Category Archives: Common Fees

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!

Validity of Condo Percentage of Unit Ownership Questioned

C.B. from Illinois writes:

Dear Mister Condo,

Hi, I live in a 48-unit building consisting of 24 2-bedrooms and 24 1-bedroom units. I understand that the 2-bedroom units owns a larger percentage than the one bedroom units and, of course, the assessment fees are more. We just had a new elevator upgrade which cost the 2-bedroom unit owners a percentage more, now we are able to have another special assessment to re-pave our parking lot, then next year will be our balconies. While I understand somewhat WHY a 2-bedroom unit owner would have to be pay more in assessments, I’m still baffled as to why they would be required to pay more toward some common areas that is equally used by everyone in the building. In this case, the elevator upgrade, the parking lot repavement. Building has 47 parking spaces that, in my opinion, are equally being used by each unit owner. Can you give me a simple straightforward answer as to WHY this is the case and, if this could be changed? Thank you!

Mister Condo replies:

C.B., the percentage of unit ownership formula is commonly used by HOAs and is the de facto standard for determining who owes what when it comes to common fees and special assessments. It is tried and proven and almost impossible to change. It certainly makes sense when thinking about the ownership ratio of the association. These owners physically own more space of their own and, in theory, use more of the common elements. A second bedroom is indicative of either more permanent residents or overnight guests. More occupants means more wear and tear on the common elements. What other formula is simple enough to take that into account when deciding when dealing with the financial responsibilities of the association. These units simply consume more of the association’s resources. While your analogy of the parking space is spot on, it is one of the few times that argument would hold water. Also, since the percentage of unit ownership was in place at the time the unit owners purchased their units, it is not a surprise or unfair to the unit owner when these assessments come due. It is quite simply the law of the land in the HOA world, has been since the beginning of common interest communities, and is likely to outlive us all. All the best!

Condo Move In Fees Create Budget Excess!

J.G. from Illinois writes:

I’ve tried submitting this blog question online, but I keep getting an error message saying I didn’t enter the “recaptcha” correctly.  It’s just a check box, so I’m not sure what I’m doing wrong.  I hope you’ll consider this question for your blog. We’re trying to determine the proper treatment of fees collected that are outside the normal monthly assessments.  We have a move-in fee and occasionally collect late fees for monthly assessments.

Our condo rules state:

“There is a $500.00 fee for moving in that is non-refundable to cover cleaning and future rekeying of the building. ”

Our condo declaration states:

“…the Board shall supply to all unit owners an itemized accounting of the common expenses for the preceding year actually incurred and paid, together with a tabulation of the amounts collected pursuant to the budget or assessments, and showing the net excess or deficit of income over expenditures plus reserves.  Any amount accumulated in excess of the amount required for actual expenses and reserves shall be credited … to the next monthly installments due…”

The IL Condo Act gives the Board the right to determine how to distribute excess as long as it’s not prescribed in the condo documents.

We’re expecting an excess this year due to a large number of unit turnovers.   Are we obligated to credit this to the owners?  Or, can we move any excess to reserves since it wasn’t “collected pursuant to the budget” (i.e. not part of the budget that all owners paid assessments for)? Thanks for any advice, opinions, or references!

Mister Condo replies:

J.G., I am sorry if the “recaptcha” tripped you up and I am glad that you emailed me instead. The “recaptcha” is needed due to deter the large amount of attempted SPAM that used to flood the website. Thank you for your vigilance. I am neither and attorney nor an expert in Illinois condo law so please accept my advice as friendly and not legal. For a legal opinion, you should contact a local attorney who specializes in community association law. At face value, I would say that you should return any monies that were over-collected before simply depositing them to the Reserve Fund. This would be in keeping with the spirit and intention of the law which is to protect homeowners from paying more than needed or agreed to in their vote to approve the budget at the Annual Meeting. At the very least, I would offer the unit owners a vote on how to use those funds at next year’s Annual Meeting. Chances are, it isn’t such a large amount that you would get much pushback to moving the funds to the Reserve Fund where it can be used to protect all unit owners. I salute your thinking and commend you for increasing your Reserve Fund but my advice is to follow the spirit and intention of the law and even your own governing documents so that no init owner can cry foul and demand their money back. All the best!

