Tag Archives: Financial

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!

Condo Owner Seeks Association Employee Salary Info

D.U. from outside of Connecticut writes:

Dear Mister Condo,

Can a condo owner demand or file freedom of information form to see how much the maintenance people are paid, that work for the management company? Their salaries are set by the condo association in their budget. I know they are paid well and receiving hefty bonus payments twice a year.

Mister Condo replies:

D.U., This is a question I get quite often. You can see some of my previous replies here: http://askmistercondo.com/?s=salaries I can understand your curiosity about how much employees of the association are making, especially since their salaries are paid by you and your fellow unit owner through your common fee contributions. However, I would liken it to the same way your tax dollars pay for municipal employees. Just as municipal employees are employed by the city, association employees are employed by the association and under the purview of the Board. You do have access to the budget, which details certain expenses of the association, including salaries and benefits. Your democratically elected Board of Directors is keeping an eye on the details for you and they do know what the employees are making, including bonuses. They most likely have their reasons for doing so (competitive pay, rewards for work done, etc). You can ask for these records but unless your documents specifically give you the power to review individual salaries, I doubt you will get it. May I ask what you will do with that information? As a unit owner, you have no power to pay employees less or alter their bonuses. If you have an issue with how the Board is handling the salaries and bonuses, you should take it up with them. Ask them how they decide when to offer bonuses. If you are satisfied with their answers, you’re all set. If you don’t like their answers, you are free to vote for other candidates for the Board or run for the Board yourself. I hope that helps.

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!

Who Owns the Carpeting on a Carpeted Condo Balcony?

L.B. from outside of Connecticut writes:

Dear Mister Condo,

My condo association installed carpeting on balconies many years prior to my purchasing my unit. The association is now requiring the carpet be removed at my expense. I claim that I did not install the carpet therefore I am not responsible for its removal.

Mister Condo replies:

L.B., that is an interesting quagmire you find yourself in. Are you certain of the carpet installation history? Balconies are typically limited common elements for the use of the unit owner who has exclusive use of the balcony. If that is the case, the Board may feel as though individual unit owners are responsible for the carpet maintenance as it is for the limited use of the unit owner, in this case, you. Your claim that you did not install the carpet may be true but you really need to find out who owns the carpet. If the association owns it, then they are responsible for the upkeep. If it was installed by a previous unit owner or by the association but at a previous unit owner’s request or expense, then it is quite possible that the Board is correct. However, it is worth your time in getting a straight answer. Ask to see the records from when the carpet was originally installed. See if you can’t find definitive proof of who owns the carpet. Good luck!

Inadequate Condo Board Meeting Notice

N.T. from California writes:

Dear Mister Condo,

I am a first-time condo owner in California for a year. I wrote a letter to the board requesting for reimbursement for an expense that my condo insurer and I felt was a responsibility of the HOA to prevent further damage to the interior since the HOA contractor was overwhelmed and was unavailable. I wanted to attend the next board meeting in case my issue comes up on the agenda. The board typically meets on a certain day of the week every other month. The community newsletter typically indicates which day the month prior or it has been rescheduled. However, the past month the date was left empty on the newsletter but there was a meeting and my issue was raised and I was not there to clarify the statement the manager made which was not true. My question, is the board required to publicize the dates of the board meeting? I plan on attending the next board meeting which was publicized in this month newsletter which listed both the prior month meeting date that occurred and the upcoming meeting date. Thank you in advance and will greatly appreciate any information you can provide.

Mister Condo replies:

N.T., I am sorry that your introduction to condo living has been so controversial and that you experienced problems right off the bat. You asked about meeting notice requirements and the short answer is, yes, the Board does need to give advance notice to all unit owners of the association as outlined in either the governing documents or local or state law. Typically, the notice requirement is in writing to the individual unit owners, although other methods may be acceptable as long as they are agreed to by the unit owners. If the newsletter is the standard and medium used then that is how it is done in your community. I will say that a newsletter alone is not typically considered due process for serving notice of a Board meeting and that email would be more common in this day and age. The notice needs to include the agenda as well as the date and time. Board meetings are open for unit owners to attend but unit owners don’t participate unless asked by the Board to do so. In your case, you wanted to clarify your petition to the Board for reimbursement for expenses you made to prevent further damage. Ideally, the Board would have undertaken this expense and you wouldn’t have been out of pocket in the first place. The Board, and only the Board, can make repairs or alterations to common elements even though common sense likely drove you to take the action you took. I hope you are not out a tremendous amount of money. It might be best to write this one off and understand that you need to let the Board take this action if it comes up again. Good luck!

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 Cable Installation Costs Out of Control

C.B. from outside of Connecticut writes:

Dear Mister Condo,

My condo association just hired a new management property company. This property company has created rules for the cable company to follow in order to gain access to the electrical room where the cable hook ups are located. The cable tech can get access one of three ways 1) to drive to the management office to pick up the key (20 miles there and back, not to mention having to return the key) – the cable tech said they are not willing to do that 2) the cable tech can send an email to the management property with their employee id, but the techs say they are not allowed to send emails to anyone outside of the company 3) I can pay the management company $40 an hour to come and open the door. If the cable company gives me a 4-hour block and the management company stays until the cable tech is done, that could easily be 5 hours and close to $200 to get my cable fixed. I have tried to ask the board, but the management property states that the board wants everything to go through the management property company and they have not passed this issue to the board. Can the management company do this? The old management wouldn’t charge anything.

Mister Condo replies:

C.B., they absolutely can! The problem is with your Board, not your Management Company. If the Board doesn’t apply pressure to the management company to change their policy, the management company can pretty much do whatever it wants. The management company works for the Board, not you. Your displeasure at having to pay these extra fees is of no concern to the management company. In fact, it is quite profitable from what you describe. You need to complain to the Board and also speak with other unit owners who must be having the same issue as you. If enough you get fed up with the Board, it is time to elect new Board Members who will pressure the management company to change this policy or risk losing the management contract. If those things don’t happen, the policy is likely to remain in place. Enjoy your cable and 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!