Category Archives: Board

Frequency of Condo Book Audit

L.L. from Litchfield County writes:

Dear Mister Condo,

How often should a condo complex’s books be audited? When they are audited, is the Board required to advise the owners that one has taken place and what the outcome was? Many thanks.

Mister Condo replies:

L.L., unless your condo documents require that the association conduct an annual or periodic audit, there is currently no legal requirement to have one performed in our state. That being said, many associations choose to have their records audited every three to five years or any time there is suspicion of funds gone missing. Larger associations are more vulnerable just because there is so much more money available to be pilfered. Many smaller associations will not take on the expense of having an outside CPA firm conduct an audit because there just enough money to be worth auditing. If the money coming in and the money going out look to be in good order, that is enough for most small and mid-sized associations. Larger associations almost always conduct annual or every other year audits because the cost of the audit far outweighs the risk of having a large amount of money stolen. One of the best people to ask is your Association Treasurer. In theory, this officer looks at the association’s cash on hand and savings and reconciles it with bank statements each month. They would be the first to see a problem. If money goes missing or the Treasurer suggest an audit, I would heed the call and get one done. There are several CPA firms here in Connecticut that specialize in auditing the books for condominiums and HOAs. I strongly recommend that use one of these firms with specific industry expertise to assist you in your audit. All the best!

Condo Board Members Vote by Email; Changes Vote After the Fact

D.L. from Fairfield County writes:

Dear Mister Condo,

Dear Mr. Condo – I am a unit owner in a 26-unit condominium. The Board of Directors voted unanimously via email to hire a contractor to perform emergency work due to the flooding of a unit by a renter.

Approximately two (2) days after the vote the Secretary notified the Management Company and the Board that she was changing her vote after speaking to the homeowner whose renter caused the water damage, as his contractor was the one not agreed to be hired.

As a result of the vote change, the President, one of only three (3) directors resigned and there are only two (2) directors (less than a quorum) remaining on the board.

I have the following three (3) questions:

1. Does the original internet vote stand?

2. The annual meeting is coming up on June 21st. Can that meeting take place without a quorum?

3. If the annual meeting cannot take place due to the lack of a quorum, what is the process by which the unit owners can call a meeting to elect a new board and adopt the annual budget?

Mister Condo replies:

D.L., Wow! You have a lot if issues at your condo, don’t you? If the internet vote was legal, meaning the association has allowed for the Board to vote by email, then the vote was valid. Unless your by-laws allow for Board members to change their vote after the fact (highly unlikely) then the vote should have stood, regardless of who resigned after the vote. That being said, there is the issue of practicality and what can actually be done now that the Board has fallen apart. The concept of quorum is an important one and you need to look at your governing documents and state law to determine when a quorum is achieved and what happens when the quorum is not achieved. Keep in mind that a quorum for an Annual Meeting is far different than a quorum for a Board meeting. As long as you achieve quorum at your Annual Meeting, you can simply elect new Board Members to fill the vacancies. With only 26 units, you have the added challenge of finding interested candidates. If quorum is not achieved, typically the previous year’s budget continues in place until next year’s Annual Meeting. The remaining Board members typically have the power to appoint directors to fill vacancies if warranted. If there is no quorum requirement for the Board, the existing members can serve out their terms and run for reelection when the time comes. Your question demonstrates some of the challenges faced by smaller associations. You have the same need for volunteers to serve on your Board but a much smaller pool of unit owners to choose from. I hope that you and few of your well-meaning neighbors will consider running for the Board at your next election. If it cannot wait until then, your condo documents very likely spell out the rules for calling a Special Meeting of Unit Owners. This is not that common but it can be done. My advice is to wait until your Annual Meeting and have a qualified and interested slate of candidates who will do a better job of running your association. Good luck!

Must the Landlord Furnish a Copy of the Lease to the Condo Board?

C.M. from New Haven County writes:

Dear Mister Condo,

Can a condo board ask for references from potential buyers or renters? Must a landlord furnish the lease to the board?

Mister Condo replies:

C.M., two very different topics there. Let’s start with the references from buyers or renters. Depending on what the by-laws say, the Board may be well within its right to ask for references, credit checks, and whatever else is in the by-laws. If the by-laws are silent, the Board may wish to pass some rules or new by-laws requiring these things if needed. Of course, the Board will need to follow the rules for adding such measures. The Board also needs to take care to make sure it isn’t using these rules to create a potential discrimination lawsuit from a buyer or renter who didn’t measure up in the Board’s opinion. I would certainly recommend any such rules be reviewed by the association’s attorney to make sure they are in compliance with any local, state, or federal housing laws.

The lease is a totally different matter. The Board certainly has a right (and a need) to know who is leasing a unit within the association. This is typically in most condo docs. It protects both the tenant and the landlord in the event there are any problems with the unit. Absentee landlords are common but the Board may need to communicate with the resident of the unit for a number of reasons. The landlord is typically obligated to provide a copy of the lease and can usually be fined or have their tenant removed if they don’t. Condo documents are legally binding on the landlord and enforcement of the association’s covenants is the duty of the Board. If a landlord refuses to provide a copy of the lease, there are several legal remedies available to the Board. Again, it is time to involve the association’s attorney if this happens. All the best!