Fairness of Condo Common Fees Questioned

A.L. from Hartford County writes:

Dear Mister Condo,

Mr. Condo, how should HOA fees be calculated in a condo association in the State of Connecticut? Is it fair that everyone pay the same fee every month even if all the units are not the same size?

Mister Condo replies:

A.L., common fees are typically defined in the condo governing documents and usually are derived using the percentage of unit ownership formula which does take square footage into consideration. However, neither the state nor the governing documents require the use of this formula and there are many other perfectly legitimate methods of determining common fees. The only universal rule is that the governing documents dictate the formula and that formula can only be changed by very strict rules for doing so. It is extremely uncommon for the formula to be changed and typically requires a full consent vote of the unit owners and, many times, even the mortgage holders of the units. Some of the other factors that I have seen that determine common fee allotment include: water-view versus non-water-view, top floors versus middle and bottom floor units in a high-rise, and end units versus middle units. Some associations like yours use a simple “everyone pays the same” common fee, which may not be fair, but is certainly not illegal and is well known before anyone purchases into the association. There isn’t too much you can do about it, A.L., as changing the common fee schedule is a major legislative ordeal. You can talk to your Board but I doubt you will see things change. Good luck!

Unhappy and Unsatisfied Condo Owner Moves Out

J.J. from outside of Connecticut writes:

Dear Mister Condo,

I been having a problem at my condo where I used to live. I left because they were always harassing me and my daughter. I’ve been towed because my car on my parking spot and the back tire was on line of the other parking spot. I have been trying to find out for 3 years where money is going because we have Reserves but we have no amenities but a pool.

Mister Condo replies:

J.J., I am sorry you have had such a trying experience living in a condo. Following parking rules can be challenging but managing the parking lot so all unit owners can enjoy the amenity is even more challenging. If you parked where you shouldn’t have you really can’t be too upset if your car got towed. How else could the association parking lot be available for all of the other unit owners who have also paid for unobstructed use of the parking lot? Understanding where your common fees go can be difficult to understand. Just because an association has a Reserve Fund (all should) doesn’t mean they don’t need your common fees for other budget items. All of the common amenities and services are paid for out of the common fees. Everything from the lights in the parking lot to the trash removal to the management of the association and so much more are paid out of your common fees. If you feel you were harassed in any way by your association, I would encourage you to speak to an attorney to see if what you experienced meets the requirements for harassment. Towing your car for parking improperly and insisting you pay your common fees certainly doesn’t qualify but I am guessing there is much more to the story than you have relayed to me here.  Good luck!

Condo Board Leaves Leaky Roof in Place for 8 Years!

K.P. from Massachusetts writes:

Dear Mister Condo,

I live on the fourth floor of a 4-unit condo. The roof is damaged to the point that when it rains it pours inside my apartment. It has been more than eight years and the condo association will not fix the roof. I stopped paying condo fees and informed the condo association that I was going to save the money to pay for the roof. I have not paid the condo fees for four years. The condo does not call for regular meetings. Two of the other owners had some funds on the condo and they spent it on things that they needed to fix without a voting from the condo association. Now they have a lien on my condo. I have damages in my apartment. Is it legal to not pay for the condo fees and save it for the roof repairs as the condo association has not fixed the roof after eight years of discussion? Can I request that the condo association pay for the damages in my condo?

