Category Archives: Financial

Question of Financial Liability for Condo Decks Leads to Foreclosure!

D.U. from New London County writes:

Dear Mister Condo,

I own a condo in a building without deck units, whereas other buildings in the condo have decks attached to their units. Since a deck or balcony is not a common element, I feel that it is not fair to be asked to pay $2,000.00 for the repairs of other units’ decks. Plus, I was appalled to learn at one of the meetings that some decks were repaired not long ago but the shabby job done made them fall apart in the following year. The Board of Directors members, who, by the way, have decks to their units, were quiet about it at the meeting. The association should be held accountable for not preventing such a failure. Instead they are imposing a lot of money to cover their mismanagement on many other units without a deck. Many of owners are elderly, as myself, living on a limited income. To involve a lawyer to fight such an abusive manner in the court, cost a lot of money which we cannot afford. As a matter of fact, I have already got a letter from the association, to be informed that a lawsuit including a foreclosure is intended on me. I have to add the association couldn’t provide, at my lawyer request, a copy of the relevant portions of the By-Laws, Rules, or Regulations which authorize the imposition of such assessment on me. Where should I address this issue other than here? I think that an investigation is overdue on Property Management at my association.

Mister Condo replies:

D.U., I am sorry you find yourself at such odds with your association. To hear that you are being threatened with foreclosure now tells me things have progressed even further than your letter lets on. Let’s start with what comes next so that you don’t lose your home. You have hired an attorney to represent you and that is critical to protect your rights. He has asked for the supporting documentation giving them the right to assess and then foreclose for failure to pay the assessment in timely fashion. I can assure you that they do have the right to collect assessments from you and they can foreclose against you if you don’t pay the assessments. You also have rights and you may be able to sue them if the assessment was passed incorrectly or if the decks are not common elements, as you claim. Unfortunately, my guess is that the decks are considered common or limited common elements and that you may, in fact, be liable even though your unit does not have a deck. I realize that this seems unfair but unless you or your lawyer can show where they have done something wrong, the assessment will stand and you will be held liable. There is no central authority in our state to investigate the management of your association and I am not an attorney and offer no legal advice here. You have already hired an attorney which is your best option to see this through. I wish I had better news for you here but I think the only real problem here is an understanding of how a condominium association operates and governs itself. Hopefully, your attorney will help you navigate this legal turmoil. All the best!

Previous Condo Owner May Have Failed to Disclose Upcoming Special Assessment

C.P. from Middlesex County writes:

Dear Mister Condo,

My daughter bought a condo where her association fees are $450.00 per month. Due to future major roof improvement job her payment will increase by $300.00. We feel the seller had to know about this upcoming project and didn’t reveal this very crucial information. The other choice to pay would be a one-time payment for $22,000.00 per unit. There are 40 units. Something doesn’t seem legal here. Your thoughts.

Mister Condo replies:

C.P., I am sorry for your daughter’s predicament. It is quite possible that the previous owner was aware that there was a possibility of a Special Assessment but unless the Special Assessment had already been passed and levied against the unit owners of record, it is unlikely that they did anything illegal. In fact, the knowledge that this Special Assessment was looming may have been a very important factor in his/her decision to sell. You can and should speak to an attorney to make sure the seller had already been informed of the assessment and failed to provide that information. If they signed a disclosure statement where they lied about the Special Assessment, you may very well have a case. All the best!

No Board at this Iowa Condo!

M.T. from Iowa writes:

Dear Mister Condo,

I own a condo in a small HOA with about 18 units. We currently have a non-existent property manager/bookkeeper that has been in charge of running things since the board disbanded prior to my ownership. This manager has not done any repairs other than basic yard work and snow removal. My roof started leaking and all my requests for repairs have gone unanswered. My front deck is also dilapidated and in need of replacement and she just hired a handy man to come put more screws into the rotting wood. She is not an owner and, in fact, lives about a half hour away in another state. Majority of the owners agree she has been neglecting her responsibilities as a property manager and needs to go. How do we go about that if a board doesn’t exist? Many owners have asked to see the financial state of the association but she refuses and ignores our requests. Some owners are unable to sell due to the fact that they cannot prove that the association is in the black financially. How do we get rid of her put the association back into the hands of the owners? FYI, these condos were built in the mid-80s and most of our roofs and decks are in need of replacing.

