Tag Archives: Attorney

Special Assessment Surplus Not Returned to Unit Owners

J.P. from Boston writes:

Dear Mister Condo,

I am a unit owner and keep the books for a 12-unit, self-managed association in Boston, MA. At issue is disposition of a special assessment surplus. A vote was taken to “replace the roof”. Trustees then obtained bids, selected a contractor (no vote) and the special assessment amount was based on the possibility there would be a cost overrun of $10k (no vote). The trustees “said” any surplus would be refunded pro-rata. Now there IS a surplus and the trustees say they have changed their minds and are exercising their rights, as trustees, to use the surplus for other projects or save in reserve for future years. I and another unit owner are selling and want our pro-rata surplus share refunded. The master deed and bylaws are silent on a surplus situation, only on the right of trustees to impose special assessments for shortfalls. Help, the clock is ticking and this is worth $1,000 each my neighbor and I. Plus what feels like a violation of trustee rights.

Mister Condo replies:

J.P., I am sorry to have not been able to get to your question a bit sooner. I answer all questions on a “first come, first served” basis and I imagine you have already moved on from this unfortunate bit of business. Each state has their own laws about Special Assessments. I am neither an attorney nor an expert is Massachusetts Condo law so I can only offer you my friendly opinion. Special Assessments are a scourge upon condo and HOA living. They typically signify a lack of forethought about common element repair or replacement that should have been budgeted for years ago. Typically, they must be used for the specific intent of what they were levied for. In your case, the Assessment was used as planned but the surplus was not returned to unit owners, which is almost always the case. While the trustees had the best interest of the association in mind when they decided that the surplus should just be rolled over in to the association’s Reserve Fund, I am guessing they overstepped their rights and trampled upon yours in doing so. The question is what can you do about it? Since we are only talking about a thousand dollars, it may not be worth the time and investment of hiring an attorney to sue the association. You can certainly talk to an attorney who is verse in Massachusetts Condo law, but I am guessing they will tell you same thing that I am and that is you would likely have to spend more than a thousand dollars to try and recoup your thousand dollars. Whether to take on that battle is your choice but I think it might be a fool’s errand. Live and learn, my friend. You may have the moral high ground but they have your money. Let’s hope this doesn’t happen to you again. Good luck!

Can the HOA File for Bankruptcy?

X.Y. from New Jersey writes:

Dear Mister Condo,

Can an HOA file for bankruptcy in NJ? If the HOA has debts that the HOA cannot pay and keep the property properly maintained and operating? Because of a loophole in the law, a homeowner sued the HOA and lost, but the expenses were sufficient to defend.

Mister Condo replies:

X.Y., it is very unusual for an established HOA to file for bankruptcy, especially without first having the courts appoint a receiver for the association. The receiver would likely levy special assessments against the unit owners to make good on the debts of the association. Since I am neither an attorney nor an expert in New Jersey law regarding common interest communities, I can’t offer an opinion as to the legality of the bankruptcy filing. My guess is that there is no difference between an HOA or any other business filing bankruptcy. However, as I stated at my opening, it would be truly unusual. If the HOA fails to maintain the property it could be sued by a disgruntled unit owner or owners or, in some truly decrepit state of repair, could face condemnation from local authorities. Even that wouldn’t cause a bankruptcy but could force owners out of their units, which might lead to eventual bankruptcy. I am sure there are underlying issues that have set the association on this path. I highly recommend you seek legal advice from qualified local legal counsel before thinking of such a drastic measure. My guess is you will be advised against it and seek another method of satisfying the debts of the association. Good luck!

Plumbing Contractor Soaks Condo Unit Owner with Surprise Bill

J.C. from outside of Connecticut writes:

Dear Mister Condo,

I recently had a slow leak from a pipe in my ceiling. I own a lower unit and asked the condo association to send someone out to determine the source of the leak. It was determined that the leak came from the pipe coming off my hot water heater. I opted to have the repairs done by a private contractor. I later received an invoice from the contractor who investigated the leak for $1700 listing mold remediation as the cause for up charge. I am currently disputing the charges as I did not request remediation and I was not notified of the increased charge prior to the work being completed. I received a letter from the condo association demanding that I pay within 10 days as the master policy says that I am responsible for repairs of non-common areas up to $5k. My state’s home improvement commission suggested I file civil suit. Am I wrong in disputing the charge? Should I just pay the $1700?

