Condo Association Management Blog

Isn't this why you should have a reserve fund to cover expenses such as this?

Your bylaws and the PA State Condominium Act both specify that assessments are based upon percentage ownership in the council of unit owners. You cannot assess all equally.

You will have to assess proportionally to each unit owner's percentage of ownership if this is what your governing documents say. You cannot assess everyone equally if doing so contradicts your by-laws.

The method for special assessment proportionate to each owner is a defined by the association’s governing documents. The provisions will dictate how the assessment is to be shared (proportionate to ownership interest; square footage or another method).  
 
 
 
With respect to securing debt service, you may be speaking to the wrong lenders who are not versed association lending. Most common lenders don’t understand the concept that an association, while has no real assets to pledge as collateral, have the ability to pledge their assessments (if the loan goes into default). More importantly, well versed lenders who have experience in providing debt service to associations like these loans because the risk is actually spread out to more than one person. There are several big players in this specialized field. We've helpd associations secure debt service on many occassions. If you need a referral, please let me know.  
 

Your Q: I am in Pennsylvania. Currently we are under a property management service. We discussed assessing the other members for work that needs to be done to our building. We were turned down for a loan due to no collateral. This is why we're having an assessment. My question is how do you assess the other units their share of the portion that we are assessing them. I think all needs to pay equal amounts and not by the size of their units. I believe our by-laws state go by size. Can we set it up differently to have everyone pay equally? Work will be done to the building not their units. Any responses will be welcomed 
Tags: Assessments, pennsylvania  
 
 
My A: Not so straight forward a question, I am afraid. 
I think you mid-westerners can be consciously aware of deeper problems and ask these pertinent questions instead, including the followings: 
 
1. My association's bylaw and the state law governing condominium association both says that the board has duty to regularly estimate (Annually?) the amount needed to (Capitalize) infuse into the Reserve account for future repair and replacement. I have ascertained that to be the laws and regulation. 
2. Now that there is no money to do repair and replacement in parts of the association's building and facilities as result of noncompliance as set forth in the above item 1.  
3. Who is responsible for the damages for noncompliance? The board ? 
4.Whether the board has wrongly instructed the hired management agent to do so? 
5. Is the primary responsibility for the loss on the professional property manager (Of magnifying the problem of disrepair due to overdue in providing repair and replacement when the initial problem was less expense to overcome)? 
6. In either case, regardless of whether the board or the agent is responsible (Both are agents of the association as matter of law and therefore same degree of or standard of care required, whether the board is paid or not for their duty as board member, and that is the law) can the homeowners or any homeowners file insurance claim under the coverage of directors and officers liability ? 
6. Is the association really that poor? Has anyone a)Totaled all the income of condo fees of say 2 years b) Minus the amount claimed and proven to be uncollected and c) Further minus the total expenses as those declared by the board or the management agent in the financial monthly reports of the same two years and see if there is a bundle of money short? That is, the board's accounting show that the cash in bank is a few thousand while, the above manner of totaling income and expenses show that there should have been tens of thousands left, not a few thousand dollars? 
 
Sincerely, 
BETP Inc.

BEPT's rather lettered response doesn't really solve anything. It is as simple as this: 
 
1. It is the Board's responsibility to plan the corporation's finances, which includes budgeting for maintenance and capital projects. 
 
2. Since board members are almost NEVER professionals in anything even remotely related to managing real estate, they enlist the services of a management company, which is supposed is supposed to provide the Board with the knowledge and experience they lack. 
 
3. Boards put too much faith in management, and management puts relatively little effort into properly planning the finances of the corporation. 
 
4. Sudden unexpected maintenance issues? There should be no such thing, or at least if something truly random does occur, there should be adequate reserves to cover it. If not, your board and management have both failed.  
 
5. Is anyone responsible for what is essentially negligent management? Hah. Management companies ALL have a stipulation in their contracts which indemnifies them from any liabilities. This is usually bulletproof, unless a board can show that the management company acted specifically contrary to board directions.  
 
Regarding debt- don't do it. Corporations acquiring debt is a damn train-wreck waiting to happen. Owners get screwed in this situation over and over. The burden of paying for assessments should be each individual's own burden.  
 

In most bylaws, it will state that special assessments will be based on a unit factor/ownership size.