Can Board Raise Common Fees So High as to Force Owners Out?

J.G. from Litchfield County writes:

Dear Mister Condo,

Can a condo board raise fees so high that owners are forced out?

Mister Condo replies:

J.G., common fees are determined by a number of factors. Some are within the Board’s control; most are not. The basic concept is that the Board reviews the known and likely expenses of the association in the upcoming year. For a really simple example, let’s say that a 100-unit association was likely to need $300,000 to operate for the year. Provided all units were the same and paid the same portion of fees, each unit would pay $2000.00 per year, or $250.00 per month. A budget is prepared and presented to the unit owners at the Annual Meeting where it is either ratified (approved by the unit owners) or rejected, in which case the previous year’s budget and common fee schedule is used. That doesn’t mean the Board cannot raise fees in the form of special assessments. In fact, if the approved budget and common fee schedule does not meet the demands of the association, that scenario is very likely. However, most associations have rules about how and when special assessments can be levied so, again, the Board must comply with the rules for levying special assessments.

Forcing unit owners out by raising common fees would be just about impossible for most Boards. Further, I cannot fathom a reason that they would want to do so. Boards are democratically elected volunteer leaders from within the community of unit owners. They are subject to the same common fees as all other unit owners so they would suffer the same consequence. It is much more likely that costs have escalated and the Board is simply passing those costs along to the unit owners. For instance, I know of some shoreline communities where flood insurance premiums have skyrocketed causing common fee increases in excess of $1000 per year per unit. That equates into just less than a $100 per month increase! I suppose an uninformed unit owner might think that the Board was indiscriminately raising fees but the reality is that rising costs were the real culprit. I suggest you investigate what the true cause of the fee increase is. If it turns out the Board has just randomly decided to raise fees, it is time for a new Board. But, if, as I suspect, the reason for the fee increase is escalating costs, at least you will know why the fees were raised. That may not stop unit owners from having to sell but the blame can be placed where it properly belongs, and not on the Board who is simply reacting to the harsh reality of increased expenses for the association. All the best!