Mister Condo replies:

M.T., I am sorry for your situation. Let me get this straight. You and the owners of the other 17 units have been living in a condo association for several years with no one realizing that there needs to be a Board to govern the association?!? You have a right to be upset with the Property Manager but what is she supposed to do? Technically, she has no supervision or guidance from the association. Unlike you and the other owners, she has no ownership interest in your association. I assume she is paying herself for her work out of the association’s common funds, collected by her, and used to pay for the scant services that are being provided. I would say you are fortunate to have her stick around without any direction or supervision from the non-existent Board. I hope she is honest and hasn’t robbed the place blind. The Board is the check and balance system to keep an eye on the association-owned assets (in this case, the money!). You and the other owners need to read your condo documents and determine who will volunteer to serve on the Board as soon as possible. Then, and only then, will you have an opportunity to address your immediate problems but also the myriad of problems created by not having a Board in place. Good luck!

Condo Owner Surprised by Special Assessment

T.S. from Massachusetts writes:

Dear Mister Condo,

My condo association is planning on replacing all the roofs. We got a letter stating we will have to come up with almost 9,000 dollars or have a monthly increase of 200.00 for 60 months. Can they make us do that? Also, they are having a meeting. In this regards, what questions should be asked at that meeting? I appreciate your help and expertise.

Mister Condo replies:

T.S., owning a condominium is kind of like being a partial owner of a business. From time to time, business decisions need to be made about how to protect and maintain the business. In this case, it would appear that an insufficient amount of common fees has been collected for many years, resulting in a deficit when it came time to replace the roofs. The correct procedure would have been to have had higher monthly dues for the many years leading up to this now needed roof replacement. The Board can and must replace the roofs or they may subject unit owners to damage and worse. There is only one place where this money can come from – the unit owners. So, a special assessment has been levied to cover the cost of the roofs. You and your fellow unit owners now must decide if you can afford the one-time payment of $9,000 or if you would rather pay an extra $200 per month for 60 months, totaling $12,000 per unit. I know if it were me, I wouldn’t want to get stuck with an extra $3000 in interest for what amounts to a $9,000 loan but not all unit owners will be able to easily come up with the $9000 and I expect many will take the $200 per month option. As for what you should ask at the meeting, I would want to know what other special assessments lie ahead and how soon. Chances are if they didn’t have enough money in the Reserve Fund to pay for the roof, they might not have enough for other association-owned items. Siding for the buildings? Pool and club house? Tennis Courts? What other expenses are coming up? It is quite possible that the roofs are just the tip of the iceberg. Ultimately, you would like to see a Reserve Study and funding plan introduced to the community so as to avoid these special assessments in the future. All the best!

Another Small Condo Nightmare When Owners Can’t Afford Needed Repairs

M.L. from outside of Connecticut writes:

Dear Mister Condo,

I am in a condo association of two. We split expenses 60 (upstairs owners) 40 (me). We agreed to have a major roof repair two years ago. I lined up a HELOC to cover my share. Upstairs owners have been stalling and now tell me they don’t have the money. They want to defer until Spring (second deferral) and I don’t have confidence that they will have the money then. What are my options?

Mister Condo replies:

M.L., your options are quite limited. You have provided a prime example of what happens in a two-unit association when one owner truly can’t afford to live there. You can contact an attorney. You may be able to sue the other owner but, in my opinion, you are very likely throwing away good morning trying to get water from a stone. Your best bet is to continue to encourage this owner to live up to their commitment. Short of that, I’d consider selling to get away from this problem. Unless the other owner finds the money, you’re not likely to get that roof. That may not be a problem today but it will most certainly be a problem in the future when the roof fails. You don’t need to stick around to experience the roof failure first-hand. Good luck!

