Tag Archives: Financial

Neighbor Damages Unit, Refuses to Pay for Repairs

L.W. from Fairfield County writes:

Dear Mister Condo,

A few months ago, a neighbor (a tenant – owner rents it out) attempted to make a change to the plumbing in his kitchen. It was done incorrectly, causing water to flow incessantly for several days into my garage which is below their kitchen. Water flowed all across the length of my ceiling (into the area where the air conditioning ducts are housed), and down the sides of the walls causing the sheet rock and insulation to be very soaked with water. I hired a painting and home improvement company who has done work for me and several others in this complex to get rid of all the water-soaked materials, and then to replace the materials once the area had time to dry out. It took them a several hours for several days to complete the work. It was done nicely, and I am satisfied with the work.

The problem is that the owner of the unit believes my contractor’s final price was too high – $750. I believe it was a fair and reasonable price. He is someone I trust, and he does good work. The owner paid half of that bill. I believe he should be the rest. He (by allowing his tenant to perform unlicensed plumbing work) endangered not only my unit, but those nearby. If I had not been home and noticed the leaking in my garage (the tenants were away for the week), the damage may have been disastrous.

Do you have any ideas on how to get this unit owner to pay the rest of the bill? I am considering Small Claims Court if he doesn’t pay within the next few weeks.

Mister Condo replies:

L.W., I am sorry for your problems. Typically, when a unit owner damages another owner’s unit, their insurance or even the association’s insurance is used to handle the repair of the damaged area. Since you took it upon yourself to handle the damage repair, you may be on the hook to collect from the other unit owner (or their insurance). Personally, I like your “take charge” common sense approach to getting the repair handled in timely fashion. However, now you may need to take your neighbor to Small Claims court to get your money back. Honestly, it sounds to me like you got an exceptional price for the work but your “shoot first, ask questions later” approach is receiving pushback from your neighbor. You might want to run the information past an attorney to see if you have a legal leg to stand on. Also, since the neighbor has already drawn a line in the sand at $375, you may need to ask yourself how much aggravation you are willing to suffer to recover the extra $375. You might just want to write this one off and pay attention to what happens the next time and hope that there isn’t a next time. All the best!

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!

Common Fee Determination Seems Unfair

B.P. from Litchfield County writes:

Dear Mister Condo,

I live in a 55 and over condo community and they charge by square footage. The townhouses pay more than the ranches which I don’t think is fair because all of us receive equal services such as plowing, mowing trash pickup, clubhouse use etc. I don’t believe assessing by size of the units is proper. Any comments on this and what we can do to change it?

Mister Condo replies:

B.P., there is very little you can do to change the schedule of common fee assessments and for good reason. The schedule of fees was part and parcel of every unit that was sold in your association. It is a legally binding agreement that both buyer and seller agreed to at the time of purchase. Further, it is an intrinsic part of the condo documents that binds the unit owner to the association. I answered a similar question from a condo owner in Illinois not too long ago. You can find my full answer here: http://askmistercondo.com/validity-of-condo-percentage-of-unit-ownership-questioned/. All the best!

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!

Condo Association Increases Late Fees and Adds Interest Penalties

C.C. from New Haven County writes:

Dear Mister Condo,

My Condo Association just sent notification that they are planning to increase late fees on HOA fees to $30 (25 to the association and 5 to the management company). They also plan to assess18% interest rate.

Can I apply both a late fee and an interest rate? Is that legal?

Mister Condo replies:

C.C., as long as the Board followed the rules for changing the assessment schedule and the interest on late fees, I don’t see why they can’t have both late fees and interest on late fees. The bottom line is that timely payment of common fees and assessments is critical to the association’s ability to pay its bills on behalf of all owners. Late fees and interest penalties are really the only tool available to the Board to encourage all unit owners to make their payments on time. Best of all, late fees and interest penalties are easy to avoid. Just make sure every unit owner pays their fees and assessments on time, which is exactly what they agreed to do when they purchased into the association. All the best!

Condo Board Closes Pools Versus Maintaining Them

T.K. from outside of Connecticut writes:

Dear Mister Condo,

We have 2 outdoor pools. For the past 2 years, 1 pool has been closed – no reason given. This year, none of the pools are opened. I was planning on attending the yearly board meeting that was to begin at 7 pm last evening. However, upon showing up for it we were told it wouldn’t be starting until 8 pm as they were “running late”. I have my own theory as to why they were delaying. What recourse do we have with regards to our pools not being opened and not being informed as to the situation? Our maintenance fees go up every single year without hesitation. Aren’t they liable to honor the dec’s & bylaws with regards to maintaining & operating the pools? So FED UP!

