in the ceiling of the garage.

Mister Condo replies:

T.G., typically when water lines burst it is the responsibility of whoever owns the area where the line has broken. In other words, if you own from the wall in, a line that breaks outside of your walls is very likely the responsibility of the association. Regardless of what the Board says about it, a reading of your documents will very likely clear this up. If, by chance, the documents don’t appear to provide you with a good answer, it is time to speak to an attorney who can read any “legalese” that might make a simple determination possible. There are exceptions, of course. I know of some associations that have allowed modification of water lines at owner’s requests and along with the approval to do so came the responsibility to maintain the water lines. This is highly unusual though and does not sound like your situation. If you do own all of the interior walls where the water line burst (garage ceiling is a good example, a bathroom supply line would be another) then you may be on the hook for the repair. Like I said, when the unit owner and the Board don’t agree, it is usually time for a legal opinion. Good luck!

Handicapped Condo Owner Forced to Park Two Blocks from Building

T.B. from Illinois writes:

Dear Mister Condo,

I am a disabled person and I own a condo in Cook County, IL There is never any parking and I have to walk two blocks to get to the front door of my building. Is it possible to get an assigned handicap parking spot? If so, what needs to be done?

Mister Condo replies:

T.B., I am sorry you have such a long distance to cover to get from your parking area to your unit. If you read my column regularly, you likely already know what I am about to say. Unit owners may request handicapped parking from the Board at any time. However, the Board is under no obligation to grant the request. The parking areas in most condominiums are private property, owned by the association and under the control of the Board. While they do need to look at your request, it typically puts undue stress on the limited parking resources of the association to grant the request. From the way you describe it, the parking for your building is on the street, which may not even be under the Board’s control. You may need to make a request of your local municipality if that is the case. The first step is to make a written request of the Board. If the Board grants your request, you are good to go. If they deny your request you may wish to make a legal challenge but I wouldn’t expect too much. Good luck!

Condo Parking and the ADA

G.S. from Massachusetts writes:

Dear Mister Condo,

I rent a unit in condo in MA and the question is the following: I believe that one of the handicapped parking spaces in the condominium is “unlawful” since it’s been created overnight by just putting a tab with the handicapped symbol. I made a research and I have learned that in order to be regular, thus lawful, a handicapped parking space must comply with the ADA regulation. In this case, a part the handicapped tab sign, this parking space doesn’t have those required features. Does the condominium need to modify this parking space because of ADA requirements or because it is a private parking lot ADA doesn’t apply? How to address this issue?

Mister Condo replies:

G.S., you have answered your own question. Typically, condominium associations are private property and are not subject to the same requirements for handicapped parking as a public parking area like a supermarket might be. There are exceptions. For instance, if the club house were rented out, it could be argued that the grounds are not private and that commerce is being conducted there, in which case the higher standards of the ADA would apply. The bottom line is that an association only needs to make a reasonable consideration for granting handicapped parking. If your association is a private entity, they are likely in compliance with what they are required to do. If not, you should alert a Property Manager or Board member so that they can take corrective action. Good luck!

Condo Board Liability for Underfunding the Reserve Fund

G.H. from outside of Connecticut writes:

Dear Mister Condo,

What are the recommended best practices for boards to abide by when deciding whether, or not, to adjust annual Reserve Fund contributions to take inflation and interest on reserves into account? Is there any liability assumed by a Board if they do not take these two factors into account when finalizing the annual budget and establishing the HOA’s contribution to its’ reserve fund?

Mister Condo replies:

G.H., there are several states that have enacted legislation to force associations to use Reserve Studies and to adjust their common fee contributions to keep the Reserve Fund at adequate levels. A list of these states can be found at the CAI website at https://www.caionline.org/Advocacy/StateAdvocacy/PriorityIssues/ReserveStudy/Pages/default.aspx. So, if you live in California, Delaware, Hawaii, Nevada, Oregon, Utah, or Virginia, your association is required, by law, to have a Reserve Study in place. The page also lists Washington State as having a statute that “encourages”, not “requires” a Reserve Study to assist the Board in determining the appropriate level of common fees for an association. Even if you don’t live in state where it is mandated, Reserve Studies are vital tools for associations to know that they are following the Best Practices and sound business judgment in running their associations. I am not aware of any liability assumed by the Board for not taking inflation or interest into account when determining Reserve Fund contributions but a well thought out Reserve Study would certainly do so. In other words, if there were $100,000 needed to replace the common elements in 20 years and only $100,000 were budgeted to do so, factors like inflation and interest would likely make that number too low when the time came to actually make the expenditure to replace the common element. On the other hand, a well-funded Reserve Fund can actually offset some of the interest expense by being invested in a reasonably liquid asset, such as a CD. Hope that helps!

