Assessments Board Common Fees Condominium Financial Governance Property Management Reserve Fund

Common Fees May Need to Double, Maybe Triple at this Small Condo!


D.J. from New Haven County writes:

Dear Mister Condo,

Mr. Condo, help! Our 6-unit Association is improperly managed and I’m looking for the best way to begin the process of getting us to more stable ground. Our Board is defunct, with no President, and our Treasurer takes care of all Association business to the best of her ability with some help from us paying bills. Our common fees fall short of covering our expenses during heavy snow years and we have no reserve fund. We are doing what’s needed through assessments, a new roof and paint but, with no reserve it’s only a matter of time before trouble hits.

Our Treasurer has now resigned – she’s tried several times – without any plan for who will conduct the Association’s business. We can’t blame her but, would rather see the Association hire a property manager or some other professional to help us work through all of these issues. Unfortunately, she and the other unit owners are refusing to hire a property manager due to cost.

Mister Condo replies:

D.J., this is a most unfortunate situation. Smaller associations like yours are often at the mercy of a very limited pool of owners to serve as volunteer leaders. The argument that they cannot afford professional help is not valid. Professional help is needed, regardless of cost, especially if no volunteers step forward to lead and do the work of governing the association and its finances. Otherwise, the association could fall into default, and worse, be sued by a creditor who would likely seek dissolution of the association. A default on that level would leave all unit owners liable for expenses and they could very well lose their homes in a long, drawn-out, and expensive process. Instead, they should bite the bullet now and either produce leaders from within the group of six or speak with several professional management companies about how much it will cost to have the necessary services provided to keep the association running. It is very possible that your common fees will need to be increased dramatically to cover this expense. The Reserve Fund must also be built as Special Assessments are a last resort and should not be the plan for replacing aging common elements that will fail over time. Again, common fees will increase to cover the expense. These new common fees may make living in your condo too expensive for some residents. Guess what? They would be right to acknowledge it is too expensive for them and move! You cannot keep common fees artificially low. A budget needs to be prepared including professional management and adequate funding of the Reserve Fund. Once those numbers are known, the true common fees will be in place and unit owners can decide for themselves if they wish to continue owning a unit in your association. This is a bitter pill, I know. But if the unit owners don’t take this course, the path to dissolution will be far costlier. Good luck!

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