Mister Condo replies:

T.K., being fed up is a good start. Now, it is time to take action. I am sorry that you and your fellow unit owners are being denied full use of your amenities. Pools are a major amenity for many associations and you are correct that their care and maintenance is the responsibility of the Board. However, many associations fail to collect enough money in common fees to properly handle all of the fiscal responsibilities of the association. Even though as a unit owner, all you see is common fees that go up every year, that is no indication that enough money is being collected. Ultimately, associations need to have really good budgets and really good Reserve Studies adhered to in order to thrive. Would you be surprised if I told you that your common fees may need to rise 20 – 30% for that to happen? Would you support a Board that raised the common fees in order to meet the financial obligations of the association? The problem is that the Board is comprised of democratically elected unit owners who must run for election and reelection to serve their community. If they raise fees, they may not be returned to office as that is always an unpopular course of action. However, I can assure you, if the association ties their hands by not raising enough revenue to operate properly, you can expect your pools to remain closed. That is likely the tip of the iceberg. Are roofs being properly maintained? How about parking lots? How about walkways? Underfunded associations are easy to spot. The problems don’t all appear at once but they do surface. I would encourage you to have a candid conversation with your Board and fellow unit owners. If there is no money to make the repairs, you might want to be the one who suggest that common fees be raised. Without that extra capital to work with, I doubt much will change. Good luck!

Underfunded Condo Association Leaves Common Area Repair to New Owner

S.M. from outside of Connecticut writes:

Dear Mister Condo,

One year ago, an owner financed the sale of condo. Now the new owner says there is a serious drainage problem outside back sliding doors. He asked the HOA to fix the problem but there is no money available to do so. The HOA gave the new owner permission to do the job. Then the new owner got city inspectors involved who do concur that there is a major problem. Could the property potentially be condemned? New owner is telling us to either renegotiate our deal, thereby sharing cost of the job, or he will renege on the deal, putting all of the expense back on us. What can be done?

Mister Condo replies:

S.M., HOAs with insufficient funds often make bad decisions. In this case, a really bad decision is coming back to haunt the association. Exterior drainage problems are the problem of the association and should have been repaired by the association, not the unit owner. Further, the correct way to raise money for such a repair is to raise common fees, levy a special assessment, and build a Reserve Fund for future repairs and improvements. The phrase “no money available” indicates to me that there is also no Reserve Study in place and that the common fees have probably been way too low for way too long. The immediate problem facing the association is the possibility of a city inspector condemning the property. While that is an extreme measure, it is possible of the unit is in such disrepair as to cause the inspector to make such a call. Typically, even if a citation is given, the association has enough time to make the repair and avoid condemnation (unless human life is at stake, i.e. a collapsing roof or broken foundation). Assuming the repairs can be made by the association, get an estimate on the job, levy a special assessment or take an HOA loan (if eligible) and handle the repair. Then, sit down and take a good look at the budget for the association. Chances are common fees should be raised this year and for several years to come until the association gets back on sound financial footing. This may prove unpopular with unit owners but it is necessary for the association’s long-term fiscal health and to make sure the Board doesn’t need to make future bad decisions on needed repairs. All the best!

Condo Association Responsible for Pipes but not Ducts

G.C. from Fairfield County writes:

Dear Mister Condo,

I recently had a service man at my house to clean the dryer vent ducts and he discovered that the ducts in the ceiling between the two floors of my condo were disconnected. Unfortunately, the only way to repair them is to break into the ceiling on the first floor, reconnect the ducts, and then repair/paint the ceiling. When I brought this issue before the condo board, I was informed that it was my responsibility. According to the exhibit they provided, it states that “all vents, wiring, ducts, & system components serving one unit” are the unit owner’s responsibility. My argument is that this problem occurred due to faulty construction and not due to my neglect or normal wear & tear. Coincidentally, I had a pipe burst in my coat closet in the winter of 2015, and the association assumed full responsibility in making the repairs which were quite extensive. If you review this same document under plumbing/related systems, it seems to contradict their actions in that they assumed responsibility for the repairs even though this exhibit states otherwise. Therefore, I’m perplexed as to why they’re are unwilling to do so in this situation.

Mister Condo replies:

G.C., I am not an attorney so I can only offer you a friendly opinion here. From what you have stated of your documents, you own the ductwork and, therefore, the repair of the ductwork is on you. Pipes were not listed in the statement and, typically, service multiple units and are, therefore, in common and the responsibility of the association. I do not see anything wrong in their interpretation of the documents or their handling of this repair. You may wish to consult with an attorney for a legal opinion but I think this is your issue, not the association’s. As far as the problem being a construction defect issue, you may be right but this doesn’t sound like a very expensive repair. It would be far less expensive to simply make the repair than to chase down a construction defect claim against the builder or the association. If this happened in a majority of units, I might have different advice but from what you have told me, I would simply advise you to make the repair at your cost and move on. 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!