Board Condominium Financial Governance

Condo Snow Removal Causes Condo Debt to Pile Up

B.J. from Middlesex County writes:

Dear Mister Condo,

Our condo board has decided not to do an assessment for the overage in snow plowing last year and instead has opted to pay the company a little at a time. Our HOA is now operating in the red because of this decision which will affect my ability to sell my unit. We are approaching the winter and I am concerned that we will get even further in the red. Shouldn’t the assessment be levied automatically by the board so that we don’t operate in the red?

Mister Condo replies:

B.J., ah, winter in Connecticut. While it can be beautiful, more often than not, we get walloped with inches and feet of snow. Getting rid of snow is a major expense for condos in our region and many experience the same financial burden that your community has suffered. For the most part, the Board has discretion in how it conducts the business of the association. Removing the snow is required. How they pay for that removal is up to them and the vendor providing the service. I am surprised that the snow removal contractor is allowing the association to make payments over time. My experience has been that if you don’t pay, they stop removing your snow. That is a pretty effective way to make sure the client pays in a timely fashion. If the association has incurred so much debt that it is affecting potential buyers from purchasing or preventing mortgage companies from making loans to prospective buyers, then the Board need to evaluate if incurring this debt is truly in the best interest of unit owners. Board members are elected to serve the best interest of their fellow unit owners. When they don’t do that, they tend to be voted out of office. Perhaps you know of fellow unit owners who are experiencing the same issue as you. If so, it is time to band together. Otherwise, you will need to abide by the decisions made by the Board as they are the democratically elected representative of you and your fellow unit owners. Hopefully, this winter won’t be as severe as past ones. Here’s hoping we only get enough of the white stuff to make our holidays bright but keep our snow removal budgets intact.

3 thoughts on “Condo Snow Removal Causes Condo Debt to Pile Up”

  1. B.J., weather related insurance-derivatives do exist on the market. They are commonly marketed as “Snow Removal Insurance” programs. How the programs actually work and how they are are priced vary. However, they are all designed to protect an association’s budget – by paying for snow removal, once a certain benchmark in snowfall is attained. After last winter, more of our clients have secured programs this year. A word of caution – many of these programs are insurance “derivatives” – meaning, they act like insurance, but they are not actual insurance policies. Because they are not true insurance, they are not regulated by state insurance departments. Therefore, the consumer is not guaranteed certain protections. The program manager could literally run off with your money or not pay according to the agreed contract. That said, if you do look to a derivative like this, it is important to vet the program manager and the entity that is actually holding the paper on the contract. Hope this info helps? Good luck this winter! -Scott

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