Condo Board Allows Unit Owner to Custom Landscape

J.B. from outside of Connecticut writes:

Dear Mister Condo,

One of our residents asked for permission to build a berm of trees and shrubs behind his home to help block noise. I say that is a common area and that the entire community should vote on this. The board granted permission. Are they correct in so doing?

Mister Condo replies:

J.B., unless your documents specifically limit the Board’s authority on its management of the common grounds, the Board was likely within its right to grant the permission. If your documents do not allow for the Board to do what they did, then you are right. However, in my experience, the Board is very likely empowered to make this type of decision. Without seeing your condo documents, I’m afraid I can’t offer more of an opinion than that. Take a look at the documents. If you think the Board has overstepped their authority, call them on it. Other than that, the Board was elected by the owners to handle the business of the association. Sounds to me like they did just that. All the best!

Can the HOA File for Bankruptcy?

X.Y. from New Jersey writes:

Dear Mister Condo,

Can an HOA file for bankruptcy in NJ? If the HOA has debts that the HOA cannot pay and keep the property properly maintained and operating? Because of a loophole in the law, a homeowner sued the HOA and lost, but the expenses were sufficient to defend.

Mister Condo replies:

X.Y., it is very unusual for an established HOA to file for bankruptcy, especially without first having the courts appoint a receiver for the association. The receiver would likely levy special assessments against the unit owners to make good on the debts of the association. Since I am neither an attorney nor an expert in New Jersey law regarding common interest communities, I can’t offer an opinion as to the legality of the bankruptcy filing. My guess is that there is no difference between an HOA or any other business filing bankruptcy. However, as I stated at my opening, it would be truly unusual. If the HOA fails to maintain the property it could be sued by a disgruntled unit owner or owners or, in some truly decrepit state of repair, could face condemnation from local authorities. Even that wouldn’t cause a bankruptcy but could force owners out of their units, which might lead to eventual bankruptcy. I am sure there are underlying issues that have set the association on this path. I highly recommend you seek legal advice from qualified local legal counsel before thinking of such a drastic measure. My guess is you will be advised against it and seek another method of satisfying the debts of the association. Good luck!

Resigning Condo Board Members Creates Quorum Vacuum

D.L. from Fairfield County writes:

Dear Mister Condo,

I live in a 26-unit community. The Bylaws state that 5-people are elected to the board annually. The property manager called the annual meeting to be June 21st however, prior to setting the date, 3-board members resigned, leaving only 2-board members.

How can the property manager call a meeting with only 2-board members approving the date? Also, since there are only two (2) board members, how can the annual meeting take place when there is not a quorum?

Mister Condo replies:

D.L., resigning Board members create a challenge for any association. It puts the burden of maintaining and governing the association on the remaining Board members. Most condo documents allow for interim appointment of Board Members by the remaining Board members so that the association can continue to govern itself until the next scheduled elections. Your Annual Meeting should be open to all unit owners. The two remaining Board members should run the meeting, with one functioning as President of the Board until the elections are held at the Annual Meeting. In a small community like yours, there are only 21 unit owners left to consider for service on the Board, assuming the three that resigned are no longer interested in serving. With such a small pool of potential Board Members, it is quite possible that you will have a vacancy or two on the Board until volunteer leaders come forward. Your existing Board will suffice until then. The alternative is to have an ungoverned association with no authority to pay the bills or make decisions on behalf of the association. That could lead to a very expensive dissolution of the association or a possible court-appointed receiver to handle the business of the association. You don’t want that! My advice would be to encourage other unit owners to serve and for you to consider volunteering to serve to help get your community back on track for good governance. All the best!

Condo Board Makes Parking Rules That Favor Board Members!

S.D. from Fairfield County writes:

Dear Mister Condo,

Our board has set up three classes of owners with respect to parking. 1. Owner that have only one car and a one reserved parking space. 2. garage owners not permitted to used visitors parking at all. 3. Non-garage users with multiple cars that can park any number of cars in visitor’s spots. This third category benefits board members without garages and have multiple cars. A new rule was passed by the board that garage owner must park their car in their garage only and cannot use visitor’s spots at any time. But multiple car owners and park 4 cars in visitor’s spots. This of course harms all owners that have lost their visitor spots. What recourse do owners have to make these rules more equitable?

Mister Condo replies:

S.D., when a Board behaves in a manner contradictory to the wishes of the majority of unit owners, they are usually tossed out of office. This can be done at the Annual Meeting or, if enough people are upset with their decision on parking, via a recall. Or, if a majority of unit owners are OK with how the Board has divvied up the parking, things can continue as they are. The Board does control the parking lots and the rules for their use. However, the Board does not have unchecked authority. The authority ultimately lies with the unit owners and who they elect to represent them. Enforcing parking rules is one thing. Creating rules that favor the Board members is quite another. I would not hesitate to bring this possible abuse of power to as many of your neighbors as possible and start looking for new volunteers to serve on your Board. Good luck!

