Tag Archives: Assessments

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!

Rules for Condo Special Assessment

R.F. from Connecticut writes:

Dear Mister Condo,

In Connecticut, can a special assessment be levied, with a vote by homeowners to paint buildings, repair buildings, labor and material? Can the Board of directors create a special assessment, by vote from homeowners for capital improvements which is patently a capital expense?

Mister Condo replies:

R.F., the rules for levying special assessments are determined by a few things, including the association’s own rules and state law. If the homeowners were allowed to vote, then, typically, the assessment would be deemed valid. Of course, all of the rules for giving proper notice of the vote would have to have been followed and all of the rules for conducting the vote would have to have also been followed. It sounds to me like that is what happened. The underlying issue is why was there a need for a special assessment for a capital expense that has likely been known about for years. You might want to suggest the Board conduct a Reserve Study and then present a plan for funding the Reserve fund so future capital expenses can be paid for out of Reserves and not via special assessment. All the best!

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 Association Not Paying Bills!

H.F. from Hartford County writes:

Dear Mister Condo,

Help! My condo association is not paying its bills! What can be done?

Mister Condo replies:

H.F., that is shocking! If your condo association is unable to pay its bills, it is likely a sign of a very large problem. The annual budget should take into account all of the likely expenses for the year and offset that expense with common fees and assessments if needed. If many unit owners default on their common fee or assessment payments, the association could find itself out of money when the bills come due. That can lead to many problems for the association, especially if a vendor sues the association. A court of law could order the association into receivership, where a court-appointed receiver (usually an attorney) takes over the finances of the association and will issue assessments and take other actions to get the association back on solid financial footing. Let’s hope it doesn’t come to that. Ask to see the books of the association and see if you can figure out what has gone wrong. Encourage the Board to raise the funds they need to pay their bills. The alternatives are dire. Good luck!

Must I Reveal Possible Special Assessment to a Condo Buyer?

R.R. from Hartford County writes:

Dear Mister Condo,

I recently was advised that our Board has started to address and extremely large repair required by the state. It has been mentioned in the Condo Minutes but no formal acknowledgment or assessment has been determined. I would like to run for the hills without telling the buyer and sell my unit before the news if official. Can I do that?

Mister Condo replies:

R.R., special assessments are very official and legal levies placed against the unit owner of record once ratified by the Board and the association. Once levied, they are the responsibility of the unit owner of record at the lime the assessment was levied. As a unit owner, you would receive notice and a payment date or payment schedule depending on how the assessment was levied. A “mention” in the Condo Minutes about an upcoming assessment is not the same as a levy of assessment. You would need to reveal (and pay off) an assessment as a term of your sale. You are not bound to reveal the possibility of an assessment. However, if the assessment has been announced and ratified and is not revealed to a potential buyer, you would very likely be sued for the assessment by the new buyer. If you are using an attorney for the sale, you would do well to explain what is going on and make sure you don’t set yourself up for that to happen. Good luck

Pre-Sale Special Assessment Assigned to Current Condo Owner

K.K. from Florida writes:

Dear Mister Condo,

When I purchased my condo in 2014, I was told no upcoming assessments. Surprise! Last August, I was told assessments for work done will cost me $15k or $155/month for 10 years. Now, I am selling my condo, can the remaining monthly 155 be transferred to buyer?

Mister Condo replies:

K.K., I am sorry you got hit with a “surprise” Special Assessment. In my opinion, there are no “surprise” Special Assessments unless the community experienced an unexpected and/or uninsured loss or a lawsuit that requires an unforeseen infusion of cash. If the assessment were for something as common as a replacement of a roof or to repair old decks or sidewalks, it was no surprise. That being said, the assessment is made against the unit owner at the time of the assessment. That was you. The association has an interest in you making the payments, not the new owner. You will very likely have to pay off the assessment before you can sell the property. It seems unfair but that is how it works. I hope your new home has no surprises like this for you. Good luck!

Big Amenities Still Being Added to this Big Apple Condo!