Mister Condo replies:

J.C., I am sorry for your situation. I am not an attorney so I cannot offer legal advice here but I will offer you some friendly advice. If my state’s home improvement commission suggested that I file a civil suit, I would seek out the advice of a locally qualified attorney to investigate the practicality of such a suit. $1700 is a significant chuck of change and a lawsuit might make sense. On the flipside, if the money isn’t so precious to you, simply paying the balance due will make this problem go away. My other advice is that should you find yourself in a situation where you need to hire a contractor for any other work, get a full estimate in advance. You should never get a $1700 surprise at the end of the job. You hired this contractor (which assumes a contract was in place). If unauthorized work was performed, a lawsuit might just get you out of the extra money. However, protecting your home against mold is a great idea and proper procedure. You may have agreed to have the work done without explicitly getting a price. As they say, burn me once, shame on you. Burn me twice, shame on me. Enjoy your mold-free dry home!

Falling Tree Damages Condo Visitor’s Car

C.B. from Fairfield County writes:

Dear Mister Condo,

I was visiting a friend in the Condo and a tree (huge part of it) fell on my car, cause many damages. Can I have the right to sue the Condo for pay the deductible of my insurance? The general manager didn’t go there to see the damage and, on the phone, he just said that the homeowner’s association does not have insurance so he’s not going to pay for it. The deductible is $500 and my car is 2016.

Mister Condo replies:

C.B., I am sorry that your car got damaged. The right to sue another individual or business is yours if you choose to pursue it. However, the cost of suing this condo association for the $500 deductible on your insurance policy will most likely outweigh the potential of collecting the $500 from the association. This is part of the risk of having deductibles on our insurance. Clearly, this was not your fault but your insurance policy is only going to pay for the amount of damage that exceeds your deductible. The rest is on you. You can speak with an attorney if you would want to see if there is any other avenue open to you but my advice would be to simply pay your deductible. Otherwise, you are likely throwing good money after bad. All the best!

Service Animals at the Condo Pool!

A.F. from outside of Connecticut writes:

Dear Mister Condo,

We are a pet friendly condo. However, we do have common areas like our pool deck that does not allow pets. I like dogs but more and more residents are turning up on the pool deck with their ESA dogs, its turning into a dog park – the condo management don’t know if they can enforce the pool deck rules and ask the ESA dogs to leave?

Mister Condo replies:

A.F., this is an area where the association needs to tread lightly. Service animals are not pets and, unfortunately for the association, are not subject to the same restrictions that the association can place on pets. There are a lot of lawsuits based upon discrimination of people with ESAs. The association doesn’t want to become embroiled in such a lawsuit. I am not an attorney and offer no legal advice here. However, I would be remiss in my friendly advice duties if I didn’t tell you that you should speak with an attorney verse in both association law and service animal laws in your state to make sure the association doesn’t misstep. There may be reasonable accommodations that can be made that allow the folks with service animals to enjoy the common amenities while not imposing on the rights of the other users. I am not saying it will be a perfect solution but there may be a way to accommodate the desires of all. Get the advice of the association attorney and enjoy your amenities, without creating a lawsuit. Good luck!

Has the Property Management Company Breached Their Co-op Contract?

A.S. from Fairfield County writes:

Dear Mister Condo,

I moved into a co-op recently. The board hired a new management company. After being unsatisfied with the property manager in place (3 months) the management company suggested we take the receptionist with limited skills and no license/certification as the new property manager. The board agreed for some insane reason and this girl has made it her mission to drive off all of our contractors and service providers to bring in the people the management company uses. There is talk of kickbacks. They have done this on other properties. Every memo, directive, repair or task this girl executes is wrong, mismanaged and just turns out badly. She has offended and outraged a dozen usually nice normal shareholders with her behavior, demands, and stop work orders. She is also the management company owner’s new girlfriend and he obviously wants her on some property. Can she act as property manager with only 1 ten-hour online class and zero experience in construction, property management, facilities, etc.? The contract between the co-op and the management company states we have a property manager, a receptionist and an Acct Exec. They are in default of their contract, correct? Please let us know.

