In this week's tip, continue to raise the alarm for boards that are still reluctant to tell owners they have to pay more to live in a great community.
Our lesson starts with a Florida news outlet that's reporting a huge spike in condo listings, attributing it to the building integrity safety regime all condos now must follow. The state's governor is even calling for the legislature to take immediate action to ease condo owners' burden.
This may seem like a Florida problem, but our experts say the crisis is a warning bell for condo and HOA boards and owners nationwide—and a growing number of boards are beginning to heed the warnings.
“I think what's happening in Florida is a lesson not just for condos but all community associations,” says Melissa S. Doolan, an attorney at The Travis Law Firm in Phoenix, who has represented community associations for the last 15 years. “It's about the importance of having a reserve study, having maintenance
plans, and planning for reserves.
“You have to take care of the property—that's your fiduciary duty as a board,” she adds. “By putting off these plans and maintenance issues, you're doing more harm to the community. That's what we're seeing
in Florida—that boards weren't keeping up on funding—and you're seeing people selling and moving as a result.”
Elina Gilbert, CCAL, a shareholder at Altitude Community Law in Lakewood, Colo., who has specialized in community association law
for 24 years, agrees. “The biggest thing I'm seeing is in the sale of condo units where condo questionnaires ask a lot of questions about deferred maintenance,” she explains. “Boards can't afford to defer maintenance. I'm also seeing that a lot of communities are becoming uninsurable.
“I don't see it as communities going under,” adds Gilbert. “But owners do have a hard time because they can't afford the skyrocketing assessments.”
That's also true in New England
states. “In the states I'm licensed in, what we've seen consistently over the years is that boards have wanted to keep the fees as low as possible,” says Janet Oulousian Aronson, a partner at Marcus Errico Emmer & Brooks in Braintree, Mass., who is licensed in that state, in addition to Rhode Island and New Hampshire. “So they didn't adequately fund the reserves, and that's really the lesson this situation has created.”