Owner Can’t Afford to Pay Special Assessment

QUESTION: The Board of Directors of our homeowner association proposed a special assessment of $2,400 to fund certain substantial and long-delayed maintenance projects. The proposal was voted on by the membership and was approved by a slim majority of 52%.

The payments are to be made in four installments of $600 each. My husband and I were unable to pay the full amount of the first installment so we paid $200 instead, and requested an extension that would allow us to pay the special assessment over a two-year period. Our check was cashed and credited to our account, but a $10 late fee was levied.

The board of directors, through the association’s attorney, has informed all the homeowners that liens will be placed on the property of any delinquent owners. Foreclosure proceedings will be instigated if the full $600 is not paid on each established due date. They also informed us that no partial payments will be accepted, even though our $200 check was accepted and cashed.

With the regular monthly assessment of $170, we are unable to pay the additional money. All appeals to the board have been ignored. Do we have any recourse to save us from foreclosure? We would appreciate any advice you can give us.

ANSWER: It is unfortunate that your association’s financial condition required such a large special assessment. It may not be easy to accept; however, you have been living in an association that was obviously underfunded in the past. If you and the rest of the owners had been paying an adequate amount in previous years, this special assessment would not have been necessary.

You and the other members of the association voted to elect board members in the past who did not adopt a realistic budget. Deferred maintenance resulted and now all of you are burdened with a lump sum “wake-up call.” A special assessment is the proverbial rude awakening, never the best way to fund your association’s maintenance needs. Another negative aspect is that it sends a warning to real estate agents and potential buyers that the association is underfunded and that more special assessments may be required in the future.

I often hear board members bragging, “Our board of directors hasn’t increased our monthly assessments in four years,” or similar examples of holding down the budget of their associations. I ask, “How have you been able to cut your expenses? What are you neglecting to maintain?” Time marches on and, in general, associations need to increase their maintenance expenditures as the complexes become older and require more preventive maintenance and repairs.

Sometimes board members need to be strongly reminded that they have a responsibility to adopt a budget that will adequately maintain a realistic operating fund and reserve funds. That is one of the primary ways to protect every owner’s investment and preserve the association’s real property and collective assets.

It appears that the association’s board of directors has followed proper procedure by obtaining a majority vote of the owners. You cannot contest the collection of the special assessment on the grounds that it was not properly levied. The association’s delinquency procedures are legal and these procedures were properly disclosed and distributed to all owners as required by state law.

The association needs the money, and you must pay it. The board of directors must take a strong stance on collecting it. How can the association pay its bills if a number of the owners defers payment? The association or its management company accepted your partial payment but they did not waive the late fee. This, too, is proper procedure, and I would advise the association’s board that they are correct in doing so. Accepting the partial payment does not remove the association’s right to levy a late fee, lien the property and eventually foreclose.

My advice is to continue to pay as much as you can while trying to arrange a short-term personal loan or an equity loan from a financial institution. If that is impossible, perhaps a relative can assist you with a loan.

By making partial payments until you can get some additional funds, you will show the association that you are trying to comply. Communicate with the board in writing and tell them how you are trying to resolve the problem. This written communication is very important. It will possibly keep the board of directors from starting foreclosure procedures if they see that you are making an effort to pay.

Who Is Responsible for Concrete Slab?

Q: A section of the concrete slab of our condominium has settled, resulting in a wide crack across our kitchen floor. The floor on one side of the crack is about one-half inch lower than the rest of the floor.

The declaration of covenants, conditions and restrictions (CC&Rs;) does not specify who is responsible for repair of the slab. Does this relieve the association from the responsibility for the cost of the repair?

A: Several legal issues are involved. If your association is less than 10 years old, and this problem is a latent construction defect that was just discovered recently, the builder-developer may be responsible for the repairs.

The second legal issue involves maintenance responsibility based upon ownership of the structure of the building. If your unit is a typical condominium unit, the association owns and is responsible for repairs to the common areas, which would include anything below the carpet or floor covering. Refer to your association’s legal documents, including the CC&Rs; and a document called the condominium plan that discloses the legal boundaries of the individual condominium units. You should also read your property deed for specific information about your ownership.

In general, individual owners are not required to make structural repairs on common area that is owned by the association. If the slab is designated as common area and, therefore, is owned by the association, you would not be required to pay for the cost of repairs. The repairs would be the responsibility of the association. The board of directors would be responsible for approving the methods and cost of the repairs. The cost would be paid with the association’s funds.

On the other hand, if your association is a planned unit development (PUD) and you own the ground that the unit sits on and the structure of the building between the common walls of the adjoining units on each side, then you would be responsible for repairing the slab.

If you and your association are unable to come to an agreement on the responsibilities because of ambiguous legal documents, the board should consult the association’s attorney, preferably one who specializes in community association law. If the board fails to deal with your problem, you have the right to contact an attorney to act in your behalf. With proper legal advice, this can and should be resolved without conflict.