Category Archives: Financial

Identical Square Footage But Higher Monthly Condo Common Fees

K.G. from Michigan writes:

Dear Mister Condo,

I recently found out that a same size condo as mine is being charged less per month in monthly fees. HOA indicated they charge by the square footage which are on the original plans. I reviewed the plans and the square footage is the same. I have requested in writing, why I am paying a higher price. HOA has not responded. I don’t know where to go from here. Thank you.

Mister Condo replies:

K.G., while square footage is often taken into consideration when determining common fee schedules, it is not necessarily the only factor. When the common fee schedule was created by the developer, other factors such as view, preferred location within the community, end-unit, first-floor unit, and many other items may have been taken into consideration. Whatever the reason, a common fee schedule was developed and a fee percentage was assigned to each unit. Those fees are the gospel of how expenses are divvied up within the association and each unit has an obligation to pay their fees based on that schedule. To simply state that square footage is the only determining factor when common fees were adopted is very unlikely true. You should review the condo governing documents to review how the fees are determined. You will likely find out that your unit was assigned a higher percentage than your similarly sized neighbor’s unit. Perhaps your unit is on a higher floor or has a better view? Whatever the reason, unless you find that you have been charged incorrectly, the common fee schedule stands. All the best!

How Many Month’s Common Fees Can Be Collected in Foreclosure?

B.O. from Fairfield County writes:

Dear Mister Condo,

What is the maximum months of common fees an association can collect in a bank foreclosure? What is the maximum an association can collect when they foreclose?

Mister Condo replies:

B.O., the answer is not as clear as you might expect. The actions taken by the association in advance of the foreclosure can have an effect on the outcome. For that reason alone, many associations turn to either a collections expert or an attorney for assistance in collecting as much as they possibly can. The other variable is the ability of the owner being foreclosed upon to pay. If they file a bankruptcy at the right time, the debt to the association may also be included in the discharge of debt, leaving the association with a claim for which they cannot collect. In Connecticut, there are various liens and lien procedure that seem to have the best yield. There is an evergreen lien that, in theory, ensures the association will collect ALL of the past due fees when the unit is finally sold or auctioned off at foreclosure. This type of lien is filed repeatedly until the unit is liquidated. A more common lien is a 6-month lien. Filed once, the association collects up to 6 months of owed fees and reasonable collection costs. This is quite common when a mortgage holder is involved in initiating the foreclosure action and the association “goes along” with the bank. The bottom line is that banks typically initiate foreclosure far more often than associations do. However, that is not always the case and in a soft real estate market, the bank has little incentive to take over the unit (and the common fee payments and liability of owning the unit) and the association needs to think creatively before foreclosing and finding there is little or no money left for them when the foreclosure is over. I think the best policy is to work with a collection professional or association attorney to make sure the association is doing all that it can to protect itself from the loss of income. The good news is that the vast majority of unit owners pay their fees on time and that the drastic measure of foreclosure only surfaces when all else has failed. All the best!

Condo Owner Excused from Paying Special Assessment

M.A. from outside of Connecticut writes:

Dear Mister Condo,

When is an owner excused from paying their share of a special assessment?

Mister Condo replies:

M.A., as far as I know, an owner is NEVER excused from paying a Special Assessment once it is levied by the Board. The whole point of a Special Assessment is to collect monies needed by the association from ALL of the association members. As an example, think of a 100-unit association where every unit is assessed 1% as their percentage of unit ownership. If the Board needed to levy an assessment of $100,000 to pay for parking lot repairs, the Special Assessment would equate to all unit owners paying $1000. If the Board were to excuse one or more owners from paying their share of the Special Assessment, they would come up short of the $100,000 needed to repair the parking lot. And what about all of the unit owners who did pay their share of the Special Assessment? I know I wouldn’t be too happy to learn that one of my fellow unit owners didn’t have to pay. In fact, I would sue the association for making an improper assessment. Unless your governing documents specify a situation where a unit owner is excused from paying a Special Assessment (I have never heard of one), there is no excusing of payment of a Special Assessment. All the best!

