Condo Association Management Blog

Many managers, attorneys and accountants are recommending to associations to budget for shortfalls or loss of income. 
 
Rather than try to get the money back, I would urge you to work with your board and put the money in reserves for future spending or other capital projects. Those that did not pay should also be pursued as long as it is cost effective (a policy that determines when and how to pursue collections and when to write them off as a loss would be something your board should consider, and I urge do) for the community. 
 
I understand your ire and position, but you, the board and the community should be celebrating that the project cost less than anticipated and that money could be put aside for future projects. Plus, there is the cost and effort of sending back money to homeowners or crediting accounts. In fact, what may happen is that you may be able to keep your fees static for some time instead, as a trade off. It is something to consider and discuss!

Before hiring a lawyer and running to court, have you spoken with the board (specifically the treasurer) about his/her plan to collect from those owners who have not paid? I would meet with him/her privately, and further suggest that s/he send a letter/email to all owners stating that "X number of owners owe the HOA Y dollars, and payment must be made by March 1st." 
 
 
 
Going to court is expensive: not only will you pay an attorney as the plaintiff in such matter, but you will pay your share of the cost of the HOA's attorney as well. Worst of all, you will invest a great deal of time and the chances of getting the desired results are very small. So, talk among yourselves first and only use court as a last resort. 
 
 
 
Now, what is the basis for the special assessment? Unless the money was needed immediately to cure an emergency situation, I would guess that your HOA documents require the owners to vote to approve any special assessment proposed by the board. Did this happen? I hope so, and I hope that the board gave all owners a detailed plan of why $400,000 was needed to address the problem. 
 
 
 
All of these issues need to be explored and discussed with your board before hiring a lawyer.

If other owners did not pay, then that money is not there right? 
 
Yes, in a shared community if others do not pay you cover the cost until collected. 
 
Once collected and all work is complete, the Board can normally decide what to do with the funds. They can roll it into a reserve account, apply the funds towards future assessments, or use it to do improvements, etc.

Most likely your Board will lien those Members who haven't paid. It makes sense to add the left over money to reserves--however, the law may require that assessment money be used for the single purpose of the original assessment. So, an assessment for repair of street lamps cannot be used the next year for solar panels on the clubhouse.

Grossly unfair. A deprevation of private property. I would write a demand letter to the board and send it cerified mail demanding a refund of your share of the over payment. How much do you believe you are owed? If it is a small amount, the cost of trying to collect it could be more than the amount to be recovered.  
 

Condo Hater writes "grossly unfair," " a deprevation of private property," 
..."demand"..."certified"... 
Holy cow, the Board isn't stealing your money. At worst it it is making a decision to take money from one of your pockets and putting it into another of your pockets. Almost like moving it from one bank to another. You are an owner of property called a share or a part of an HOA or Condo.That 'share' of the unused assessment is still yours. 
Are the Board members putting the money into their own pockets? If so, that would call for verbiage like that at the top of this comment.  
 
You aren't being objective--as "condo hater" isn't still possible to moderate your views depending on the situation.

First time our association had a special assessment,we had two choices. 1. put it in a special reserve for the next time we had a special assessment,2. Divide the money not used, among the owners. The by laws stated the money could not be put into other reserves. So they divided the money among the owners. That worked out real well.  
 
This last summer we were assessed again, on the assumption our insurance premium was going up and we didn't have the money to take care of it. When that didn't happen, the board decided to take the money they were supposed to return to us, and instead, lowered our association fee payment for one quarter. Later we found out the money was used to balance the budget. Was this legal? Who knows. 
 
As I've said many times the board can do what ever they want, because most of us can't afford to get a lawyer to find out if they were right or wrong.

This assessment was for a specific purpose. The surplus funds from the assesment are the property of the owner who contributed them not the board to do what they see fit to do with them. If property belongs to an individual they have control over it and can use it as they see fit. The board is not taking it from one of your pocket and putting it in another. If the owner needs the balance for his or her own expenses, he or she can not use it as they see fit. That money is not available to the individual to do as he or she sees fit. The owner can not buy groceries for their own use with it for example. As far as I am concerned, that is a breach of a fiduciary duty to the owner. This is other people's money, not the board's to use as they see fit.

I think I get it far more than you. Groceries were merely an example of the inability of one to use the money for one's own purposes and the distinction of possession and control over those funds. You have the typical attitude of a board member who tries to control by personal attacks. Your comments about affording or not affording a property are inappropriate.  
 
 
 
What you fail to comprehend is that a board has a fiduciary duty to the owners which includes the duty not to comingle funds and use them for a purpose that was not designated in the special assesmentment. The lack of control by the owners in situations such as this is a major problem in condo ownership.  
 
 
 

If the DOCs or the laws of a particular state call for strict adhesion to the purposes of the original assessment, then, by all means, the funds should be returned to those who paid the assessments. But if the law of a particular are silent on the issue, then the Board should do what it believes is in the best interest of the Association. It is the Board of the Association; not that of individual owners.

Condo Hater: 
 
Although you have managed to convince yourself of an interesting theory not based upon law or fact, it is interesting nonetheless. 
 
When you purchase a condo, you do so according to the condo docs and state law. In Florida, and many states, it dictates that your board has ability to assess for repairs (whether regular, special, etc.), and they have the fiduciary duty to ensure those repairs are made. 
 
In this case, the board would not be comingling funds as you suggest. Normally boards set up a special account, deposit all funds into that account, pay for repairs out of the account, and once all repairs are finished, they board can legally decide what to do with that money. They also have the ability to assess for "bad debts" which is what you describe with others not paying. They are under NO OBLIGATION WHATSOEVER, to return the funds collected to you. 
 
