Condo Association Management Blog

Based upon your comments, your condo would not qualify for HUD certification, another qualification of which is a limit on the number of rentals. So, can you sue them for fudiciary mismanagement -- probably not. Most assn gov docs and state laws do not require a reserve study, but a prudent board will have one and contribute to the reserve fund on a monthly basis. Insurance deductibles do not belong in a reserve fund, but can be set aside in a contingency fund. A reserve fund is only for major repairs and replacement of fixed assets. 
 
Unless the members wake up and demand that your BOD get it's act together, nothing is going to change!

It sounds like you have a lot of management issues in your associations besides HUD Certification. From your post it also sounds like the board is not malicious it simply doesn't know what needs to be done. For example in CA reserve studies are required by law, and most condo governing docs require that you have a separate reserve account. 
 
As far as HUD certification goes the board needs to decide if this is the expense you want to spend money on. Starting this year HUD Certification requirements changed and you can no longer get your certification after a buyer makes an offer on your property. you need to be certified before. The certification is also only good for one year so you need to do it regularly to maintain your certification.

In what state are you located. Most bylaws and state condominium laws demand that the board of directors develop a budget and adopt it by a majority vote of the unit owners at an annual meeting. Evidently your Board thinks they are above the law,

Is HUD certification and FHA certification the same? I know that our condos are now over 35 years old and out of FHA certification and so people can't get FHA loans for the condos now. The Board was told by the mgt. company that we wouldn't be able to get it again.

This is an archaic, form of housing that takes in countless owners dollars, with little accountability, except through expensive litigation to get records. Laws of governance have no teeth of enforcement. You might want to look tenants in common laws to see if you would have more of an advantage and control over your property than is available under condo or hoa laws.

I live in Minnesota.

Whenever you get HUD involved, you may be opening yourself up for Section 8 Housing. HUD will not help when it comes to one of their tenants violating the law. In the end you have to resort to complaining directly to the property owner. I have no objection to anyone living in my community that needs help, but when they bring in a bunch of people to live there, don't take care of their property and cheat the government, I don't like it. Look into all the ramifications before you try for HUD. PS the tenant can also sue you for interfering in their life by complaining.

This message is for Linda who asked about FHA for older communities. There is no limitation on the age of the condo in obtaining FHA certification.  
 
There are very specific requirements which must be met to achieve FHA approval. However, it is very important in this market for most condos to enter into the process and strive to meet the requirements. Right now I am working with 3 projects in active pursuit to achieve FHA cert; about 5 other boards are working with their management companies to obtain reserve studies and other items including delinquent accounts and proper budgets.  
In a couple of cases, we have advised boards to begin merging very small (1 bld/27 units) condos into one larger complex. The cost of merger will be recouped in several years and is well worth the effort now. Another 8 condos just completed their merger and are now finishing the reserve study before we submit application for FHA approval.  
 
RE the initial inquiry - for the next several years at least FHA loans will be important. One suggestion - have a presentation by a local real estate agent and mortgage lender (well chosen for having good presentation skills) with solid facts to back up the need for the condo to "catch up" with the times.  
At some point, a homeowner may consider suing for the board not taking action to facilitate sales - by having reserve study, FHA, balanced budget, etc. More financial institutions are requiring information similar to FHA before approving a loan. The terrible alternative is that sales prices may be driven down drastically due to the inability of owners to sell except to investors for cash.  
 
Good luck to both condos. Contact me at nancy@cpwi.com for assistance if it would be helpful. 

L. Baker, 
 
 
 
The FHA certification for condos has nothing to do with HUD Section 8 housing.