Condo Board Refuses to Address Major Safety Concern of Unit Owner

J.J. from Middlesex County writes:

Dear Mister Condo,

I live in a townhouse complex of 46 units. There are 7 board members who seem to play favorites and pick and choose who they will and will not respond to. There are 2 basements attached to owner units, where the association actually owns half of the basement and the exterior entrance to each. One of these basements is next to mine, and the cement stairs leading down to it have been collapsing for years with only talks of repairs. Now, because of the poor stability of the cement, the metal railing is no longer stable either. It’s come apart and very wobbly. I have a small child as does the renter that lived in the unit this is attached to. I wrote an email with my concerns asking that the railing be addressed. If a child were to lean on that railing they could absolutely fall in and the drop is high enough I fear it could be fatal. As usual I’ve not gotten any acknowledgement at all that my email was even received. What would be my next step in getting them to address something so dangerous?

Mister Condo replies:

J.J., I am sorry that your Board has allowed this common asset to fall into such disrepair that a child fatality could occur if the element fails. I would say that an email isn’t getting the job done. You mentioned 7 Board Members but no Property Manager. If you have a Property Manager, you should bring it to their attention, if not you need to address the Board in another way that they cannot ignore. Pictures and documentation should do the trick, presented in a letter to the Board (not an email). Send a copy to the local Building Inspector as well and cc: the Board that you have done so. You should also consider attending the next Board meeting (that is your right). Address this concern face to face with the Board. In other words, be a squeaky wheel! If they still don’t respond, you have two choices. Run for the Board yourself or elect better leaders that will address the issue. The other choice is to just accept that the Board is a group of self-serving people who aren’t going to address your issues until there is an injury and a lawsuit. That would be truly unfortunate. Good luck!

HOA Turns Off Water on 5-Day Delinquent Owner

B.A. from outside of Connecticut writes:

Dear Mister Condo,

I’m wondering if our Property Management really has a right to authorize disconnection of water in my unit due to unpaid HOA dues (only 5 days overdue to be exact) even if I don’t have an outstanding balance from my water provider. I can say that this is the first time that my HOA dues was paid late because I’ve been paying my dues always 1 year in advance. Hoping for your advice. Thanks

Mister Condo replies:

B.A., I am sorry that your HOA took such a drastic measure as turning off your access to water after you were only 5 days overdue with your payment after having a great track record for so many years. The reality is that every association has its own policies for such things and it would appear that yours is quite strict. As to whether or not they had the right to do so is a legal question best posed to an attorney in your area. My guess is that they tool lawful action and that you aren’t the only unit owner who has had this happen. You can always make a quick call to an attorney to confirm if your rights were abused. Other than that, my advice is to set up auto-payment or prepay as you have done in the past. Common fees are the lifeblood of any association. The association is right to do all that they can to assure they are paid in timely fashion by all unit owners. All the best!

Condo Board Issuing Fines without Hearings

A.F. from Hartford County writes:

Dear Mister Condo,

Can a board fine a unit owner without a hearing?

Mister Condo replies:

A.F., typically, the Board cannot simply fine a unit owner without due process which typically involves a written notice of violation and a summons to appear before the Board to explain the reasons for the violation. After hearing the unit owner’s rebuttal or explanation, the Board is then free to take whatever disciplinary action that is called for in the governance documents, which is typically a fine. There are rare exceptions but the Common Interest Ownership Act (CIOA) does give unit owners very specific rights that many times supersede the association’s own governance documents. If you fell the Board is improperly doling out fines, ask them if they are following the state’s laws in doing so. If not, they should change their ways or risk being sued by a homeowner who will claim they had their rights violated. All the best!

A Top 10 Bad Condo Story! 80% of Unit Owners Don’t Pay Fees!

M.D. from New Jersey writes:

Dear Mister Condo,

How can I get out of a 100-unit condo development where only 20 units pay maintenance and road dues? The association painted over rotten wood siding 4 years ago! They cut what little grass there is every two weeks that’s about the extent of the maintenance for last 10 years. Retaining walls falling down, parking lots are sliding in to the building, the roof leaks with ice build-up and more. Help!