Mister Condo replies:

K.P., I am sorry for your problems. If you read my column with any regularity, you will see that I never advise any condo owner to withhold common fees for any reason. As you are seeing first-hand, the Board will sue you for those fees and they will win. If you can’t make good on your arrears, you could have your unit foreclosed upon by the association. I hope it doesn’t come to that for you. Assuming you don’t lose your home in this debacle, let’s discuss what you can do to get your unit repaired. First off, hire an attorney. After 8 years, let’s face it, it is long past time to sue the association for dereliction of duty in maintaining the roof. There will undoubtedly be a Special Assessment to make the repair but a lawsuit and judgment against the association will force the issue. Keep in mind that this will cost you as well as the other unit owners a financial hardship but you really have no choice. Hopefully, the threat of the lawsuit will be enough to motivate the association to make the repair to the roof. If not, a lengthy and expensive legal battle will likely ensue. This is a “lose/lose” situation for you and the other unit owners but their ridiculous mismanagement of the roof has lead you all here. Once the repairs are made, I would strongly consider selling and getting out of this potential money pit. If they let the roof go for 8 years, I can only imagine what other nightmares await. There are better places to live. Good luck!

Previous Condo Trustee Allowed Unit Owner Delinquency to Go Unchecked!

M.C. from Middlesex County writes:

Dear Mister Condo,

Our trustee just sold her unit making me the new trustee. After she left, I found out one of the Unit owners wasn’t paying their HOA fees and that the former trustee had used funds I put in the Reserve Fund for my share of assessments to front for them. We were about to hold off on a planned assessment because of this when the city slapped us with a fine so now we have to move forward or rack up more fines! I asked a lawyer for a consultation hoping he could give us some advice on how to proceed and he practically laughed me off the phone saying the situation wasn’t worth a lawyer. But the unit owners still aren’t paying and the city is expecting us to move forward with the assessment! What do we do?

Mister Condo replies:

M.C., for starters, you get a new lawyer! I don’t know of any lawyer committed to community association law that would “laugh you off the phone” for such a potentially serious and clearly legal matter. You have three very separate matters to attend to here. The city slapping you with a fine is likely your biggest fish to fry. Get your association in compliance with the city so no further fines result. The city likely has powers to make your life quite uncomfortable depending on the nature of the offense. If they find your buildings are uninhabitable due to a safety issue, they could actually forbid people from living in your units. You certainly don’t want that and I am hoping that the fine is for something easily remedied. If a Special Assessment is needed to bring the association into compliance with the city’s requirements, it may be time to levy that assessment. Be sure you do so in accordance with your association’s governance documents and state law. Second, you need to take legal action against the unit owner in arrears as allowed by your governing documents. Typically, this is the work of an attorney or collection agency. Do not take matters into your own hands. Collections is a delicate and legal process best handled by professionals. Collection efforts may even lead to a foreclosure action by the association against the unit owner in arrears. This is not a matter to be taken lightly. Finally, the previous Trustee has acted inappropriately and, perhaps, even illegally. The decision to let another unit owner to forego paying assessments was very likely outside the scope of their authority. At the very least, it was a dereliction of duty. An attorney can best advise you if it is worth seeking criminal or civil charges against the previous trustee in an attempt to collect the delinquent common fees. Once you get all of these problems behind you, M.C., you can focus on running the association like a business, as it was intended to be. Good luck!

Condo Owner Seeks Relief from Mysterious Vibrating Noises

S.J. from Outside of Connecticut writes:

Dear Mister Condo,

We’ve been hearing strange rattling/vibrating noises coming from the bathroom in our unit. It sounds like it’s coming from the pipes from the wall between our bathroom and flex room. It can get really loud throughout the night. The noise can be as short as 30 seconds to as long as 5 minutes. And we hear this all through the night. We’ve contacted our property manager and the board president and have sent a recording of the sound. Nothing has been done to resolve issue. What can we do? Can we legally withhold our association fees until they start taking our issue seriously?

