HOAleader.com - Tip of the Week - February 14, 2020
Published: Fri, 02/14/20
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Condo Board Allegedly Shames Owner Who Complains About Surprise Jump in Special Assessment
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In this week's tip, we report on a battle in a Maryland condo over a surprise increase in an assessment and the board's alleged public calling-out of an owner who complained.
According to a complaint by a condo owner, a board notified members of a $1.5 million project, but it's now ballooned into a $2.6 million project — paid for by a special assessment.
Is that OK? A homeowner says no and is suing.
In response, the board has allegedly called out the owner and urged members to "take action" against her. Yikes!
"I'm literally coaching a manager on this today with a board that has to go through a big increase on a special assessment or a loan," reports Elizabeth White, counsel at the law firm of Sands Anderson PC in Williamsburg, Va., where she leads the firm's national community association industry team. "It's possible you think a project is going to be one amount, and you do everything regarding your special assessment about that. Then the inspector says more work needs to be done.
"Also, a few years ago, we represented an association that was doing a recladding project," she recalls. "The board thought it was just removing EFIS cladding and replacing it with HardiePlank. Turns out, the whole structure was rotted and needed to be replaced." (In case you're not familiar with it, EFIS is a type of siding that's more formally called an exterior insulation and finish system, or EFIS.)
The details our reader has provided are on the brief side, so our experts can't specifically speak to that situation. "I don't think we have enough information here," says White. "If the board is notifying members of this issue, you'd hope someone has looked at the governing documents to ensure the board has the authority to increase the assessment amount or obtain loans of that magnitude without going to a membership vote."
However, this could also be an emergency. In that case, the board could have more authority to act. "It might be emergency repairs," speculates White. "The community I'm working with had a fire inspection, and it revealed violations and needed emergency repairs.
"Even if you need that, you can have a bunch of members who say, 'I'm on a limited income, and I don't approve,'" she adds. "Here in Virginia, we have a statutory provision under which a certain percentage of owners can rescind a special assessment at a special meeting.
"If the board attempts to get a special assessment and the owners rescind it, the board is off the hook for repairs and its fiduciary duty," says White. "But in this reader's case, certainly there's a communication issue here. The board should be informing members of the situation and asking for their buy-in as they learn more information."
Can a board increase a special assessment amount once it's been approved? That depends, of course. Find out the many ways states handle this situation — and why our experts are uncomfortable with the board's alleged public shaming of an owner — in our new article: https://www.hoaleader.com/public/4061.cfm
Best regards,
Matt Humphrey
President
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