Tag Archives: Assessments

Unapproved Remodel to Upstairs Condo Damages Downstairs Unit

L.S. from outside of Connecticut writes:

Dear Mister Condo,

The question I have is this, I live in a condo that has 4 units per bldg. I own mine. These condos were built in the late 50’s maybe early 60’s. Unfortunately, there is an HOA fee of 150 dollars a month and the outside of the buildings look horrible. They really need to be painted and new front and rear doors placed. The front porch is falling apart. The condos were not built like the newer ones are. Someone purchased the upstairs condo and decided that they would remodel the whole condo. There was a wall removed and other major repairs without a permit that has caused damage to my condo. I spoke to a contractor who looked at the damage and informed me that if we were to try to fix it, it would cause more damage. The upstairs condo would receive damage also. I am just wondering who should pay for the damage. The owner knows that there were issues and he wanted his handy man who caused the damage and himself to look at it. I am not sure what good that would do. Should I file a claim with my insurance company and let them fight it out or is there another way to deal with this? Am I going to be stuck with a huge bill?

Mister Condo replies:

L.S., you certainly have a lot going on inside your 4-unit building. Let me address each item separately. First up, the HOA isn’t maintaining the property as they should. There is no reason for painting to go undone other than there is no money in the Reserve Fund for the project. You mention a fee of $150. If that fee isn’t enough to cover operating expenses and set aside money for routine maintenance like painting and door replacement, there will need to be a Special Assessment and/or an increase to common fees. Neither option is popular but that is the only way to get the association back on track so it can fulfill its duty to maintain the building exteriors.

The remodeling project is another issue entirely. It sounds like the upstairs unit owner did some unauthorized and unpermitted work on their unit causing damage to your unit. It’s time to speak with an attorney about suing the unit owner for the damage. You should file a claim with your insurance if you have suffered financial damage worth filing a claim over. However, the fault is clearly with the unit owner who did the unauthorized remodel. You governance documents likely spell out what types of repairs and improvements can be made to unit interiors. If they knocked down a supporting wall, you could be looking at a very expensive repair, not to mention the potential danger you are in. I would want to get this taken care of immediately. If they are amenable to correcting the problem at their expense, you may not need to sue but, in my experience, once the dollars start adding up, a lawsuit is almost inevitable. You should be able to recover your damages though and I am hopeful that your upstairs neighbor will do the right thing. Good luck!

Withholding Repairs to Delinquent Condo Unit Owner

M.B. from outside of Connecticut writes:

Dear Mister Condo,

Can a condo board withhold unit repairs to an owner who is delinquent?

Mister Condo replies:

M.B., that is a loaded question with lots of possible answers! Since I am not an attorney, I must recommend that you speak with a qualified community association attorney from your area to determine if withholding repairs is within the association’s rights. Typically, my answer would be that the association has a duty to upkeep and maintain all common elements as they are property of the association and not the individual unit owners. The association’s governance documents clearly state what is the association’s duty to maintain. This would usually include parking lots, landscaping, amenities like pools, sidewalks, roofs and building exteriors. Now, if a unit owner became delinquent in their common fees and needed a roof replaced over their unit, the association would still have to maintain that roof because they own it, not the individual unit owner. Failure to maintain a common element would be akin to cutting off your nose to spite your face. It will still need to be done whether the unit owner living under that roof is delinquent or not. I think the more important question here is what steps the association CAN take to either bring this unit owner up to date with fees or force a foreclosure where by the association evicts the unit owner, and, hopefully, replaces the unit owner with a dues-paying owner. If you haven’t already done so, consult with your association’s attorney and make sure the proper steps are being taken. Good luck!

Condo Operating Expense Versus Reserve Charge

J.N. from Fairfield County writes:

Dear Mister Condo,

When is an operating expense really a Reserve Charge?

