Tag Archives: Financial

Paying the Price for Years of Low Condo Common Fees

A.C. from outside of Connecticut writes:

Dear Mister Condo,

I live in an 85-unit condo complex that was built in 1970. Many of our residents have lived here since the 80s. Unfortunately for us, the Reserve Study we reviewed before buying listed the HOA health as good and properly funded. The Reserve Study issued a month after our purchase brought to light a number of upcoming expenses to maintain the buildings due to age. What many of the new owners are discovering now is that for years the association kept unit dues very low and avoided large repairs until needing emergency repairs. Now they are increasing dues rapidly to help pay for aged repairs- such as replumbing of the buildings. Our dues have increased by over 50% in a few years. Dues increases and assessments are incurred based on % of ownership, but is there a legal option (perhaps through a change to by-laws) that would allow for a special assessment based on years of ownership to place some of the financial burden on those that enjoyed years of rock-bottom dues at the expense planning ahead?

Mister Condo replies:

A.C., I am sorry that you and your fellow units are left paying the bill for previous unit owners. The sweetness of low monthly fees is often replaced with the vial reality of special assessments and higher common fees for future owners. There is currently no laws that allow for associations to go back and recoup additional common fees or assessments from previous unit owners. All that you can do as an association is to buckle down, address the reality of the situation and base future common fees on a properly funded Reserve Fund for when these common elements will need replacing next time. Otherwise, you will very likely find the next generation of unit owners feeling the same way you do now when there is no money available to them to make the repairs and replacements for the common elements you are about to replace and use for decades ahead. It is a vicious cycle but, with planning and proper budgeting, it can be managed. Good luck!

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 Landlord Reluctant to Pay for Damage to Neighboring Unit

D.J. from Michigan writes:

Dear Mister Condo,

I have a condo. A little over 1 month ago, water was pouring out of my linen closet. I immediately ran to my neighbors, thinking they must not be home or left water running. They were and I advised water is pouring out of my linen closet. They came down to take a look. They are renters. I’m an owner. I notified the HOA that night, by phone and email. Eventually, after 2 days the HOA sent out professional to dry vac my carpeting and to detect the problem. Once the bathroom ceiling was opened up, linen closet ripped out the problem was located, and it was & has been determined the renter’s condo owner is responsible for basically getting my bathroom back together/carpeting replaced/drywalls repaired: I have no linen closet, because it was ripped out.

The owner of the other unit and the HOA are going back and forth as to who is responsible. The HOA has brought in an attorney to confirm they, meaning the other condo owner, are totally responsible. The owner feels as though the HOA is responsible, because it’s a common area. This is so bad, the owner has asked for the bylaws, which was provided. No one is doing anything, and I’m caught in the middle, totally. I can’t see this being resolved any time soon. The owner will not provide his insurance information, so a claim can be started. I’ve already asked the HOA for information & was told, the owner will not provide that information.

I’ve been very patient and understanding, but nothing is being done. I’m at the point I need to contact an attorney and sue the HOA, as well as the Owner, for my insolvencies, as well as repairs/replacement of items.

Mister Condo replies:

D.J., I am sorry for your worries and problems. Water damage at condos is far too common and, as you are seeing first-hand, it isn’t always a simple case of pointing to the cause and assessing the cost of repairs. Your closing comments are my best advice to you. It is long past the time of being patient and understanding. The other parties have hired attorneys, so should you. If the damage came from a common area, the other owner may have a point. If not, he may be responsible and have to pay or have his insurance company pay. Either way, your best interests will be protected by having your own attorney look out for them. Have you read the by-laws yourself? Sometimes it helps to have your own understanding of what is being contested. It doesn’t necessarily help resolve the matter any sooner but it might help you understand what the legal bickering is about. All the best!

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 Board Passes Along Leak Inspection Fee to Unit Owner

J.B. from outside of Connecticut writes:

Dear Mister Condo,

The unit below our condo reported a ceiling leak to the HOA maintenance. The maintenance personnel looked at the leak, performed a moisture test, then asked to go into our unit. He identified our kitchen faucet as leaking and told us to fix it. We replaced the leaking faucet. The HOA then sent us a $90 bill for his “investigation services”. Are we responsible for his service?

Mister Condo replies:

J.B., most likely, yes. Your unit was found liable. It is not uncommon for the association to pass along expenses they incur that are attributable to a particular unit. On the upside, $90 isn’t very much money compared to the thousands of dollars that such a leak could have caused. I would pay the $90 and be thankful the leak didn’t cause more damage. 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!