Category Archives: Financial

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!

Condo Unit Owner Doesn’t Want to Pay Assessment to Cover Lawsuit Costs

C.O. from outside of Connecticut writes:

Dear Mister Condo,

One owner is suing the condo so now the condo wants each owner to pay $500 to pay the legal fees to defend against the suit. I have no problem if it was for something to improve the condo that the budget couldn’t cover but not legal fees. They have also threatened us with a collection agency if we do not pay. We live pay check to pay check as it is and do not have this extra money. What is your opinion?

Mister Condo replies:

C.O., I am sorry for your financial worries. Lawsuits against the association are serious business and the Board is right to hire an attorney to defend against the lawsuit. As a unit owner, you are a member of the corporation and have a vested interest in the outcome of the lawsuit. If the association decided to not defend itself and the plaintiff won the suit, the association could find itself owing a great deal of money to the unit owner bringing the suit. The end result of that would be an assessment to unit owners equal to the amount of the award. You could end up paying much more by not paying to defend against the suit. The bottom line is that you are the association and you are being sued. You want to defend yourself and the legal fees incurred are part of being in the association. You must pay them or the association will act against you with full legal authority to do so. My opinion is that you should pay these fees and keep a close eye on the lawsuit. Hopefully, the money invested in the defense fees saves you from having to pay far more. Good luck!

Single Condo Unit Owner Prevents Maintenance for Other Owners

W.W. from outside of Connecticut writes:

Dear Mister Condo,

I live in a 4-unit condo, where the unit owners are the 4 trustees. We are dysfunctional and have hired a Property Manager to do our bookkeeping and such. The Property Manager has recommended several maintenance issues be addressed since he was hired in 2013, but since 1 condo has >25% beneficiary interest and at least 75% beneficiary interest is needed to make repairs, we cannot make any maintenance repairs on the (historic) building. The deed and bylaws are generic and since the market where I live is going up, none of the repairs adversely affect the value of the property but are sorely needed to maintain the property and its safety (railings on steps, repairing loose brickwork, repointing the exterior brick; cleaning the gutters so the rain doesn’t rot out the window sills; replacing the roof). What do we do?

Mister Condo replies:

W.W., small condos like yours face problems like this far too often. The governing documents have placed the other three owners, including yourself, at the mercy of a single unit owner. Short of buying the recalcitrant unit owner out of the building, you can’t do anything. You say the market is good. Sounds like a good time to sell and buy into a building where all of these modification and maintenance items have been addressed. Unless this hold-out is heading out, nothing is likely to change. Good luck!

Condo Unit Owner’s Right to Association’s Financial Transparency

J.R. from Hartford County writes:

Dear Mister Condo,

What rights do I have for convenient financial transparency from our board of directors?

Mister Condo replies:

J.R., financial transparency is typically outlined in the association’s governance documents. Additionally, in Connecticut, the Common Interest Ownership Act (CIOA) offers unit owners additional transparency if the governance documents don’t offer the same or better. Of course, your definition of financial transparency may not be exactly what you are looking for. Things like the Annual Budget are readily available and should be presented to all unit owners at the Annual Meeting. Detailed items, such as invoices, bids, etc. may require some additional work on your part to get and the association can charge you a fee for such requested documents. The transparency is still there but it is not necessarily free. Unit owners are part of a corporation. Corporations need to keep records and those records can be inspected by shareholders (unit owners). Those are your rights. If they are violated, you may have a case against your association. Good luck!

Condo Owner Flooded Twice by Vacant Unit Above

D.B. from outside of Connecticut writes:

Dear Mister Condo,

Our 2-level condo was flooded last week for the second time in 17 months by a bank-owned unit above ours. The first time the above unit was unfinished and not winterized; a pipe burst, flooded us below and we were out 47 days for repair. This time the bank owner’s subcontractor broke a sprinkler head, resulting in more damage than last time. What is our legal status with owner and with subcontractor? Settlement? Lawsuit? Other remedies? It will be repaired but we will be out an indefinite time.

Mister Condo replies:

D.B., I am so sorry for the double whammy you have experienced. I can’t even imagine the heartache and inconvenience these back-to-back disasters have caused you. Unfortunately, the nature of having units stacked on top of each other creates the possibility for exactly the types of problems you have experienced. The good news is that insurance covers most of the loss. The bad news is that lawsuits are typically only used for your “out-of-pocket” expense. They rarely cover paying you back for your inconvenience and time. I don’t think I see the basis for a lawsuit or settlement based on what you have shared with me. However, I am not an attorney so I offer no legal advice in this column. If you think you are entitled to damages above and beyond what has been offered, you should seek the advice of a local attorney who can best guide you. I wish you dryness and a comfortable living space moving forward. Good luck!