Mister Condo replies:

J.N., typically speaking, operating expenses are those expenses which are incurred during the regular course of business during a calendar year for the association. There are exceptions, of course, as there are some expenses that recur at intervals outside of the calendar year that are still operational in nature. Reserve Charges, on the other hand, are quite specifically collected and deposited in the Reserve Fund. Additionally, many associations have specific Reserve Fund components, meaning funds are collected in Reserve for the roof or the parking lot or the buildings or the pool and tennis courts, and so on. These funds should not be mingled with Operating Funds, which further help to identify them as Reserve Charges. If your association is doing something else when collecting Reserve Charges (paying insurance bills or management fees, for instance) then they are not handling Reserve Charges correctly and could find their use of these funds questioned by a concerned unit owner like you. Hope that helps. Good luck!

Condo Board’s Ability to Make Capital Improvements Without Unit Owner Vote

R.J. from outside of Connecticut writes:

Dear Mister Condo,

I am living in a condo where the condo board has decided that we’re getting the decks enlarged. They claim “everyone wants this done,” but no such formal vote of the unit owners was ever taken. I know that a number of unit owners do not want larger decks and most certainly do not want to pay for them. Our responses fall on deaf ears.

First, we can push for an actual unit owner vote on this matter and may need to hire an attorney to make sure such a vote is taken. BUT, since this is not a matter of “maintenance,” as in necessary repairs, nor are the back decks uniform now by any means (because of the topography of the land) should those of us who do not want larger decks be forced to have them and forced to pay upwards of $10,000 each for them? Even if they get a majority vote, this does not seem fair, nor is it in the bylaws that an optional aesthetic improvement must be paid for by everyone – as it does for repairs or common ground improvements.

Mister Condo replies:

R.J., this is an interesting problem. Board Members are elected to office by democratic election of unit owners. Yet, they are taking action that a number of unit owners do not want taken. The real question here is: What do the majority of unit owners want and what do your by-laws state about this type of improvement? Depending on your by-laws and any state or local law dealing with common interest communities, the Board is likely within its rights to consider this deck enlargement program. They may even have the ability to enact it, again providing the action isn’t in violation of the condo documents. However, they do have to follow all protocols as outlined in the documents or, as you correctly state, disgruntled unit owners will hire an attorney to bring action against the Board. Many associations would require a vote of the unit owners for such an improvement because the Board is considering such a major expense. Replacing worn common elements is one thing; creating new common elements is quite another. You are on the path to getting the right action. Also, consider getting some like-minded folks on the Board during the next election cycle. If it can’t wait, and you think you have the votes to hold a recall election, you could attempt to recall and replace these Board members. However, if the majority of unit owners are in agreement with the deck expansion and improvement project, your efforts may generate little less than a thorn in the side of the Board as they continue to push the project through. Good luck!

Can the Condo Association Issue Fines and Fees for Unpaid Condo Fines and Fees?

M.D. from Illinois writes:

Dear Mister Condo,

Can the Association impose fines for unpaid late fees, fines, etc., if they are not paid within a certain time period? For example, we have a few owners who have refused to pay late fees and fines, going back several months. Association wants to come up with a rule to impose a $25 fine per month to all individuals who don’t pay their dues (late fees, fines, etc.) within 3 months.

Mister Condo replies:

M.D., as long as the condo documents support the fines being levied and there are no state or local laws to the contrary, the association is allowed to collect fees and fines when monies owed are not paid on a timely fashion. In fact, the whole concept of fines and fees is the only power the association has to protect itself from non-payment of fees it is owed, short of taking very costly legal action against any delinquent unit owner. The motivation to the unit owner is to not get himself or herself in arrears with the association. Common fees are the lifeblood of any association. All of the common expenses are paid from these fees. When they don’t materialize on time, associations ca find themselves strapped for operating cash to pay the bills of the association. These bills are for services that directly, or indirectly benefit the unit owners. Why should they be allowed to not pay their fair share in the same timely fashion that all of the other unit owners are paying. By paying late, they are actually creating a burden on their fellow unit owners. The fine system is designed to keep the payments coming. If those payments are tardy, even late fees and fines, the association needs to continue to motivate them to pay on time. The fine system allows them to do just that. Honestly, these unit owners simply need to get caught up and not fall behind again. All the best!