Mister Condo replies:

A.S., you have made a lot of accusations here and, if true, are certainly worth contacting the association’s attorney to discuss. Breaking a management company contract for an association of your size is no simple matter. Just because you claim the management company is in default does not mean that they are. You would need to be prepared to prove it, very likely in court, as the management company would be likely to sue for breaking of the contract. My best advice to you is to speak with the association attorney. As for the Board’s “insane reason” to agree with the management’s company proposal to use a secretary as the property manager, it is time to call them to task for making such a decision. The Board is comprised of elected members. They can be recalled or voted out of office at the next election cycle. People that use “insane reasoning” have no business representing the financial interests of co-op owners. This is very real money of the co-op owners they are spending and protecting. They need to behave like the Board of any business and make decisions that are in the best interest of all shareholders. It would appear to me that they have shown exceptionally poor judgment in this matter. Of course, that also means you need to be ready with a slate of new volunteers to serve on the Board. Without that, this Board may continue to serve the association poorly. In that case, putting the blame on the management company is only half correct. Good luck!

Condo Landlord Thwarted by Pet Ownership for Renter Rules

J.C. from outside of Connecticut writes:

Dear Mister Condo,

Master Deed By-laws state only one pet per condo. House Rules state one pet per condo and then states no renters can have pets. Paragraph two speaks of renters having no pets. Paragraph three speaks of lessees needing to provide 2 references. Our lessee has one pet. POA wants to fine us because they say the House Rules say no pets for renters. I believe someone signing a lease for longer than 30 days is considered a lessee, not a renter. How do I fight this without an attorney? Thank you.

Mister Condo replies:

J.C., I am sorry you find yourself at odds with your association over the pet rental rules. The terms “renters” and “lessees” are generally interchangeable so it would appear that your documents are in conflict with themselves. This is actually not that uncommon as many associations simply use a boilerplate as a basis for their documents. If there were no verbiage about the pet restrictions on renters, I would say you are in the clear. However, even though it appears to be in conflict with an earlier statement on the subject, the fact that there is a restriction on pets for renters elsewhere in the document, I would say you will not be successful in challenging the association’s position. You can challenge the association by filing suit, seeking arbitration, or whatever other method of dispute settlement is available to you. However, if you do not wish to hire an attorney, you will do so on your own. The association on the other hand would likely use the services of an attorney to defend themselves. In my non-lelgal opinion, the association will prevail. Good luck!

Condo Board Refuses to Hold Annual Meeting!

J.W. from outside of Connecticut writes:

Dear Mister Condo,

Our condo association elects board members at the annual association meeting. The current board will not schedule the annual election. The current board just keeps making decisions. How can a non-board member force the board to schedule an annual meeting so that new board members can be elected? The By-Laws call for the annual meeting to be held in April and they must give a minimum of 21 days’ notice.

Mister Condo replies:

J.W., if your Board is operating outside of the governing documents (it sure sounds like they are), you can do a few things to correct the situation. First, you can speak with other unit owners and call a Special Meeting of the unit owners following the method to do so outlined in your governing documents. This requires some organizational skills on your part and you do need to follow the proper procedures to do so. Your goal in this meeting would be to recall the current Board (essentially remove them from office) and replace them with better volunteer leaders who will follow the rules of governance for the association. This is serious business and I would even recommend that you speak with an attorney who specializes in community association law to guide you. This will cost money but is worth every penny, in my opinion. Your second option is to sue the Board for not following the governance rules of the association. This option may force the annual meeting but will do little to remove the Board members who are not following the rules. Your third option is to leave this community. That is a drastic measure but if you can’t find better volunteer leaders to run this association, you can either live with the out of rule-breaking Board or sell your unit. Communities get the Boards they deserve. If your fellow unit owners aren’t outraged that this Board isn’t operating by the rules, it is time to leave. It is only a matter of time before more than missed meetings are unearthed. Boards that operate in this renegade fashion are usually breaking multiple rules. This can cost every member of the association dearly in their pocketbook if left unchecked. You have your work carved out for you. Good luck!