Mister Condo replies:

M.D., I am so sorry for your problems at this poorly run condo association. While I’d like to think I have “head it all” when it comes to condo craziness, clearly you have provided a Top 10 Bad Condo story. Obviously, you want to get out of this poorly run association before the units are condemned or deemed not worthy to sell. The good news is that there is “an ass for every seat” and if you price it right, you just might be able to cut your losses and buy into a properly run association. Without the benefit of a crystal ball, I will make a few predictions about your current association. With 80% of unit owners not paying their fees, the association will collapse. Vendors who are owed money will sue the association at some point. Even unit owners such as yourself could sue the association for not fulfilling its obligation to maintain the common elements. Even one lawsuit could bankrupt the association. If the association is to survive, it would likely be due to receivership (the court appoints an attorney or property management firm to run the association) at which time special assessments would likely be levied and common fees raised significantly. The 80% of unit owners who aren’t paying fees would likely default and eventually lose their homes through foreclosure. The bottom line is that unless you really love your unit and are willing to live through the chaos and expense of such an action, it just isn’t worth sticking around to see how it plays out. If I were you, I would sell as quickly as possible, even at a loss if I had to, and make sure the next association you buy in to is properly run and funded. All the best!

Sinking Floor Troubles Condo Owner

D.G. from outside of Connecticut writes:

Dear Mister Condo,

If I hire a structure engineer to do a report and it is in fact the association to cover damage of sinking floor will the association have to pay me back for the cost of the report?

Mister Condo replies:

D.G., I am sorry you find yourself with a sinking floor. I assume you have asked the association to make the repair and they are claiming that it is not their responsibility so you now find yourself needing to take further action to get rid of the sinking floor. If you expect the association to pay for anything – the cost of the report, the damage caused, and, ultimately, the actual repair, you will very likely need to sue the association. I am not an attorney and offer no legal advice here but my friendly advice would be for you to speak with a competent local attorney and see what your rights are. Since the association has already refused to make the repair and you will likely be suing them, I don’t see why you couldn’t include the cost of the report in your suit. However, if you are unsuccessful in your lawsuit, you might not be able to recover any money, including the cost of the engineering report. Speak with an attorney first and then follow the advice on how to proceed. I sure hope you get your sinking floor repaired one way or another. Good luck! 

Condo Owners Question Developer’s Handling of Tax Bills

F.B. from Massachusetts writes:

Dear Mister Condo,

We moved into a newly built condo in MA last year. We have not received a town tax bill and the town said that the builder filed the master deed too late for the town to assess the individual properties. The town said that the bills will be ready next year. Is the builder liable for retroactive taxes or are the condo owners? Also, if the builder pays the town the taxes, can he try to collect the taxes from the home owners? We are concerned if the builder pays the taxes and we reimburse him then we will not get tax benefit.

Mister Condo replies:

F.B., congratulations to you and your fellow unit owners on your new condos. I am afraid that I am neither an expert is Massachusetts or your town’s tax code and rules so I am not the proper person to answer this question. As a newly formed condominium association, you should have an attorney representing the homeowners. This is separate from any attorney representing the developer. You need to ask this question of the association’s attorney and/or accountant who should be familiar with your local tax code and practices. You make a valid point about who you are paying taxes to. If you pay the municipality directly, you can show where you paid real estate taxes which can be itemized and claimed on your own tax return whereas a payment to the developer might not satisfy the requirement for using the tax payment as a personalized deduction. I have no idea about the builder’s liability because it would really depend who the owner of the property was when the tax burden was incurred. You should really get some local expert advice to answer these questions. Good luck!

Changing the Condo Common Fee Structure

E.G. from outside of Connecticut writes:

Dear Mister Condo,

What are the ways to realign the condo fees in a condominium building?

Mister Condo replies:

E.G., it is very difficult to change the common fees in most condominium associations, and for good reason. The fees are established when the condominium is formed as part of the condominium’s governance documents. When units are purchased and mortgages are created for individual units, this fee structure is part and parcel of how a unit owner buys into the association. They effectively become a shareholder in the corporation. There are many different formulas for how these fees are arrived at. The most common is the percentage of unit ownership formula. Everyone pays a share of the fees based on their percentage of ownership in the association. However, there are other factors that can contribute to these formulas, including but not limited to enhanced desirability of a unit for factors such as water views, penthouse locations, garage parking, etc.. The bottom line is that the fees are part and parcel of the corporation itself and changing them typically requires 100% of unit owners voting in favor to do so. If you check your condo documents and state law, you will have a better feel for if and how the change can be made. Personally, I advise against it. Everyone who purchased into the association knew what their share of the common fees were before they made the decision to purchase. Changing these fees after the fact is patently unfair and likely unachievable even if allowed by law. All the best!