Change Needed in Condo Leadership

C.C. from New Jersey writes:

Dear Mister Condo,

Do you know of any condominium law in the state of NJ that would limit a single person holding the same position on the board as president for many, many years? The power is being monopolized and we need a change!!

Mister Condo replies:

C.C., the power to change the Board is in your hands! Board members, including the President, are elected by the unit owners. You simply need to vote new people in to office and the old ones go away. What happens far too many times is that the association is unable to produce new volunteers to serve on the Board. Guess what happens then? The folks who have been serving continue to serve, regardless of whether they do a great job or a terrible job! If you want to see a change in leadership, you need to take action. You may need to volunteer your own time to serve on the Board. You will certainly need to convince your fellow unit owners to also serve and to support new candidates in elections. Otherwise, you will keep getting what you’ve been getting. Good luck!

Small Condo Board Can’t Get Along!

R.G. from Litchfield County writes:

Dear Mister Condo,

The President of our 3-unit condo would like to go virtual! He no longer wants to have regular meetings and would like to do everything completely by email, with a 24-hour period for responses. Although he claims it is because of lack of civility on everyone else’s part, besides his own, this man is even ruder in emails! My question, however, is on the legality of voting and holding meeting by email. Our by-laws do not mention this as they were first enacted in 1986. What other ways would you suggest our board holds meeting so that there is accountability and respect for all. We have come up with having a mediator and meeting in a more public place. Both were rejected by this man; the first was too expensive, the second, not private enough. We are at our wits end!

Mister Condo replies:

R.G., it is hard to imagine that such a small community would have this type of trouble. 3 units requires that three unit owners sit down monthly or less frequently if the by-laws allow, and take care of association business. There may be no provision for using email or any other form of communication that didn’t exist back in 1986 but that doesn’t mean that the association can’t adopt it, provided no state laws are being violated. The larger issue is that all parties need to agree to this “virtual” meeting and records must be kept as these meetings are official business of the association. Additionally, there will need to be Minutes from these meetings that serve as permanent record of the items discussed and voted upon. In a small association like yours, that sounds like a lot of work. The mediator idea is valid and may make sense to get the association out of its dysfunctional phase and back on track. Ultimately, the three unit owners should find a way to work together to handle the business of the association. You can disagree but not be disagreeable. I am guessing the mediator will help with that process. Good luck!

Condo Bylaws Call for All Cars to be in “Good Working Order” but According to Who?

J.Z. from outside of Connecticut writes:

Dear Mister Condo,

I own a condo and two deeded outdoor parking spots. My car was in an accident and the condo board is telling me I’m not allowed parking my car in my own spot because it is not in good working condition. Apparently, this is in the building’s bylaws. The car is not severely damaged and is not leaking fluids. It does not pose a security risk to other owners. They gave me 48 hours to comply or they have threatened to tow it. Can they do that? What are my rights?

Mister Condo replies:

J.Z., I am sorry your car was in an accident. Unless your documents spell out what “good working order” is, you have plenty of wiggle room here. That being said, you do need to be mindful of the condo documents and ask yourself if you would want to see other damaged cars allowed on the property. It is a sticky wicket for the Board, at best. If you are going to have the car repaired, why not take it to the shop sooner rather than later? That way you’ll get your car back and the Board will have nothing to complain about. Even though it is your parking space, the lot is owned by the association and under the authority of the Board. It is up to them to enforce the rules. If they do tow your car and you end up taking them to court, you are going to get into an argument over what “good working order” means. Your definition of “not leaking fluids” or “posing a security risk” may not be enough. If the car is visible damaged, that may be all that is needed for the Board to prevail. Best to get the car off of association-owned grounds as soon as you can. Good luck!