Condo Association Management Blog

Condo association is a financial sinking ship. Can we turn this boat around?

We have a 40 year old 60 unit condo association. $350.00 per month dues, average $1.000.00 in assessments per year, On site 80 year old manager positioned herself as president of HOA and controls the rest of the board to vote her way.  Is there anything we can do to save this sinking ship?

Condo association's history effects its corporate structure and operations

We recently bought a condo in a large gated community association. We just learned that there is a 66-unit lease-hold apartment complex within our gates at our entrance (the land on which it sits is owned by a man in Hong Kong). They share our community facilities for a monthly fee per apartment unit. The problem: the apartment corporation is allowed to participate in our membership voting as if it belonged to our Condo Owners Association. They don't.

The County identifies their building as an apartment. Before 1991, 396 condos were noted in our Condo Association bylaws. In 1991, that count was increased by 66, the exact number of the apartment's units. Long-time owners report that in 1991 a large bank foreclosed on the apartment. That bank sued each condo owner individually. It would drop the lawsuits if the owners voted to annex the apartments. So they all did. The bank wanted a controlling voice in the Condo Association's fees charged for use of common areas. With 66 votes, they threatened to removed Board members if they didn't vote the way the Bank demanded. My question is, now that we know the situation, how can we get the apartment complex removed from the voting process without it costing a fortune in legal fees? How do we get our condos' total number corrected back to 396?

Our condo association bylaws definition of a condo clearly matches the legal definition pursuant to California code. The apartment building doesn't meet the definition. Because they are now part of our total numbers, our rental rate is too high. No HUD/FHA loans are allowed. We definitely need advice. Help.

Do all new HOA rules need to be put in bylaws?

We are a new HOA. We have the CC&Rs the developer filed with the city. We have an easement document, also filed by the developer. We have no HOA bylaws. From reading sample bylaws I see the bylaws deal with the HOA governance. Where does one set forth things like (1) no pets larger than 20 pounds, or (2) no noise that disturbs the neighbors, or (3) rules that govern community parking areas? I hope you can help. Thanks, Ed

Can CCRs Prevent Bad Condo Association Board Behavior?

I live in a condominium complex in Illinois. There have been recently concerns and issues regarding our HOA board's compensation and expenditures. In accordance to our Articles of Incorporation, it states that "no director shall be compensated by the Condominium Association for services rendered to the Condominium Association, except as expressly provided in a resolution duly adopted by the voting members". Can you please interpret this for me?

We have three condo associations on our property, and the HOA board presidents like to have their meetings at restaurants, or bring in food and refreshments at their meetings, while discussing board issues. Are the HOA meetings that our board members have among themselves, considered services and duties of their office? Can they be compensated for holding these meetings?

Can you please explaing what CCRs are? And what impact they may have on how a board conducts their business? Thank you. Looking forward to your response.

Concern over condo association's common areas

Are the main drainage pipes in the walls and under bathroom floors considered common areas of a condo association building?

Our association bylaws say 'yes' but certain condo association board members are trying to make it a votable item; meaning that they can vote on what they think are common areas moving forward. This concerns me.

Looking Deeper Into Condo Association Regulations

Condo associations have certain condo documents on file when a condo development is established. First, the Declaration is the document that establishes the condominium complex as a legal entity. It calls for the establishment of a condominium association made up of all the owners of the condominiums in that complex.
Second, there are condo by-laws, rules for the administration of the condominium property. It is important to understand the by-laws of the development in which you will be purchasing a unit. Some by-laws prohibit pets while others have restrictions on noise, visitor parking, and so forth. The original by-laws can be amended by a vote of the condoassociation members. Some of these documents can be quite lengthy and hard to read. However, a realtor who is a condo specialist is familiar with these documents and can explain them to you. Ask your real estate agent to obtain the latest information on recent condo budgets and changes to the by-laws so that you can choose the best complex for you.

The budget will indicate how much is being spent on each item covered by the condo fee. The size of the reserves gives you insight regarding how secure the condo association is. Reading the minutes of the most recent meeting will tell you if there are any special HOA assessments, condo fee increases or major changes being considered by the condo board.

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Is Your Condo Association Playing By The Rules?

Can my condo association use special assessment funds for something other than what the assessment was originally collected for?

No. Condo bylaw (F.S. 718.116(10)) requires money collected via special HOA assessment to be used only for the purpose stated in the notice of the meeting called to approve the assessment. Upon completion of that project, the condo association must return excess monies, the condo board choosing either a refund or credit directly to unit accounts.

While the HOA Act does not have the same specific provision, most HOAs appear to follow the same restrictions on special assessment use that apply to condo associations.

What is the requirement for unit owners to maintain condo insurance?

Condo law (F.S. 718.111(11)(g)) contains two paragraphs that spell out the condo requirements. Generally, unit owners are still required to carry insurance to protect against hazards and liability. The condo association must be an additional named insured and loss payee on the unit owner's casualty insurance policy. In HOA's, there is no statuatory insurance requirement; thus, owners in those communities must check their governing condo documents, especially in townhouse communities which frequently require insurance.

Owners will want to insure their interiors because if a storm, fire or other casualty occurs, normally the condo association only repairs the walls, windows and doors. This coverage is helpful, funding reconstruction for which the unit owner is required to pay, and to provide the unit owner loss assessment coverage to reimburse some portion of special HOA assessments required to pay for common element casualty reconstruction not covered by the condo association's coverage.