Board Attempts to Reassign Limited Common Element Responsibility to Unit Owners

A.F. from outside of Connecticut writes:

Dear Mister Condo,

On the limited common area behind my home, a tall retaining wall runs behind 4 of the 48 cottages in our condo development. The Board of our POA wants to reassign responsibility for a portion of that wall to each of us. Two problems: it is a retaining wall, which is a structural support for our homes, plus my insurance agent says that homeowners and liability policies sold to condo owns do NOT cover any thing in or on limited common or common areas. Can the board assign responsibility for something that homeowners cannot insure for?

Mister Condo replies:

A.F., the Board can try and you can fight back with a lawsuit if necessary. While I have no particular knowledge of your governing documents or your state’s laws on common interest real estate, I sincerely doubt the Board can legally reassign any common element, limited or otherwise, to an individual or group of individual unit owners. Such a change, if possible, would likely require a supermajority of unit owners to agree and would basically require a rewriting of the incorporation and governing documents. Neither of these is easy and would involve the services of an attorney specialized in common interest communities. I offer no legal advice in this column but I would strongly suggest you speak with a locally qualified attorney to seek legal advice should the Board decide to push through this measure. All the best!

Rats in the Condo Attic; Rats on the Condo Board!

J.S. from California writes:

Dear Mister Condo,

I live in a 100+ unit condominium development in California. My question is whether the current board is under any obligation to correct mistakes made by a past board? Specifically, a past board denied my request to do work clearly in the common area as defined in our CC & R’s. That area is the attic above our unit where there was significant rat infestation. The board authorized the pest control company that we have on annual contract to close out all the openings allowing the rats into the attic and to remove all dead rats and rat traps. The board refused to remove the fouled attic insulation, clean the attic and replace the insulation. The local county Vector Control District recommended the clean-up and insulation replacement to protect us and our downstairs neighbor (there is a fresh air make-up duct to her unit from our attic) from possible contamination of virus, etc.. Our general contractor (we were having a lot of remodeling done including plumbing, electric and HVAC all of which required workers in the attic space) refused to begin the remodeling until the attic was properly cleaned to protect his workers. After finding out much more about the past boards’ and current boards’ position on repairing damage in units (they have been paying to restore, repair, replace damaged items from water leaks even if those items are in the “unit” and not contained in the common area, an act specifically against rules in our CC & R’s) I resubmitted a request reimbursement for the cost to clean out the attic and replace the insulation which I had done at my cost after the past board had denied the request to pay for the work. The current board is waffling on whether to reimburse me or not fearing that they should not open a can of worms and reverse a previous board. Doesn’t the fact that we are a California corporation require the current board to correct a past board’s mistake when that mistake is brought to their attention? Doesn’t the corporate responsibility to act in accordance with the CC & R’s continue regardless of which board is in place? Thank you.

Mister Condo replies:

J.S., I am sorry for all of your problems. Rat infestations and the resulting potential for hazardous conditions is no laughing matter and the failure of the previous boards to take corrective action is appalling. However, the sins of the father are not necessarily vested upon the son in the form of the current Board. You should have sued the association for not taking the proper action back when the infestation and resulting damage was going on. You were not authorized by the Board to pay for the attic cleaning and insulation replacement. In fact, since you do not own that space, you really shouldn’t have done that. That being said, I would have done the same thing under those conditions rather than risk my own health due to an incompetent Board. So where does that leave you now? Obviously, the good news is that you have remediated the damage and are living in a healthy environment. You have asked the Board to reimburse you for the work and while I agree with you that they should, they are correct in that it sets a dangerous precedent of having unit owners handle repairs that the Board is responsible for and then obligating the Board to reimburse the unit owner for the work. Quite simply, that is not how things work in a condo. When common elements are damaged, the association needs to make the repair, putting them in control of hiring the contractor, negotiating terms, etc. You usurped that process when you took care of the problem on your own. Had a previous Board authorized your action, then it would be as simple as you submitting your receipts for reimbursement. Instead of asking permission, you now need to beg forgiveness. The Board is under no obligation that I am aware of to pay you back so ask politely. If the dollar amount is large enough, you might wish to speak to an attorney to see if it is worth pursuing. Otherwise, see what the Board does, hope for the best, and be happy that you have a rodent and disease-free living space. All the best!

