V.B. from Macomb County, Michigan writes:
Dear Mister Condo,
Hello, Mister Condo! Our condo community is drowning in mismanagement and financial ruins. Our Property Management company is telling us we need to pay dwelling insurance for the outside dwelling. Is that our responsibility as condo owners? Clearly, they mismanage the funds stating they can no longer afford the outer dwelling insurance. The management company is bleeding us dry with assessment fees. In one year, $6,000 and increased our association fees from $210 in a year to $360. Please, our community needs legal help and we just can’t afford it. Our community is mostly middle- and lower-class hard-working families. Can you please send me some resources for my state to help our community to not become homeless cause that’s where most are heading under this management company? PLEASE HELP!
Mister Condo replies:
V.B., I am sorry for your condo association’s problems. Just looking at your uncommonly low common fees, I can tell you where the problem is but I don’t think you’re going to like my answer and advice. Low common fees are popular with condo owners. They feel as though they are paying their fair share towards the expenses of the association and that the fees they agreed to when they purchased should be the fess they pay for life, adjusted mildly for inflation, of course. However, the reality of a condominium is that every element owned by the association – every roof shingle, every sidewalk, every tree – has a life cycle and needs to have a plan to pay for the eventual replacement. Operating expenses have skyrocketed over the years. Your NEW monthly fees of $360 are likely far too low to sustain your association’s expenses. Your PREVIOUS fees of $210 per month were likely far below where they needed to be. How many years have these fees been so low? What is needed is a way forward. I understand your disappointment with the management company and it is easy to create a “bad guy” to blame. The hard reality is that your condo has had many Board members over the years who did not properly plan for the future. The Management Company only does what the Board instructs it to do and provides its expertise as needed to the Board. Clearly, the Annual Budget has been short of what it should be for many years. To claim there isn’t enough money to pay for required insurance is outrageous and borderline catastrophic. If the building isn’t insured as it should be, unit owners with mortgages will be hearing from their banks demanding that the buildings be insured or the mortgages may be called in. You are right to be concerned about families losing their homes over this financial mismanagement. The Board needs to take charge, perhaps even be replaced with leaders willing to address this situation head on. That will likely mean another special assessment to cover the insurance premium (and whatever else is lacking) and another increase to common fees to prevent this from happening again next year and future years. One local resource for you to check out is CAI Michigan at https://www.cai-michigan.org/. CAI is a national organization that serves community associations including condominium association. The Michigan Chapter may provide you with some additional local resource. All the best!