L.L. from New York City writes:

Dear Mister Condo,

Hi, Mr. Condo! We are in a 90-unit newer (2009 built) condo in NYC with doorman, gym, roof/grill facilities. A bike storage was originally promised by the sponsor. However, they have not been cooperative in fulfilling that promise. Currently the board presented a bike storage design that features another grill/kitchen, a still reflecting pool, fire pit and many seemingly excessive designs. Also, there is no budget or cap on this current project. Although we have an adequate Reserve Fund for the building, the board is planning on taking out a loan in addition to using cash to fund this project.

How much would a second grill/kitchen, small reflecting still water pool and fire pit add to the selling price of units in this building? Will the cost and maintenance/liability outweigh the positive? (To be honest I am failing to see any positives on these added features)

Mister Condo replies:

L.L., sounds like you live in a lovely condominium, despite the problems you are now facing with the sponsor fulfilling all of the promised amenities. Despite the potential for increased costs and maintenance liability, it is likely that these additional amenities will make the condo more desirable, which is what drives up market value as well as outside factors like real estate prices for competitive units. I am a bit confused about why the Board needs the loan if the sponsor is still in the picture but these amenities are likely part of the master plan that was approved and need to be either completed or, if possible, removed from the plan by a vote of the unit owners. You may also face pushback from the city as the project approved is the only one that can be built without going through the approval process again with no guarantee changes would be acceptable. In other words, in for a penny, in for a pound and the most likely course is for the original plans to be honored, regardless of the price and regardless of whether or not individual unit value will increase because of the amenities. I’ve never known property values to decrease because of increased amenities and my guess is that it will enhance the value of your existing units. All the best!

HOA Board Ain’t Fixin’ Nuttin!

R.M. from outside of Connecticut writes:

Dear Mister Condo,

4 months ago, I purchased a duplex which has 3 buildings and 6 owners. I had a hard time getting documents during the sale and did not understand the dynamics involved. The first email I got from the treasurer was on the day the fees were due. Our first meeting when I met the other owners was a nightmare. The president has been in position for 20 years and has Alzheimer’s so her daughter had appointed herself to the position. The treasurer was appointed by her, not vote, and the secretary had been behind 6 months in fees which they were trying to cover up. When I brought up concerns about the outside of our building, I was yelled at by the President’s son-in-law and told “we ain’t fixing nuttin, we got no money!” Then my neighbor brought up a repair not done properly and he stood up screaming and swearing at her and everyone started fighting. I asked for the bylaws and I was told by the president to find them myself. She doesn’t have them.

A few weeks ago, the fascia that needed repair was hanging off of my roof. I called the president and son in law started screaming and threatening me and said we have no money to fix it. I mentioned the Reserves that we should have had when I moved in, and both him and the treasurer admitted it was fudged to make the sale happen and accused my realtor of fraud. I had her call them and the next day the son-in-law apologized and paid out of pocket to have the fascia repaired.

They had previously called a special meeting to discuss the budget so I told them I did not want the son-in-law there as he has no business there; they agreed. The meeting started off ok until we brought up questions about missing payments from a couple of owners. We started getting bullied again. When the argument was brought up about the fascia I defended myself telling what the son-in-law said to me. He came running down the stairs screaming and swearing and threatening me again and threw me out of his mother-in-law’s house. I called the police.

I want to have the President, Treasurer, and Secretary removed by law for keeping false books, hostile environment, favoritism, harassment and negligence. If I have solid proof (which I do), will I be able to charge the association for the attorney since it’s in the best interest of the owners? It’s the board who caused all of these problems.