Condo Association Looks to Remove Use of Common Elements from Delinquent Unit Owner

C.S. from New London County writes:

Dear Mister Condo,

If an owner who has NOT paid Condo fees for a considerable amount of time (4yrs), can the condo association revoke the owner from parking in their assigned parking spot? Also, can the association revoke the privilege of having a storage unit?

Mister Condo replies:

C.S., typically speaking, the association may not remove any of the delinquent unit owner’s rights. In fact, if the association takes such action against the delinquent unit owner, they will very likely be sued by that unit owner. Delinquent common fee collection is separate from unit owner’s rights. There is a process that the association should be undertaking to collect this serious delinquency. That involves collection letters, demands, liens, and, ultimately, foreclosure against the unit. There are many collection firms and law firms in our state to assist the association. Do it the right way, and you’ll get your money. Do it the wrong way and the association will likely end up getting sued. Step carefully and get the money. Good luck!

How Can I Buy a Deceased Owner’s Condo?

J.S. from outside of Connecticut writes:

Dear Mister Condo,

How can I buy a deceased owner’s condo?

Mister Condo replies:

J.S., deceased owners have their property disposed of according to either their will or the probate system. You would buy this property pretty much the way you would buy any other property. The challenge may be in determining exactly who the owner of the property is. If there was a mortgage on the property, the bank holding the mortgage may be the eventual owner. If there was no mortgage and the property were left to a family member via will or probate, the new owner will eventually be known through property records and you could contact the new owner to express your interest in purchasing the unit. If there were any other lien holders on the property (the association, for instance if there were unpaid assessments or common fees) the unit could end up in their hands. Again, you would contact them and let them know of your interest in purchasing the property. It is quite possible that any of these entities will simply use a real estate agent to sell the property. If you see the “for sale” sign go up, you know what to do. Good luck!

New Condo Trustee Finds Evicting Long-Time Owner Uncomfortable

L.P. from Middlesex County writes:

Dear Mister Condo,

I am a first-time home owner. For the first 2 years I lived in my unit I tried to be active in my (small) HOA, but the main Trustee never had time for me and HOA meetings were always cancelled. When he sold his unit, he hurriedly gave me a “crash-course” on duties a week before the closing. It wasn’t until weeks after that I realized he had conned me. He left me with unpaid bills (some a year old!), angry contractors, and one unit egregiously in the hole to the HOA. After weeks of talking with my neighbors, I got them to agree to a payment plan: they agreed to pay a minimum of their balance every month for 6 months—enough time to figure something out—and after 6 months they had to pay in full every month. A year later they are still only paying the minimum and have become even more in debt to the HOA with back fees and Reserve Studies. A friend’s wife—who is a lawyer—is helping me out with the lien process, but my question is this: what should I expect? This family (a retired couple and their adult son) have lived here for 20 years and now I (this young newcomer) is going to be threatening foreclosure. We all live in the same small building, run into each other often, and share a common stairwell. I feel terrible that I’m the one that’s going to be “evicting” them, but obviously they cannot afford to live here—we have not been able to do basic, needed maintenance for years because of their finances.

Mister Condo replies:

L.P., heavy is the head that wears the crown, my friend. People who purchase into an HOA do so at their own choosing. They are aware of the fees and costs associated with owning a home, condo, or unit within an association. While you are the embodiment of the HOA as it takes action against them for defaulting on their duty to pay their fees in timely fashion, they are also the makers of their own destiny. They need only look in the mirror to see the folks responsible for their demise. In fact, it is you they should be thanking for carrying their weight as they neglected to pay their fair share over the years. Where did they think the money would come from if they didn’t pay? Did they not realize that they were in fact forcing their neighbors to pay more than their fair share because they weren’t willing or able to pay theirs? You asked what should you expect? That’s really hard to say at this point. My guess is if these folks are insolvent, they will eventually be foreclosed upon and you will sell their unit and hopefully find some new owners who will fulfill their obligation to pay their fair share of the common fees. Eventually, the association should regain financial strength and get itself back on track. That is the nature of HOAs. The HOA is a not-for-profit business, the key word being “business”. Business is conducted under the terms of business agreed to by all parties. As long as those terms are met, the business thrives. When/if a party defaults, the business protects itself by exercising the clauses that make it a business, no more, no less. You are on the right track to getting back to business. Good luck!

