Few Recourses for Condo Assessments

Question: My wife and I--we’re senior citizens--bought a condominium in May after living in our home since 1960. We love both the condo and the area and want to stay here. But prior to closing the deal, I read the CC&Rs; (conditions, covenants and restrictions) and saw where we can be assessed extra money for certain reasons. I spoke to the real estate woman (whom we knew), and she got back to me after talking to the listing agent in her office.

She was told by this agent that the former owner never paid any special assessments--other than his regular monthly assessment--in the years he lived here. At my first association meeting in May, an assessment of $359 for insurance was set upon me as well as all of the other condo owners. I was told that this was also done in 1986 as well, and that there were other assessments too.

We want to remain here but do we have any recourse?--E.S.

Answer: In all fairness to the previous owner of your condominium and to the agent who investigated and found no record of prior assessments, it is entirely possible, according to Dave Peterson, a property manager for Culver City’s Condominium Administration Co., that neither of them knew that this particular special assessment was in the works.

Premiums Increase

“I’m not surprised that it was for insurance--premiums have been going up like crazy, and this is the only way that a lot of condo associations can come up with the money,” Peterson adds. Of course, it still doesn’t explain why the agent’s investigation didn’t turn up last year’s insurance assessment, although it is again possible that it was regarded as a fluke not likely to be repeated.

“We’ve had one of our associations, made up of older units, where the annual premium just jumped from $20,000 to $115,000.”

In the face of unexpected expenses like this, condo-owner associations have only two courses of action: either raise the monthly dues to establish a reserve fund or hit the members with this kind of special assessment from time to time.

“We feel that it’s better to establish a reserve fund even if it means raising the monthly dues,” Peterson says, “but there’s a natural reluctance on the part of the associations to do this, because it scares away potential buyers.”

Condominium Administration Co. is about 15 years old and manages 80 to 100 condominium associations. “With some of them we simply handle the finances, but for many others, it’s on a full-management basis and we take on all the details--getting bids, conducting inspections . . . handling all the maintenance contracts,” Peterson continues.

Financial Disclosure

Unfortunately, your question as to what recourse you have doesn’t really have any good answer. Before you bought the condo, the seller and the association had to make a full financial disclosure to you, of course, and I’m sure that you read it thoroughly. But it wouldn’t necessarily tip you off to the possibility that some large, unexpected expense lay just over the horizon.

Such calls for special assessments, incidentally, are decisions that must be made by the homeowners’ association itself, not the condo-management company, Peterson explains.

“On a few occasions,” he adds, “sellers have invited would-be buyers to sit in on the next upcoming homeowners’ meeting--with the other members’ approval, of course--so that they won’t be surprised by any problems that may be in the works.” But even this isn’t guaranteed foolproof.

Other than convincing other members of your condo association to raise monthly association dues to establish a reserve fund and reduce the need for special assessments--not a palatable chore, admittedly--there’s not really a whole lot that you can do.

Q: I was dismayed to read your answer in a recent column about the right of a landlord to raise a tenant’s rent verbally. It is simply not true. Although there are many areas of the law that can accurately be labeled “fuzzy,” the question of a verbal rent increases is not one of them. California Civil Code Section 827 governs changes in the terms of what are called “periodic tenancies”--these are tenancies that can go on for an indefinite period, based upon regular rent payments. If rent is paid weekly, the tenancy is called “week to week”; if rent is paid monthly, it is a “month to month” tenancy.

Section 827 states that in order to change the terms of a tenancy, including the amount of rent, a landlord must give advance notice in writing . The length of the advance notice must be at least as long as the term of the tenancy--if it is week-to-week, then one week’s advance notice is required; if it is month-to-month (most common), then one month’s advance notice is required. If the landlord and tenant agree in advance, the length of the required notice may be reduced to seven days, but this agreement must be in writing. As a result, a verbal rent increase has no legal effect.

On the other hand, if a tenant who lives in a non-rent-control area does go ahead and pay the extra rent demanded in a verbal rent increase, the tenant’s chances of being able to recover the extra rent in a small claims court suit are probably slim, because the judge would probably decide that the tenant had waived his or her right to written notice of the increase by paying.

Most of the problems with your response could undoubtedly have been avoided had you chosen a more objective and informed source to help you. The Apartment Owners Assn. is a group that was formed to promote the interests of landlords, and although they certainly have legitimate concerns, one could hardly describe the association as objective in its interpretation of the law and how the courts apply that law.

--ANNE KAMSVAAG

San Fernando Valley

Neighborhood Legal Services

A: Yes, you’re quite right on all counts--rent increases in non-rent-control areas do, indeed, have to be in writing and in advance, just as they are in rent-control areas.

The error wasn’t on the part of the Apartment Assn. of Greater Los Angeles, whose objectivity and accuracy I have never found in question before, but in my phrasing of the question to the group’s spokesman. His impression was that my query had to do with the legality of verbal contracts, as opposed to written contracts, and from there on we went rapidly downhill.

You have also answered my correspondent’s original question very well: If, he asked, he accepts a verbal rent increase, does he have any recourse? Your response was that his chances of being able to recover the extra rent in a small claims court suit “are probably slim,” since the judge would probably consider that, by virtue of paying the rent, the tenant has waived his right to the written notice.

Sorry to have led both tenants and landlords in non-rent-control areas down such a primrose path.