J.K. from outside of Connecticut writes:
Dear Mister Condo,
My condo association consists of 22 units with a 7-member board. Recently they decided on a capital expenditure of $100,000. The talk is that they want to borrow @ 7% over 7 years and equally assess all homeowners, interest included, over this 7 year period. There are a handful us that want to pay our portion up front to avoid this interest charge and resale value killer. The board says no and that we cannot pay upfront and we have to go along with the terms of the assessment. To me, this is ludicrous and I want to fight it. Am I wrong?
Mister Condo replies:
J.K., you are always free to fight any decision your Board makes. However, since 7 of the 22 units are already represented on the Board, I find it highly unlikely you would prevail on popular opinion. As the democratically elected representatives of the unit owners, the Board is in the best position to make business decisions on behalf of the community. However, many associations require more than just Board approval for things like special assessments and borrowing money on behalf of the association. You should check with your governing documents to see if the Board has acted properly in making this loan and also in handling the $100,000 expenditure. It is quite possible that you could prevail if they made a technical error in the approval of the loan or the expenditure, in which case, you may be able to force them back to the table to handle the appropriation in accordance with your governing documents. If so, I would suggest you strongly encourage like-minded unit owners to encourage the Board to allow for an option of pre-payment of the assessment, which I assume is roughly $5,000 per unit. If you are strictly concerned with resale value of your unit, you could offer an incentive to a purchaser whereby you would lower the cost of the purchase by the remaining amount of the assessment. That should nullify any detrimental effect on the resale value of your unit and should cause you no harm, as you are willing to pay the assessment in its entirety right now. All the best!