Leaking Toilet Causes Condo Water Bill to Triple!

J.C. from outside of Connecticut writes:

Dear Mister Condo,

Our condo association consists of 12 units that share a common water meter. Earlier this year we noticed that our water bill had suddenly more than tripled, and an inspection of each unit by the board determined that the cause was a constantly running toilet in one of the units (the continually-spinning water meter usage indicator stopped on a dime the moment that the water supply to that toilet was turned off; the toilet was fixed and our water bills subsequently returned to normal). Based on a review of our prior water usage history, we estimated that approximately 200,000 gallons of water was wasted at an excess cost of $1,500, from the time the toilet began running until it was repaired. Our board proposed a 50/50 split of this added expense with the unit owner of the broken toilet (the unit was occupied at the time by college students who likely never reported the toilet problem to their landlord), to which the unit owner tersely replied: “Not going to happen.” Is the condo association within its rights to demand that the unit owner cough up an additional $750 beyond regular monthly assessments to cover half of the excess water charged caused by the constantly running toilet in their unit?

Mister Condo replies:

J.C., the answer is “it depends” but most likely “no”. What it depends upon is the wording of the governance documents. If water is supplied as part of the common fees and there is no verbiage assessing penalties or expense to individual unit owners for excess water usage then the unit owner was right to refuse the charges. Also, there is an issue of documentation. Since your water is all supplied on one meter, you cannot say with any accuracy that all of the excess water was used by this one unit. Maybe another unit owner turned on a faucet and let it run during the same period of time. How would you know? How could you prove all of this water was consumed by this particular unit owner? It is unfortunate that the association has incurred this additional expense. However, the only way to prevent such an issue in the future is to submeter each unit’s water consumption (involving an expense of submeters) and also revising your documents to read that each owner is responsible for his/her water consumption. The local water company would bill the association and the association would then bill the individual unit owners. Short of that, the unit owner is correct in denying the charge. Good luck!

Condo Owners Reluctant to Pay Proper Common Fees

K.I. from New Haven County writes:

Dear Mister Condo,

I serve as board president for a small association. The Treasurer and I are the only unit owners who have any interest in serving in more than name only. Despite our best efforts, we can only seem to get the unit reps together annually to discuss business. For the past few years he and I have been warning everyone that due to inflation, our expenses are surpassing our income. We have tried raising monthly dues, but according to our by-law, raising dues and levying of non-emergency assessments must be passed by majority, so we’ve been unsuccessful. Because of this, we have been unable to allocate funds to do upkeep. The unit that is the most vocal about status quo reported a water stain that will certainly lead to a leak. The treasurer and I would very much like to address this…but we don’t have the money because we’re being out-voted on raising dues and budgeting future assessments into them. Once there IS a leak we can say this is an emergency assessment and levy it, but the unit that reported it is threatening legal action against us for not maintaining the building unless we fix it post-haste. Because we are a small association, we have been unable to find a property manager that will take us on or that we can afford, so we don’t have access to a lawyer. We’ve called around, but have been unable to find a lawyer that will even see us for a consultation! Any advice?

Mister Condo replies:

K.I., I am sorry for your situation. Unfortunately, you are seeing the direct results of what happens when unit owners’ apathy reaches a dangerous level. There are some things you can do but you will likely get pushback from unit owners and even the uninterested Board Members. A lawsuit from an upset unit owner will get their attention despite your best efforts to avoid that scenario. The emergency repair will also cause the immediate problem to be fixed but will not solve the long-term issue of inadequate Reserve Funds and even general maintenance funds. The reality of the situation is that your common fees should probably be at least twice what they are right now but, as you know, unit owners will fight you tooth and nail if you raise the fees that much. Having money for a property manager and an attorney are all part of collecting adequate common fees. Until the fees are raised, the problems will persist. If it were me, I’d hit the road while the units still have some value. If you wish to stay and fight, you can cite governance and legal (Connecticut State Law) requirements to adequately collect Reserves as part of the monthly common fees. It will take years to correct but with diligence, I do believe you can turn the association around. The alternative is catastrophic financial failure, which will lead to the association going under and owner losing their homes. I hope it doesn’t come to that. Good luck!

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!