H.B. 6477 – Protecting Condo Unit Owners

R.G. from New Haven County, Connecticut writes:

Dear Mister Condo,

My monthly condo fees were raised by $40 recently. I got a note from the Board that the reason was that two of the condos in another section of the property went through foreclosure and the unit owners had filed for bankruptcy. One of the units owed almost two years in common fees that the association cannot collect. I have never been late with my common fee payment in the five years I have lived here. I already pay my fair share. Why do I have to pay extra common fees for units I don’t live in?

Mister Condo replies:

R.G., you are not alone in feeling the pinch of increased foreclosures at condominiums here in Connecticut. When a condominium prepares its annual budget, it does so assuming that all of the units will pay their fair share. That is a central pillar of common interest community living. So what happens when unit owners stop paying their fair share? The remaining unit owners must pick up the burden. What is even more shocking is that even though the association is a non-profit corporation, the current bankruptcy and foreclosure laws treat it as just another creditor when the foreclosure eventually goes to court. It really is not fair.

You will be hearing a lot about a 6-month rule and an Evergreen rule about liens in condo communities in our state. This is an attempt to help protect typical unit owners within condo associations in our state. Currently, condo associations have the ability to collect 6 months worth of delinquent common fees and reasonable attorney’s expenses from units that become delinquent and go through the foreclosure process. There is a bill before the legislature that would extend that to 12 months worth of delinquent common fees that will hopefully pass to protect citizens like you. The bill is House Bill 6477 and you can read about it here: http://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&bill_num=6477&which_year=2013. I encourage you and your neighbors to contact your state representative and state senator and urge them to pass this bill.

The Evergreen rule will also help prevent this type of financial catastrophe from hitting typical condo unit owners like you. Basically, it prevents legal maneuvering by banks from taking too long to foreclose on delinquent units. The idea is to allow the association to file multiple actions against mortgage holders that would keep the association’s claim to be made whole through the repayment of delinquent common fees. Each time a claim was filed, it would be treated as a new claim, thus keeping the claim evergreen, which is where the name comes from.

Again, I encourage you and all condo owners to support these legislative actions by alerting your state representative and state senator how important these issues are to you. Together, we can bring about change that will protect condominium owners!