Timing of Special Assessment Hampers Condo Unit Sale

W.L. from outside of Connecticut writes:

Dear Mister Condo,

My condo is under contract and set to close very soon. I just received a notice about a week ago of a meeting of the owners to approve/disapprove an assessment of $750,000 ($7,500/unit). I immediately notified the buyer’s agent and invited the buyer to attend the meeting. The assessment was approved last night (the buyer was out of town… supposedly). Is the buyer obligated to close? Note: I am willing to finance the $7,500 amortized over 3 years. Note 2: Closing attorney says buyer is obligated to close because he will ‘enjoy’ all the benefits of the expenditure.

Mister Condo replies:

W.L., congratulations on selling your unit. Special Assessments are ugly for so many reasons. The timing of this one as you are selling your unit is almost calamitous. The liability for the assessment is with the unit owner of record when the assessment was levied. So, depending on when the closing date and time and transfer of deed for your unit occurred, the assessment is on the unit owner of record at that time. The purchase and sale agreement you have with the new owner is a separate entity and your attorney can best advise you on what legal options you have if the buyer breaks that agreement, for whatever reason. So, in the simplest of terms, look at the date and time the assessment was levied. Look at who owned the unit at the date and time of the assessment. That is who owns the assessment. As for offering to finance the assessment for the new buyer, that is a decision you need to make. Personally, I would not offer that option as it isn’t your problem, but very well could be if the unit owner defaults on the repayment. Then you will need your attorney for a whole other reason. Good luck!

Condo Executive Board Passes Special Assessment with Meeting of Unit Owners

S.R. from Fairfield County writes:

Dear Mister Condo,

Our Executive Board has imposed an assessment on the unit owners without calling for an open meeting to discuss the reasons for the assessment. Cited is the CT statute that allows the board to impose the assessment without an owner’s meeting if the assessment is less than 15% of the annual budget. However, the state statute, in its language, gives precedence to the declaration and by-laws of the association and makes no mention of the 15% rule but requires an open owner’s meeting and a vote to approve the assessment. Does the declaration and by-laws have precedence in this matter?

Mister Condo replies:

S.R., it sounded to me like there may have been a misinterpretation of the statute by the Board if the declaration requires an open owner’s meeting. But since I am not an attorney, I checked with one of my friends who specializes in community association law in our state. Here is what the attorney had to offer:

“Section 47-261e(b) of the Common Interest Ownership Act says that the executive board may propose a special assessment by giving a summary of it to all unit owners within 30 days after the board adopts it.  The statute says that, “unless the declaration or bylaws otherwise provide,” the special assessment is deemed automatically approved if it does not exceed 15% of the association’s last approved budget for that calendar year when combined with all other special and emergency assessments for the same calendar year.  Only if those amounts would exceed the 15% trigger does the statute require that a meeting of the unit owners be called (and even then, it still passes automatically unless a majority of all of the units vote to reject it).  So, this is a “default” statute that explains how to adopt a special assessment when the declaration and bylaws do not say otherwise.  A community’s declaration or bylaws might raise or lower the 15% trigger, or require some other vote threshold for owner approval, or impose a different procedure entirely.  Many community documents do not mention the procedure for approving special assessments (as opposed to annual budgets), and when they are silent, the statutory procedure will control.  But if your community’s declaration or bylaws do say something different from the statute, such as by requiring unit owner approval even for smaller special assessments, then yes, those documents will supersede the statute on this issue.”

Based on what you have told me here, S.R., I am inclined to think that the Board may have made an error in their methodology. Of course, the bottom line is how much this money was needed and what it is being used for. If you feel strongly that the special assessment was unfair, you may have grounds to challenge it or it may be as simple as bringing this article to the attention of the Board so they don’t make the same mistake in the future. Either way, I wish you all the best!