Mister Condo replies:

S.J., NO! You cannot withhold your common fees! Unwanted noises arising from mechanical or plumbing issues can be a real pain in a condo where you can’t always get at the source of the noise. You have done the proper thing by contacting the Property Manager and the Board. They are not under obligation to act immediately but they do not provide a resolution. Ask for a proper response, in writing, from them about what they plan to do to resolve your complaint. If their answer is to do nothing, then you will speak with an attorney and see what your next step will be. At the very least, the Board should acknowledge your complaint and dispatch a maintenance or engineering person to follow up. Have you checked with your neighbors? Are they having the same problem? There is always strength in numbers so the more complaining that goes on, the more likely there is to be a resolution. Be persistent and be thorough. I am confident that you can have this situation remedied. Good luck!

Common Fees Continue After Condo Unit Fire Damage

E.J. from outside of Connecticut writes:

Dear Mister Condo,

We recently purchased a foreclosed unit. Just prior to the foreclosure being finalized the unit was badly damaged in a fire, originating from the unit below. There is damage to our unit which is being repaired. Am I correct in assuming that the condo fees will abate until the unit is habitable?

Mister Condo replies:

E.J., I am sorry to say that you are not correct. I am sorry that you have suffered a loss in the form of fire damage but that is what insurance is for. Common fees continue unless the Board has decided it will not rebuild the unit (unusual). Your common fees pay for far more than just your unit. All of the common grounds are maintained, reserve funds are built, and all of the day-to-day expenses of property management and maintenance continue. Your common fees are part of the pooled common fees that pay for all of these expenses. Should you elect not to pay them, the association is then forced to pursue you for collection, up to and including, foreclosure on your property. You certainly don’t want that to happen. You should continue to pay your common fees and encourage the association to get your unit in good working order as quickly as possible. Good luck!

Small Condo; Big Governance Problem!

J.P. from Florida writes:

Dear Mister Condo,

I live in a small condo association in Florida. While being a new owner, I have noticed that the whole board and the running of the property is out of control. The President has been in place for several years as I can tell since no one else wanted to be on the board. It is a 55+ community. He also put himself as the property manager. The budget is less than $100K, so no property management company is required. He does not pay any HOA fees as he says that is in lieu of his property manager position. The association never voted for this, he just took this over on his own. He bullies the owners who are old and some do not speak good English. When he gets mad at you, he is very vindictive and knocks on people’s doors late at night. This guy is in his 70’s and a heavy drinker. I voted myself onto the board recently as Treasurer to have a voice and he has yet to hand over the books, check writing, etc. Many people believe he is hiding stuff and he now refuses to answer his door or calls from me. He feels threatened and believes I will expose what he has been doing the past 5 years or so. What do you recommend the best course of action to get control of the situation? I have spoken to the association’s lawyer who says to file a complaint with the state (Florida), I plan to do so in hopes of getting the ball rolling to have him removed. We also have cameras throughout the property which he installed but he is the only one who has control of them as it is set up in his unit. Many people feel uncomfortable as he watches all day and approaches people when they get home. I have to assume that is not legal as when we ask to see a clip he does not allow it. As you can see this place is a mess and would be happy to hear any suggestions you may have before I contact the state. Thank you for your advice.

Mister Condo replies:

J.P., there is very little that I can add before you contact the state, which I hope you have already done. The association attorney can only do as much as the association (the Board) instructs him or her to do. You do need to review your governance documents (or have the attorney review them for you) to see what steps will be necessary to remove the President from office and from the Board. If funds are missing or misappropriated, there may very well be criminal charges as well. Right off the bat, I can tell you that the association should go after the unpaid common fees. Board members are not exempt from common fees and unless there is some kind of formal agreement between the President and the Association for him to serve as a paid Property Manager, he will have to make good on those unpaid fees as well as any late fees. Shame on your fellow unit owners who took no action until now. From what you have said, this behavior has been going on for years. Who knows what financial perils this person has brought upon the association. What about other Board members? Are there none? This situation stinks to high heaven and you are correct to pursue a remedy for you and all of the other unit owners are at serious financial risk as long as this individual has the association checkbook. The time for action is now. Good luck!