A.D. from Hartford County writes:
Dear Mister Condo,
If I may quote you, you said in a recent answer “Levying special assessments for something as common as roof replacement concerns me on a far greater level. If your association isn’t building adequate reserves for common elements in your condo association, you might want to ask the Board what the long term plan is for other major expense common elements, like siding and parking lots and sidewalks. If the Board needs to levy special assessments every time maintenance needs to occur, you will likely see a repeat of what had just happened. A better strategy would be to raise common fees and build a reserve fund to handle these known, upcoming expenses. Special assessments should only be used for major, unforeseeable expenses. That avoids this whole nastiness of late fees on top of special assessments, which, technically, the association is entitled to collect. However, if the Board isn’t properly representing the best interests of the unit owners, consider nominating candidates to the Board who will do a better job of managing the common elements and create a fiscal strategy that addresses these financial shortcomings”.
That all makes sense to me but what do you do when the general resident population is all of the mindset we have no reserves, are faced with road repairs, sidewalk replacement, parking lot replacement, etc. over next ten years? Our complex is 35 years old and finds itself in the position of very low reserves due to unforeseen weather-caused costs the past few years, not raising fees in recent years in sympathy to residents’ financial situations, etc.. Now faced with large fee increase most of the population is of the mindset that it is better to run under continuing assessments. Rationale being better those potential buyers see low fees. Some owners are currently paying 10 year loans for a $9,000 roofing assessment last year. The majority of owners are calling for low fee and financing work with more assessments. Joining the board to influence otherwise is not an option as the majority vote is to keep fees low. This is shortsighted and there seems to be no solution other than try to sell and move. Problem is it’s a great area, new roofs/chimneys, good people, and otherwise intelligent people. They are highly focused on monthly fee as seen by potential buyers and no amount of discussion can change that. Majority rules! What to do?
Mister Condo replies:
A.D., your condo may be in a great area with good people but there is a major storm brewing and you probably don’t want to be an owner of record when it hits. Deferred maintenance, the practice of putting off tomorrow what needs to be done today, is a slippery slope for condominium associations. Other states have actually enacted laws that require associations to take into account future expenses as part of their current budgets and Connecticut may be soon to follow. At that time a Reserve Study will be mandated and a dollar amount will be determined. Unit owners of record at that time could find themselves on the receiving end of some really difficult financial news. Paying off a $9,000 roofing assessment could feel like a gentle breeze through your wallet compared to seeing your monthly common fees doubled or an even larger assessment needed to properly fund the Reserve Fund.
Sure, I can see the appeal of keeping the common fees low but what is the point if you are leading the community down the path of financial ruin? The concept of stewardship, the community’s responsibility to maintain, protect, and enhance the common elements is not a responsibility to be taken lightly by the Board. Your condominium documents likely require the Board to maintain a proper Reserve Fund and that all owners contribute regularly to that fund in their monthly common fees. If that has not been done for the past 35 years, the damage has already been done. Unforeseen weather-related damage aside, 35 years has undoubtedly taken its toll on the common elements for your condominium. Making the decision to keep common elements in disrepair based upon the current financial status of residents is no way to run the community and assure its viability in the future.
If it were me and I could not gain consensus on how to turn this situation around, I would sell my unit or accept my fate of likely looking at an uncomfortable financial future for myself as an owner of a unit within the community. At the very least, I would expect that there will be more special assessments down the road and, very likely, financial instability that could put the community on hard times. The sweetness of low common fees will be replaced by the sourness of increased financial burdens on future owners. Please feel free to share this with your current Board and encourage them to get active in their local chapter of the Community Associations Institute (CAI). More information is available at http://www.caict.org. They need a crash course in Best Practices for Community Association Volunteer Leaders. The sooner they embrace these principles the better. Good luck!