Tag Archives: Financial

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!

Can the Condo Property Manager Sue Me?

M.Z. from outside of Connecticut writes:

Dear Mister Condo,

Has the property manager the right to fine me or sue in court?

Mister Condo replies:

M.Z., I am sorry you find yourself at odds with your Property Manager and now need to inquire if you can be fined or sued. The answer to both questions is yes, but with a few caveats. Property Managers work for the association and are granted their powers to enforce the covenants of the association by virtue of their contract with the Board to do so. They cannot make up offenses that you can be fined for. If you are in violation of your community’s rules and regulations, the Property Manager can issue you fines as outlined in the governance documents and in accordance with local and state law. In many states, unit owners who have been cited for violating rules must first be summoned to appear before the Board and state their case before the fine is issued.

Suing you is a different matter entirely. As an individual, almost anyone can sue anyone in this country. The Property Manager can follow the Board’s instruction to bring suit against a unit owner for a couple of reasons. The most common is that the unit owner is in arrears with the association. Delinquency of common fees or special assessments are the most common reasons an association would sue a unit owner. An ongoing dispute over architectural compliance issues is another. In both of these instances, the Property Manager is acting on behalf of the Board. If you and the Property Manager got into an altercation (I hope not!) and the Property Manager decided to sue you personally, that is certainly their right.

The bottom line is that you should speak with an attorney if you are being sued. Personally, and professionally, the Property Manager can bring suit against you. You will want to defend yourself. I hope it doesn’t come to that. 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!

Jersey Co-op Unit Owner Strong-armed into Questionable Repairs

L.S. from New Jersey writes:

Dear Mister Condo,

I have unit in a large co-op (almost 500 units) which is rented out. The Manager of the co-op is pushing me into renovation of 2 bathrooms in this unit. The claim is that high moisture reading in adjacent hallway is caused by my bathroom. The reading of moisture is provided by co-op engineer who does what Manager wants. The Board doesn’t want to help. The Manager has only 2 approved contractors who do all work in co-op and gets paid from them (no proof, all cash). The Manager has same bullying background and law suit from previous work place (co-op) requesting unit owners to do unnecessary repairs and getting kickback.  Both bathrooms have no visible defects and look perfect from inside. What can I do? The Board doesn’t respond to my complaints. I wrote to them showing Manager’s background. All correspondence goes through Manager. Is there any organization that protects unit owners in co-op in NJ?

Mister Condo replies:

L.S., thank you for writing. I am sorry for your situation. I am not an attorney so I cannot offer you legal advice. You are describing a particularly legal situation that may very well require legal action to settle. Further, since the Board isn’t amenable to take your side and question the tactics of the Property Manager, that leaves you alone in your battle. If you can’t afford an attorney to represent your best interests you may have little other practical choice but to sell the unit and buy elsewhere.

In NJ, the Department of Community Affairs is tasked with investigating allegations of HOA abuse, which this may fall under. Their website is http://www.nj.gov/dca/divisions/dhcr/ and I encourage you to look there and see if there isn’t a resource to assist you. Good luck!

Condo Work Contract Awarded Without Bid!

J.B. from New Haven County writes:

Dear Mister Condo,

Does the condo board have a fiduciary responsibility to obtain multiple bids for work completed on exterior? If so can they set a dollar limit whereby they must obtain bids?

Mister Condo replies:

J.B., it is a best practice to obtain multiple bids for any work done at the association. However, there are plenty of times that a Board will work with a contractor they trust or who has done previous work for them that they feel merits further hiring of the same contractor. That being said, if the by-laws call for a minimum of three bids before jobs above a certain dollar amount are awarded, then they should follow the by-laws. If not, they are setting themselves up for a lawsuit from unit owners who feel the Board isn’t following the rules on such purchases. You should take a look at your by-laws to see what it says on the matter. If it doesn’t describe the process, then the Board is likely free to hire as they see fit. All the best!

Condo Lawsuit Revelation Shouldn’t Cause Issue for Selling Owner

J.P. from New York writes:

Dear Mister Condo,

I am planning to sell my condo soon. One of my fellow owners is deeply behind on HOA fees. There’s a law suit pending. I’m told this could hold up my selling. I’m in Brooklyn. Any help would be greatly appreciated!

Mister Condo replies:

J.P., I am sorry that your association is dealing with a delinquent unit owner. While lawsuits against the association might cause a potential buyer for your unit to shy away from the deal, a lawsuit initiated by the association against a delinquent unit owner should not. The association’s only risk here is that the unit owner doesn’t pay in timely fashion. The association’s risk is relatively low, seeing as they have a lien against the unit owner in arrears. It is a requirement that lawsuits that the association is involved in must be disclosed to a potential buyer, I don’t see where this suit should make them change their mind about purchasing your unit. This type of lawsuit is quite common and almost always won by the association. 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!

Right to Inspect Condo Employees’ Salaries and Benefits

B.B. from Fairfield County writes:

Dear Mister Condo,

Do the unit owners of a condo village in Connecticut that pay the salaries of their employees through their common charges have the right to know what the salaries and benefits of those employees are? We do not have a management company. We have our own manager and maintenance department, and office staff.

Mister Condo replies:

B.B., the answer is “yes and no”. The employees of the association work for the association, not the individual unit owners. The democratically elected Board of Directors has full access to all of this information and acts as the employer in this situation. Technically, all association records can be inspected by individual unit owners but the private information of the employees cannot be disclosed due to privacy and security concerns. That being said, you can inspect the budget which should have line items for salaries and benefits. While your common fees are used to pay their salaries, this is no different than saying your taxes pay the salaries of city employees. As a taxpayer, you have no right to inspect individual city employees’ salaries or benefits. The same concept is in play here. You have had a say in the election of the Board members, whose duties include all business functions of the condo. In this case, that includes keeping an eye on the salaries and benefits of the association’s employees. All the best!