My suggestion is that you brush up on your condo law, go take a condo management class and come to terms with what you have purchased and your rights. 
 
Your view is not necessarily in alignment with state laws and requirements.

. Condo hater. I agree with you %100 on this one. Most of these comments are from people who are on or have been on a board. It seems I read somewhere in Fl state laws, a board can do one of two. Either put the money in a reserve to be used only for special assessments, or divide the money and return to owners. Of course those who have a management company, or works for one, will agree with what the board does, with OUR money. 
 
The remark to move to a cheaper condo, is uncalled for.

The thread of this discussion seems to be overlooking an important point: the human element in all of this combined with the fact that your ultimate goal should be one of building a strong sense of community. I can't opine on the legalities of this matter, but the "good neighbor" policy would be to refund the overpayments or provide a clear justification for retaining the money. Just as a good baord is diligent in collecting past due receivables, they should be just as diligent in refunding overpayments. No other action eliminates problems better than thinking of your neighbors. When they believe that the board has their best interests at heart, complaints are reduced to zero.

Dear Over-assessed 
 
 
 
Condo hater has obviously had some bad experiences but makes a point. It seems pretty simple. If the board decides to refund unused amounts back to owners, follow the pertinent rules for doing so, or create a new policy for doing so, officially. If someone has a hardship case and needs grocery money or whatever, the board should consider homeowner's needs in a case like this, especially if there is no clear rules on refunds of over assessments. Ultimately if the decision is made to move the excess monies to the reserve (from one pocket to another), just be sure all is accounted for properly and done so in accordance with state laws, your CCRs, by-laws, etc.  
 
 
 
Many Condo / HOA boards have a tendancy to create more condo haters with arbitrary, self serving and poor decision making, sometimes despite collective good intentions.  
 
 
 
Who was it who said "Those intelligent enough to avoid politics are forever doomed to be governed by those less intelligent than themselves."  
 
 
 
I try to keep this in mind when spots open up on our various HOA boards, PTA's, city councils, church fund raisers, etc.  
 
 
 
Get involved... or quityerbitchin!  
 
 
 

Condohater. You buffle me! You say one thing in one comment. Then change in the next. I can't keep up with you.

I like this word, "buffle." I am adding it to my vocabulary.

Actually special assessments are "Restricted Funds". They can only be used for the purpose for which they were collected. Any over-assessment must be returned to the unit owners who paid. Those who have not paid must have collection actions initiated (lien, Lis Pendens, and foreclosure). You may not use these funds for any other purpose, you may not comingle them with reserves.

condo hater..... I am with you 100%. 
 

I have been in a condo since new 11 years and watched it fall to crap 5 years with a new board and management. Policing residents to death. We have 120 sigs so far to do a board recall finally after 5 years of hell. Condo even if good in the beginning, sometime during things will change usually for the worst. My first and last time ever buying a condo.

HELP 
 
I live in NY and have a condo board who continues to collect a special assessment for legal bills almost 2 years after the atty's were paid. 
 
The monthly bill has the special assessment $250 on it. 
 
When challenged, one member said either we moved the money over to the reserve fund, or the legal fund is now a reserve fund. 
 
Is this legal ? Please respond with any applicable statutes and sources of info if there are any in NY.

Re your special assessment: (1) You must have received a "Notice of Levy" stating the purpose, term, and amount paid over a set time period.(2) S/A funds can only be used for the purpose for which they were levied and cannot be comingled with operating or reserves. (3) You must send a written request to the board of directors c/o the manager, if any, to view the financial records for the past 2 years. Make copies and track the funds.When you have tracked the income and expenses related to this assessment you will be prepared to take the appropriate action. When filing a claim in your local district, you must have completed your investigation and have prepared an Excel spreadsheet detailing the income and expenses with balances and/or improper expenses. Attach copies of your spreadsheet and the financials from the association to your lawsuit. Demand attorney fees and costs of filing the action in addition to your share of the over-assessment. If the cause is not settled at mediation you can then retain an attorney to represent you at trial.You will find NY condominium statutes at your local public library.

expfli.. 
 
Thank you for a well thought out and detailed response 
 
Does your response apply to NY condo's ? 
 
I can not find any info in the NYS statues. 
 
thank you again

I am too in a similar predicament; my HOA charged me a late fee for my due, when my bank statement shows that they clearly got the money before the due date. I tried to contact them, but they just bounce me around from a few representatives to a manager and to a liaison with no solution. All I get is a forwarding email and no reply addressing the issue. I went to a community meeting and found that the board would ignore everyone and just speak among themselves. Come to find out 2 of the board members does not even own property in my community. One of them was the manager assigned to us by the management company and the other was a liaison placed there by the original builder. Most of the board member were people that first moved into the community when it was first built. Some one told me that they had just created several posts (parking committee) for their friends just by calling yay or nay among themselves. At one meeting I overheard the manager and the liaison said that they would never be dumb enough to buy into a community and laugh about it. After I began to distrust them more and more, but I don't know if I should pursuit this any further because there were a few people who did voiced their complain on several issues and afterward they received fines for all types of violation. The thing is prior to their complain they didn't get any fine, but afterward it seems like they were targeted. Some people on this thread said that the money is still mine because it is part of the community, but I rather it stay in my pocket. Who better at spending my money than me. I need to sell this place and get out of here ASAP.

Condo Hater and a few people who think like he or she does attack Board Members because the money is not returned. Condo Hater and his allies assert that anyone who disagrees with them is a Board Member or a past Board Member. Is it conceivable that every Board is crooked and that no one follows the rules of their state and their documents? Many Board members are actually familiar with State statutes and HOA or Condo DOCs. It would be a good idea for Condo Hater and Company to read these DOCs and Statutes before complaining.