Condo Board Closes Pools Versus Maintaining Them

T.K. from outside of Connecticut writes:

Dear Mister Condo,

We have 2 outdoor pools. For the past 2 years, 1 pool has been closed – no reason given. This year, none of the pools are opened. I was planning on attending the yearly board meeting that was to begin at 7 pm last evening. However, upon showing up for it we were told it wouldn’t be starting until 8 pm as they were “running late”. I have my own theory as to why they were delaying. What recourse do we have with regards to our pools not being opened and not being informed as to the situation? Our maintenance fees go up every single year without hesitation. Aren’t they liable to honor the dec’s & bylaws with regards to maintaining & operating the pools? So FED UP!

Mister Condo replies:

T.K., being fed up is a good start. Now, it is time to take action. I am sorry that you and your fellow unit owners are being denied full use of your amenities. Pools are a major amenity for many associations and you are correct that their care and maintenance is the responsibility of the Board. However, many associations fail to collect enough money in common fees to properly handle all of the fiscal responsibilities of the association. Even though as a unit owner, all you see is common fees that go up every year, that is no indication that enough money is being collected. Ultimately, associations need to have really good budgets and really good Reserve Studies adhered to in order to thrive. Would you be surprised if I told you that your common fees may need to rise 20 – 30% for that to happen? Would you support a Board that raised the common fees in order to meet the financial obligations of the association? The problem is that the Board is comprised of democratically elected unit owners who must run for election and reelection to serve their community. If they raise fees, they may not be returned to office as that is always an unpopular course of action. However, I can assure you, if the association ties their hands by not raising enough revenue to operate properly, you can expect your pools to remain closed. That is likely the tip of the iceberg. Are roofs being properly maintained? How about parking lots? How about walkways? Underfunded associations are easy to spot. The problems don’t all appear at once but they do surface. I would encourage you to have a candid conversation with your Board and fellow unit owners. If there is no money to make the repairs, you might want to be the one who suggest that common fees be raised. Without that extra capital to work with, I doubt much will change. Good luck!

Service Animals at the Condo Pool!

A.F. from outside of Connecticut writes:

Dear Mister Condo,

We are a pet friendly condo. However, we do have common areas like our pool deck that does not allow pets. I like dogs but more and more residents are turning up on the pool deck with their ESA dogs, its turning into a dog park – the condo management don’t know if they can enforce the pool deck rules and ask the ESA dogs to leave?

Mister Condo replies:

A.F., this is an area where the association needs to tread lightly. Service animals are not pets and, unfortunately for the association, are not subject to the same restrictions that the association can place on pets. There are a lot of lawsuits based upon discrimination of people with ESAs. The association doesn’t want to become embroiled in such a lawsuit. I am not an attorney and offer no legal advice here. However, I would be remiss in my friendly advice duties if I didn’t tell you that you should speak with an attorney verse in both association law and service animal laws in your state to make sure the association doesn’t misstep. There may be reasonable accommodations that can be made that allow the folks with service animals to enjoy the common amenities while not imposing on the rights of the other users. I am not saying it will be a perfect solution but there may be a way to accommodate the desires of all. Get the advice of the association attorney and enjoy your amenities, without creating a lawsuit. Good luck!

Underfunded Condo Association Leaves Common Area Repair to New Owner

S.M. from outside of Connecticut writes:

Dear Mister Condo,

One year ago, an owner financed the sale of condo. Now the new owner says there is a serious drainage problem outside back sliding doors. He asked the HOA to fix the problem but there is no money available to do so. The HOA gave the new owner permission to do the job. Then the new owner got city inspectors involved who do concur that there is a major problem. Could the property potentially be condemned? New owner is telling us to either renegotiate our deal, thereby sharing cost of the job, or he will renege on the deal, putting all of the expense back on us. What can be done?

Mister Condo replies:

S.M., HOAs with insufficient funds often make bad decisions. In this case, a really bad decision is coming back to haunt the association. Exterior drainage problems are the problem of the association and should have been repaired by the association, not the unit owner. Further, the correct way to raise money for such a repair is to raise common fees, levy a special assessment, and build a Reserve Fund for future repairs and improvements. The phrase “no money available” indicates to me that there is also no Reserve Study in place and that the common fees have probably been way too low for way too long. The immediate problem facing the association is the possibility of a city inspector condemning the property. While that is an extreme measure, it is possible of the unit is in such disrepair as to cause the inspector to make such a call. Typically, even if a citation is given, the association has enough time to make the repair and avoid condemnation (unless human life is at stake, i.e. a collapsing roof or broken foundation). Assuming the repairs can be made by the association, get an estimate on the job, levy a special assessment or take an HOA loan (if eligible) and handle the repair. Then, sit down and take a good look at the budget for the association. Chances are common fees should be raised this year and for several years to come until the association gets back on sound financial footing. This may prove unpopular with unit owners but it is necessary for the association’s long-term fiscal health and to make sure the Board doesn’t need to make future bad decisions on needed repairs. All the best!