Condo Move In Fees Create Budget Excess!

J.G. from Illinois writes:

I’ve tried submitting this blog question online, but I keep getting an error message saying I didn’t enter the “recaptcha” correctly.  It’s just a check box, so I’m not sure what I’m doing wrong.  I hope you’ll consider this question for your blog. We’re trying to determine the proper treatment of fees collected that are outside the normal monthly assessments.  We have a move-in fee and occasionally collect late fees for monthly assessments.

Our condo rules state:

“There is a $500.00 fee for moving in that is non-refundable to cover cleaning and future rekeying of the building. ”

Our condo declaration states:

“…the Board shall supply to all unit owners an itemized accounting of the common expenses for the preceding year actually incurred and paid, together with a tabulation of the amounts collected pursuant to the budget or assessments, and showing the net excess or deficit of income over expenditures plus reserves.  Any amount accumulated in excess of the amount required for actual expenses and reserves shall be credited … to the next monthly installments due…”

The IL Condo Act gives the Board the right to determine how to distribute excess as long as it’s not prescribed in the condo documents.

We’re expecting an excess this year due to a large number of unit turnovers.   Are we obligated to credit this to the owners?  Or, can we move any excess to reserves since it wasn’t “collected pursuant to the budget” (i.e. not part of the budget that all owners paid assessments for)? Thanks for any advice, opinions, or references!

Mister Condo replies:

J.G., I am sorry if the “recaptcha” tripped you up and I am glad that you emailed me instead. The “recaptcha” is needed due to deter the large amount of attempted SPAM that used to flood the website. Thank you for your vigilance. I am neither and attorney nor an expert in Illinois condo law so please accept my advice as friendly and not legal. For a legal opinion, you should contact a local attorney who specializes in community association law. At face value, I would say that you should return any monies that were over-collected before simply depositing them to the Reserve Fund. This would be in keeping with the spirit and intention of the law which is to protect homeowners from paying more than needed or agreed to in their vote to approve the budget at the Annual Meeting. At the very least, I would offer the unit owners a vote on how to use those funds at next year’s Annual Meeting. Chances are, it isn’t such a large amount that you would get much pushback to moving the funds to the Reserve Fund where it can be used to protect all unit owners. I salute your thinking and commend you for increasing your Reserve Fund but my advice is to follow the spirit and intention of the law and even your own governing documents so that no init owner can cry foul and demand their money back. All the best!

Unhappy and Unsatisfied Condo Owner Moves Out

J.J. from outside of Connecticut writes:

Dear Mister Condo,

I been having a problem at my condo where I used to live. I left because they were always harassing me and my daughter. I’ve been towed because my car on my parking spot and the back tire was on line of the other parking spot. I have been trying to find out for 3 years where money is going because we have Reserves but we have no amenities but a pool.

Mister Condo replies:

J.J., I am sorry you have had such a trying experience living in a condo. Following parking rules can be challenging but managing the parking lot so all unit owners can enjoy the amenity is even more challenging. If you parked where you shouldn’t have you really can’t be too upset if your car got towed. How else could the association parking lot be available for all of the other unit owners who have also paid for unobstructed use of the parking lot? Understanding where your common fees go can be difficult to understand. Just because an association has a Reserve Fund (all should) doesn’t mean they don’t need your common fees for other budget items. All of the common amenities and services are paid for out of the common fees. Everything from the lights in the parking lot to the trash removal to the management of the association and so much more are paid out of your common fees. If you feel you were harassed in any way by your association, I would encourage you to speak to an attorney to see if what you experienced meets the requirements for harassment. Towing your car for parking improperly and insisting you pay your common fees certainly doesn’t qualify but I am guessing there is much more to the story than you have relayed to me here.  Good luck!