Board Can Raise Fees Any Time

Question: I am interested in purchasing a condo, but I have some basic questions. Can the condominium association monthly fee increase after I purchase? Who is responsible for repair and painting of balcony railings? Should I request that the repair be done before I close escrow?

Answer: The monthly assessment can be increased at any time by a vote of the board of directors of your association. The board is limited to a 20% increase annually, regardless of any limitations in the governing documents of the association. However, the membership can approve a higher increase than 20%. If any increases are currently being contemplated, you are entitled to be informed in the disclosure documents that you receive prior to the closing.

If it is unclear who is responsible for the balcony after reading your declaration of covenants, conditions and restrictions (CC&Rs;), ask the seller to have the work done. The seller can then contact the association if the association is responsible.

I recommend that you require the balcony repairs be completed prior to your purchase. If the repair is the responsibility of the association, the board may decide that it does not want to do the work when you want it done.

Now is the time to find out how well the association will respond to the seller’s request.

Rental Disclosure Often Required

Q: Can I rent out my condominium unit after living there for a few years? Does the association have the right to keep me from renting the unit?

A: A small percentage of associations do have rent restrictions in the governing documents. Many associations do not prevent renting, but the owner is required to disclose information about the tenant and provide a copy of the lease. If you have been told that you cannot rent out the unit, consult an attorney who is well-versed in community association law.

There is a legal precedent that established that if your condominium association is subsidized and/or designated only for low-income owners, you would be required to live in the unit yourself. Your attorney can provide the advice that you need.

Board Not Beholden to Reserve Study

Q: In your Nov. 29 column headlined “Even Small Association Boards Are Required to Have Reserve Studies,” you stated “the board is responsible for long-term financial planning and budgeting based on a reserve study.”

The board of my association had engaged a reserve study company to provide a reserve study, but now it has decided not to follow the recommendations in the study.

The board has extended the “expected remaining life” of some of the reserve components while keeping the “replacement cost” constant. As a result, the board’s reserve budget is significantly lower than the recommendations of the consultant.

Does state law require that the board follow the reserve study?

A: The law requires that the board provide disclosure to the owners. A reserve study must be prepared and the study, or a summary of the study, must be distributed to the owners. The board does not have to follow the reserve study’s recommendations.

If the board has documentation to show its reasons for not following the reserve study, that information should be shared with all of the owners also.

The board may have good reasons for varying from the reserve study. The study may provide an estimate of roofing costs, for instance. However, if the board has written estimates from reputable contractors that are lower than the roofing estimates in the reserve study, that would be a valid reason for reducing the amount of reserves in the reserve budget.

The law requires that a general statement of the method of calculation be disclosed in the reserve study that is distributed to the owners.

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Jan Hickenbottom is a community association management consultant and a founding director of the California Assn. of Community Managers. She selects questions of general interest for the column and regrets that she cannot respond to all questions received. Send questions to: Condo Q&A;, Box 5068, Thousand Oaks, CA 91360.