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Knowing When to Raise Condo Association Fees

Raising HOA and condo association fees can be a difficult decision for a condo board to make. Unfortunately, as the cost of everyday living continue to go up, it is sometimes necessary to raise fees to help cover those increases. If association fees are not increased to keep up with the cost of living, the condo associations that chose not to raise assessments will usually find themselves in worse financial shape than expected.

How do condo owners usually find out about an increased condo fees? Most governing condo documents and state statutes require associations to notify owners at least 30 days in advance of the effective date. Many times when the fees are raised, however, the residents are blindsided with the increase by receiving the first notification in the mail in the form of a statement without as much as an explanation, only a due date to avoid a late charge. That scenario engenders hostility and anger, just the opposite of the harmonious relationships we encourage in condo  associations. Therefore, it is extremely important that the board present such an increase in a positive and proactive manner.

The following tips will help alleviate some of the problems that may arise due to an increase in assessments:

• Draft a letter explaining the increase. If the budget allows for the expense of copying, send the letter out as soon as the board approves the increase or include it with statements. Even better, throughout the year inform the owners about the financial condition of the condo association to prevent unwelcome surprises when they open their dues statement.
  
  
• Provide the residents with detailed information regarding the increase such as copies of the condo budget, most recent financial records, and results of a reserve study. Include charts or graphs from utility and insurance companies that detail their rate increases over the past five years. Providing the residents with these items will help justify the need for the increase.
  
  
• Reassure the residents that the board has exhausted all avenues to cut cost. Provide reports showing bids requested and how costs were cut. This will help residents understand that the board did everything in their power to reduce the expenses as much as they could and that the increase is still necessary.
  
  
• Offer payments plans if it's an annual or quarterly maintenance fee. Let the residents know that the board understands that the increase may cause financial strain on the household and, therefore, the board is allowing the residents an opportunity to pay their assessments over a short period of time instead of the entire lump sum at the beginning of the year or quarter.

Using a few or even all of these tips when preparing to increase special HOA assessments will help preventpotential problems that may arise. Instead of being reactive when owners request justification of the increase, be proactive and provide them with all of the information they need to understand that raising the special HOA assessments was a necessary action.

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Condo Association Fees: What Do They Actually Cover?

You have purchased a condominium, and in the closing you received a credit for condo fees owed. But, what do the condo fees cover?

Condo fees are created as part of the creation of the condo association, and are assessed based on the percentage of ownership that each unit within the condo holds. Fees are typically assessed either monthly, quarterly, or annually, dependent upon what services are provided as part of the dues.

Fees are assessed for the purpose of providing funding for common area expenses, and are set (at a minimum) on a monthly basis by the condo association board. At a minimum, common area expenses should include funding a reserve fund for a future roof replacement, and in a larger condo association, can be extremely complex condo association documents.

In a small condo association, the fees are generally a fixed amount, since there are few shared expenses. In a larger condo, involving hundreds of units, the budgeting process is detailed and complex, and fees can be assessed based on projected annual expenses, with variable amounts for such items as common area utilities.

Items usually included in condo fees are:
1. Reserve funds for large items. Basically a savings account, set to provide for the future replacement of major components such as roofs, driveways, boilers, and air conditioning systems.
2. Fixed annual expenses. Items such as common area real estate taxes, maintenance contracts, and planned improvements such as painting, lawn care, and payroll costs are generally included in this category. These amounts are generally fixed annually.
3. Variable costs. Many condo associations have opted out of charging a flat rate for utilities for the common areas for items such as heating and lighting, and instead charge these expenses on a monthly basis to the owners, based on the current billing. Other variable costs can include things such as valet services, parking fees, and other services provided specifically to that condo owner.

Items not usually included in condo fees are maintenance to your individual condo unless the item being serviced could have a deleterious affect on other condo association owners. To truly understand what is included in the condo fees you are expected to pay, the answer is to obtain a copy of the annual budget from the Board or its manager. Failure to pay the dues can lead to foreclosure either by your lender or the condo association.

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Condo Associations and HOAs - Are They Right For You?

Sick of renting, but not ready to spend your Saturdays on a lawn mower? Often featuring desirable locations, minimal maintenance, and smaller price tags than single-family homes, it’s no wonder young homebuyers find condos attractive. But living in a condo association can present some unique challenges. Ask yourself these questions to make sure a condo living is right for you.

Are the condo fees worth it?

Condos are clusters of individually-owned units typically sharing common walls, landscaping, and driveways. To fairly maintain these common areas, condo association owners pay a monthly condo fee for routine and emergency maintenance including lawn mowing, snow plowing, painting, and roofing repairs.

While freedom from yard work can be a perk, condo fees—which can be several hundred dollars—will take a bite out of your budget. Plus, most condo associations only maintain property from the walls out. That means when a bathroom pipe bursts, you still have to play plumber.

Can you afford a special HOA assessment?

While monthly condo fees cover ongoing maintenance and contributions to a reserve fund for small emergency repairs, condo associations may assess separate fees for unexpected expenses or to fund major property improvements like repaving. If you buy a condo, be prepared for fluctuating or increasing condo fees.

Can you play by the condo association rules?

Every condo association has rules. While some condo associations’ rules may provide owners with most of the liberties of owning a stand-alone residence, other associations’ rules can be restrictive—or downright bizarre. Every condo association is different, but examples of rules you might find include: no dogs, no window air conditioners, no kids, no late-night laundry, or no flags or outdoor decorations.

Condo associations can sue over violations, but neighbors can make your life miserable even without getting lawyers involved. The bottom line? Read the condo documents (which include association rules) carefully before purchasing a unit. And if your style is easily cramped, you may want to avoid condos all together.

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