T.S. from Massachusetts writes:
Dear Mister Condo,
I live in a self-managed, 5-unit, condominium. Our Board is levying a Special Assessment, which I am fine with paying, as it is for work I have been trying to get them to complete for years. However, this is my concern. Last year, the Board levied a Special Assessment for Maintenance, but did not budget a line item for Reserves for the current fiscal year and underfunded Maintenance in order to retain low fees, which is what the majority preferred. In levying this year’s Special Assessment, they are again specifically doing so to avoid having a Maintenance or Reserve Fund line item that will impact the monthly rate.
Is this legal? According to my interpretation of the law, Reserve funds should be charged to the Operating Budget, and while Massachusetts does not designate how much, they should be funded annually. I also thought Special Assessments should be avoided, not opted for as the preferred payment structure?
I want to pay the money to get the repairs completed, but I want to stop under-funding our account to pander to the majorities desire to maintain rates with little to no increase annually so that we do not annually have a Special Assessment, which as a seller, I know hurts sale prospects. Where do I stand legally?
Mister Condo replies:
T.S., I am sorry that you find yourself regularly doling out extra money as Special Assessments. As you have said, you and the other unit owners have discussed the strategy and decided it was what your association wanted. I am unaware of any law that is being broken. I am in full agreement with you that it is a lousy practice and that Reserves should be established at the inception of the association and contributed to regularly as part of the common fees. That being said, absent a law to compel the association to do so, your only other option would be to review your governing documents to see what they say about Reserve contributions. Even if the documents suggest that Reserve contributions be made, the wording is likely to be so vague as to not have any legal teeth, meaning you probably couldn’t force the association to change its ways by filing a lawsuit (at your expense). My advice is to go with the flow and take advantage of the currently strong real estate market in your part of the country. My guess is you’ll have no problem selling. Good luck!