Mister Condo replies:

R.M., your tale of woe reads like a comedy of errors. I am glad you got your fascia replaced but the rest of this tale is a nightmare! This is a small homeowner’s association (6 units if I understood your opening statement). Small associations face the same challenges as larger associations but have far fewer resources to handle the issues. A functioning Board is a good start but there are legal remedies available to you. I want to ask you about your own purchase into this association. Did you use an attorney? Did the attorney review the governance documents? They can’t go missing as they are part of the closing process. Of course, if you somehow waived your right to these critical documents in an eagerness to make the purchase, you are experiencing a major case of “Buyer Beware!” It sounds to me like there is awful lot of impropriety going on here. You need to speak with an attorney, which I am not. I offer friendly advice; an attorney will offer you legal advice. You may end up suing the association, individual officers, anyone else associated with these misdeeds in an attempt to get the association back on sound footing. By the way, 6 owners don’t guarantee deep enough pockets to do that. In fact, you may be throwing good money after bad in an attempt to correct this problem. Your attorney can better advise you if you can include your own legal fees in any litigation but winning the litigation is just the beginning. You need to collect from these folks, who clearly don’t have the money from what you have told me. If it were me, I think I would try to sell and cut my losses. Otherwise, be ready to deal with an ongoing problem for months and even years to come. Keep the police on speed dial because these folks clearly have no idea what they are supposed to be doing and will likely continue doing what they have always done. Good luck!

Condo Developer Transition Litigation Nightmare

N.P. from outside of Connecticut writes:

Dear Mister Condo,

I am in a large condo association that was in litigation with the developer when I purchased many years ago. We were never told of the litigation, and strangely enough had no problem getting our mortgage, which was not the case with many potential buyers from what I have been told. Over the years, the board, which is a veiled one, never fully disclosed the extent of the deficiencies until 6 years after the litigation ended. Now every member has been told we will be assessed potentially over $60,000! (They have not done bids yet for the work.) The board will not allow us to see a cost breakdown as to how the engineering company got to this amount. The property manager has also said that in times of litigation open meetings are not required even to ratify any binding action. The minutes of open meetings cannot be accessed because this management company has said anything before their time (3 management companies in 7 years) is missing. To top it off, there was a recent election in which the property manager was bad mouthing certain people running as write-ins to people just turning in their proxies. Faced with this huge looming bill, I am feel like this community is in huge trouble. I fear numerous foreclosures and the association going belly up! What can we do?!

Mister Condo replies:

N.P., I am truly sorry for your situation. The developer transition period is a unique time in an association’s history and it is a time that requires all unit owners to be wide-eyed, leery, and as well-represented as possible. I have written numerous columns on the subject which you can read by following this link: http://askmistercondo.com/?s=developer+transition

I would love to say that your situation is unique but that is hardly the case. The dollar amount in question is unusually high but I have heard of worse, especially when the transparency is lacking between the developer and unit owners. It is not too late to take corrective actions but the underlying financial damage is likely to remain and perhaps intensify if the association needs to take legal action against the developer. Here is what I would recommend you and your fellow unit owners do to protect yourselves.

First and foremost, speak with a qualified community association attorney (NOT the Developer’s Attorney!). You need legal guidance here and each state has its own version of condominium and incorporation acts that will likely come into play. Construction defect lawsuits are not uncommon, can be very expensive, and tricky to pursue. However, money invested in a construction defect lawsuit that may yield millions for the association is money well spent, in my opinion.

You need to understand which phase of developer transition your community is in. Has the developer relinquished governance of the association to the Board or is the Board only functioning as outlined in the development stage, meaning the developer still has large control of the Board? If the developer is no longer in control, different rules apply. This is another discussion to have with your community association attorney. If the Board is in full charge of governing the community, it is also likely time for a new management company as the one originally in place had the best interests of the developer in mind and not necessarily the unit owners. From what you have described, this management company is working for the developer, not the association. 3 management companies in 7 years is not a good thing. Be sure to thoroughly interview thoroughly to make sure the next management company is a better fit for the association.

Finally, consider selling before it gets any worse. This is going to be an expensive and drawn out process. If you don’t have the constitution for it, get out while you can and consider moving into another condo without these problems. Even if you talk a loss to sell your unit, you may be coming out ahead of a $60K special assessment and who knows what else if a legal battle ensues. When money is needed from a community association there is only one source: the unit owners. You might just do better to cut your losses and move on. Good luck!