What Are Alternatives to Higher Assessment?
QUESTION: I live in a 25-unit condominium building that is about 20 years old. The board is considering an increase in the monthly assessment to cover the cost of painting and repairs.
Our monthly assessment is now $175 a month. I feel that higher assessments could scare off potential buyers.
I would like to raise money some other way. Perhaps we could charge a $3 fee for guests who use the pool. We could also charge a yearly maintenance assessment based on the number of occupants per unit. For example, two people would pay $200 and a couple with child would pay $300. Could these methods be used to raise the money for the needed repairs?
A: Sorry, but your creative financing ideas will not fly.
Your first suggestion would create work for someone because the pool guest fee would have to be collected from the owners. I doubt that you are going to want to set up a ticket booth at the entrance to the pool. The association does not have a way of billing the guests and the honor system probably would not be very effective. Owners will not be pleased if they have to start paying for their guests when the pool has been a free amenity in the past.
In addition, the pool guest fees would create more work for the tax accountant because the pool guest fees would be taxable income. The small amount of revenue is not worth it. The arguments against the fee would far outweigh the arguments in favor of it.
Regarding the yearly maintenance assessment based upon occupancy, I assume that you are suggesting that this would be an extra charge in addition to the monthly assessment. I am certain that the association’s declaration does not authorize an extra charge based on occupancy.
The cost of operating the building is shared on the basis of the percentage of ownership (square footage) or is shared equally among the 25 unit owners. Some associations have a more complicated equation that is a combination of the two cost-sharing methods. Each owners’ share should be clearly explained in the governing documents of your association and it probably also is included in the deed to your property. Any other method of computing the owners’ financial obligation is illegal.
Perhaps you think that you could get the owners to vote to change the declaration. In my opinion, this type of amendment would require 100% approval of the owners, and possibly the lenders, since it is an issue that deals with percentage of ownership and each owners’ financial obligations.
Who Should File Claim for Roof Leak Damage?
Q: I own a condominium with a leaky roof. The roof of the complex is the maintenance responsibility of the association. The association’s board of directors is not taking care of the problem. They have instructed me to contact the roofer’s insurance company to file a claim. Why should this be my responsibility? I feel that the board of directors should be pursuing the claim.
My personal property was damaged due to the roof leak. Is the association responsible for the damage to my personal property that resulted from the roof leak?
A: You have asked some questions that often arise in an association when common area components fail. It is not a simple issue because the association’s maintenance responsibility, contractor liability and insurance coverage can all play a part in the controversy.
The board of directors should notify the roofer that the roof is leaking. The roofer should then fix the leak and communicate with you about the procedure to file a claim with the roofing company’s liability insurance carrier for the damaged personal property. Obviously, you will have to personally deal with the contractor and his insurer at some point.
Attorneys don’t always agree on an association’s responsibility for paying for damage to personal property. In general, owners are responsible for their personal property and the owners can obtain insurance to protect themselves from loss of their personal property.
Some attorneys say that when personal property is damaged due to a failure of a common area component, then the association is responsible for any resulting damage. Other attorneys advise their association clients that the association is liable only if the association’s board of directors knew that there was a problem and they were negligent in performing timely repairs. The association’s insurance coverage may pay for the damage in either case.
In some cases, the owner is responsible for damage because the owner failed to take reasonable care to protect his or her property. For example, if the owner knows that the roof is leaking and he doesn’t move or cover an antique walnut table that is located directly under the leak, the owner should assume responsibility for the resulting damage.
You didn’t mention insurance in your letter, but the association’s insurance policy may take care of your damaged property if the contractor’s insurance fails to do so. Some policies are very liberal when it comes to covering damage that results from common area failures while others take a very hard line and refer the owner to his or her insurance carrier. In some situations, the association’s insurance claims adjuster and the owner’s insurance claims adjuster will disagree.
Controversies are minimized when the association’s insurance company or the agent discloses to the owners exactly what the association’s policy covers and the amount of the deductible. The owners are entitled to this information, including who has responsibility for payment of the deductible when a loss occurs. Owners can then seek their own insurance coverage that will fill in the gaps.
Consult an attorney who specializes in community association law if you need an explanation of the association’s governing documents or if you would like a legal opinion of the association’s responsibility regarding your damaged property.
Dispute Reprint
For a reprint of the “Condo Q&A;” column on alternative dispute resolution, including a summary of the law that took effect Jan. 1, an explanation of the differences between mediation and arbitration and information on how to find mediators and arbitrators, send $3 to ADR, c/o “Condo Q&A;,” P.O. Box 5068, Thousand Oaks, Calif. 91360.