Paying the Price for Years of Low Condo Common Fees

A.C. from outside of Connecticut writes:

Dear Mister Condo,

I live in an 85-unit condo complex that was built in 1970. Many of our residents have lived here since the 80s. Unfortunately for us, the Reserve Study we reviewed before buying listed the HOA health as good and properly funded. The Reserve Study issued a month after our purchase brought to light a number of upcoming expenses to maintain the buildings due to age. What many of the new owners are discovering now is that for years the association kept unit dues very low and avoided large repairs until needing emergency repairs. Now they are increasing dues rapidly to help pay for aged repairs- such as replumbing of the buildings. Our dues have increased by over 50% in a few years. Dues increases and assessments are incurred based on % of ownership, but is there a legal option (perhaps through a change to by-laws) that would allow for a special assessment based on years of ownership to place some of the financial burden on those that enjoyed years of rock-bottom dues at the expense planning ahead?

Mister Condo replies:

A.C., I am sorry that you and your fellow units are left paying the bill for previous unit owners. The sweetness of low monthly fees is often replaced with the vial reality of special assessments and higher common fees for future owners. There is currently no laws that allow for associations to go back and recoup additional common fees or assessments from previous unit owners. All that you can do as an association is to buckle down, address the reality of the situation and base future common fees on a properly funded Reserve Fund for when these common elements will need replacing next time. Otherwise, you will very likely find the next generation of unit owners feeling the same way you do now when there is no money available to them to make the repairs and replacements for the common elements you are about to replace and use for decades ahead. It is a vicious cycle but, with planning and proper budgeting, it can be managed. Good luck!

Condo Unit Owner Seeks Legal Recourse for Poorly Maintained Roof

D.N. from outside of Connecticut writes:

Dear Mister Condo,

After living in my condo unit for many years, the roof recently came off during a rainstorm. The Association’s master policy is paying for the property damage which means they will put the home back to the state it was sold to me. However, do I have any legal recourse against the property management company and the board for not maintaining the roof in good order in addition to what the insurance will cover. The roof was originally scheduled for replacement in August. My roof came off in July. The state of the roof of my unit as well as the other roofs in the building unit I am in was in very poor shape. It appeared as though the roof should have been replaced or maintained quite some time ago. I was wondering if I had any recourse against either or both parties for not maintaining the property at the level it should. I have always paid my condo fee in full and feel I deserve to have my property maintained.

Mister Condo replies:

D.N., poorly maintained condos are almost always the result of “deferred maintenance”, the polite term for not collecting enough common fees to make adequate Reserve Fund contributions over the years. I am sorry that you had a such a direct impact from such a poorly maintained roof and I am glad that you have had the benefit of insurance to help you rebuild. As for your ability to seek additional damages against the association, I am doubtful. That isn’t to say you couldn’t try but the reality is no real crime was committed here. The Board is democratically elected by the unit owners like yourself and has likely changed over many times in the years of neglect involved. The Property Management company does the bidding of the Board so they are not at fault. Who exactly would you sue? The association paid to replace your roof after it failed so they fulfilled their obligation as well. I am not an attorney and offer no legal advice here. My friendly advice is to be happy that you have been made whole by insurance and that no one was injured by the failed roof. You might ask the Board what steps they are taking to start saving for the next roof now that the current one is new. My guess is your common fees need to increase 20% or more to properly reserve for future repairs. As you can imagine, that won’t be popular with unit owners who are unlikely to want to pay more today for tomorrow’s repairs. Yet, that is the right solution. Good luck!