S.C. from New Haven County, Connecticut writes:
Dear Mister Condo,
The association never put money aside for roofs. They couldn’t get a loan so they had a meeting and decided at that meeting to raise our common fees $100 per month. They said they sent a letter so you could vote but I didn’t get one. I don’t think many people knew. We have almost 100 units and I was told that only about 20 people voted. We had been paying $35 a month towards the roofs for the past 2 years. Now they want $100.00 a month for 2 years. Is it time for a CPA audit?
Mister Condo replies:
S.C., an audit by a CPA may be a good idea but it is hardly what is at the root of your association’s fiscal challenges. It would appear that not nearly enough money was set aside for the roof replacement project that your buildings needed. A proper Reserve Study is more likely what is needed to stop this from happening again. What if the same math is applied to the roadways, or the pool and clubhouse, or the building exteriors? You and your fellow unit owners could find yourselves reaching for your checkbooks every time such a repair is needed. If I have done the math correctly, your association set aside $35 X 24 months X 100 units = $84,000 for the roof repair. In reality, the repair is costing $100 X 24 months X 100 units = $240,000. That means the project was underfunded by more than $150,000! I can see being off a few thousand dollars here and there. Even coming up short by 10,000 or 15,000 or 20,000 dollars in a project that size is understandable. It would appear the Board had no real barometer by which to measure the project’s real cost. That is where a Reserve Study can be invaluable in helping the association prepare for known upcoming expenses. An audit can come in handy to catch items that might be missed during standard review of the Profit and Loss statements by the Board but unless you think someone has stolen or misappropriated funds an audit will only confirm what you already know. Enough money has not been set aside for years to cover the cost of this roof replacement. The good news is you and your neighbors will have new roofs over your heads to protect you and your investments. The bad news is that you will pay for it in a relatively short period of time versus over the lifetime of the roof.
As for the procedures followed by the Board in calling the meeting and modifying the common fees I cannot say if they violated any of your rules or state law for Common Interest communities. If they did, you may challenge their change to the common fees. However, the long term outcome is likely to be the same. I assume you need new roofs and as an owner, it is your common fees that will pay for them. All the best!