Condo Owner in Arrears Seeks to Purchase Second Unit

R.D. from outside of Connecticut writes:

Dear Mister Condo,

We have a small commercial condo complex. A current unit owner is in arrears for over $4000. He is trying to purchase a unit that is for sale. Can we block him from making the purchase until his other unit fees are paid in full?

Mister Condo replies:

R.D., I am not aware of any law that would prohibit this unit owner from purchasing a second unit in your association just because he or she has fallen behind in common fees or assessments due to the association. Unless your by-laws have such wording (doubtful), my guess is that the association has little to say about who can purchase into the association. The larger question is how has this person gotten so far into arrears and what is the association doing to collect its monies? Certainly, by this point, all efforts should be made to collect the association’s dues, up to and including the use of a professional collection service and/or attorney to bring suit against the unit owner. I find it unlikely that a unit owner that far in arrears would have the credit to secure a mortgage for a new purchase but, again, that really isn’t the concern of the association. Collecting the fees due that are in arrears should be the priority. I can only imagine the burden it puts on a small association like yours. Good luck!

What is a Condo 13th Month Assessment?

L.L. from Massachusetts writes:

Dear Mister Condo,

We just had a 13th month fee. Then a fee increase and then last year another 13th month fee. At our June meeting, out self-managed trustees explained they will be seeking a loan for $125,000.00 to repair the parking lot.  Do you think this association has any financial problems?

Mister Condo replies:

L.L., your association has more than financial problems! For my readers who aren’t familiar with the term “13th month fee”, all me to give a quick tutorial. A 13th month fee is an extra month’s worth of common fees some associations have adopted as a way to build up their Reserve Fund. It amounts to a little over 8% of the annual common fees going to the Reserve Fund and it was devised by some clever-thinking folks as a fairly painless way to build Reserve Fund contributions. While I acknowledge the cleverness of the tactic, I neither condone nor recommend its use. For starters, it isn’t a part of the condo’s governance documents. Technically, it is a special assessment which has its own set of rules for levying and enforcing. It also masks an underlying problem of financial instability within the association. In other words, it is a band aid for a wound that requires stitches. Eventually, this wound will burst and be a much larger problem for the association.

The best plan for your association would be to have a straight talk conversation about the association’s need for a healthy Reserve Fund and its need to adhere to a Reserve Study indicating how much money will be needed and when. Then a reasonable budget could be constructed that will take this shortcoming into consideration and address it properly. Yes, common fees are going to go up but that is because they are artificially low right now. To eliminate the 13th month fee, they need to go up 8.33%. The dollar amount of fee increase needed to account for the Reserve Fund shortfall also needs to be calculated. Then the association can get itself back on track to good financial health that will benefit all of the unit owners. Good luck!

Ups and Downs of Condo Elevator Special Assessment

S.P. from New Jersey writes:

Dear Mister Condo,

I just received word that there is a planned assessment being prepared to repair 1 of the 2 elevators in my building. The assessment payment schedule is spread out over 5 months and if you can’t pay it you are being told to finance the loan. The assessment has not been presented to the owners and was approved only by the 4 board members. Can this be challenged?

Mister Condo replies:

S.P., as long as the rules for levying a special assessment were followed, challenging the special assessment will likely be unfruitful. 4 of 5 board members constitutes a majority so if the rules for passing a special assessment for your association state a majority vote of the Board members is all that is required, then I don’t see where you have grounds for a challenge. Check your condo governing documents to determine if the rules were followed. You might also wish to seek a legal opinion for a more legal response than what I can provide here. However, if those elevators need repairing and enough money has not been saved, there will be a special assessment necessary to make the repair. Challenging the method of assessment may delay the assessment but it will still come eventually, and the association might even need more money to defend against a legal challenge to the assessment. Good luck!