Slashing perks when condo fees rise

Unnecessary budget expenses a growing concern for unit owners

DEAR BENNY: I thought condo fees were for the maintenance and repair of homes and grounds, and for lawn care. Our association fees also pay for parties. I think the people who participate in the parties should pay for the parties themselves. Our condo fees have been raised twice since I moved here six years ago, and they are expected to go up again this coming fiscal year. What can be done to remove the party category from the budget? –R.E.

DEAR R.E.: Condominium fees are set by a board of directors, and in some cases, depending on your legal documents, the budget must be approved by the membership. The fees cover a lot of things, over and above maintenance and repair. They pay for snow removal (where applicable), lawn maintenance, management fees, and (of course) legal fees.

In many associations, the budget will include parties, although if liquor is involved the board must consult with their legal counsel as well as their insurance agent.

Since you are concerned about the party item in the budget, I suggest that you volunteer to assist with determining next year’s budget. Many associations actually have budget committees that work with management to draft a budget for consideration by the board and the membership.

If there is no such committee, make a formal request that one be created.

But don’t just look at a line item for "parties." Analyze the entire budget and compare it with the actual expenses over the last few years. We all know that utility charges (water, gas, electricity) have gone up, but are there any budget line items that can either be eliminated for next year or at least reduced?

Condominium ownership demands that every unit owner take an active role in the affairs of the association, whether serving on the board of directors, or attending board meetings and serving on committees.

If you do not participate, then you should not complain.

DEAR BENNY: I live in a freestanding house that is part of a homeowners association. We have a neighbor who parks a 32-foot motor home in four guest spaces just outside our fence, with permission of the manager, for 24 hours every three or four weeks. In our restrictions, covenants and conditions (CC&Rs) it states, "Recreational vehicles shall only be parked in an area designated by the association for such use." The owner of the RV is parking in guest parking spaces (meant for one car in each space). Our manager told us those spaces are common property. Our bylaws state that "common areas shall mean all real property owned by the association for the common use and enjoyment of the owners."

What does "designated by the association for such use" mean? Can the board let this homeowner park in any of the guest parking spaces, even though they’re not specifically for parking an RV?

My husband and I are very frustrated by this situation and the board is refusing to make any changes. In our view, they are ignoring the rules. –Lorraine

DEAR LORRAINE: One of the major concerns of state legislators when drafting a common ownership interest statute for their state was to provide flexibility to associations and their boards of directors. Some things are carved into stone (i.e., the state law), such as the ownership percentage interest for each owner cannot be changed unless 100 percent of the owners agree. So, most community association statutes (whether for condominiums, homeowners associations or cooperative housing projects) have language stating that unless specifically required by law, the association legal documents can expand on the law.

That’s a long-winded explanation of "designated by the association." I doubt that your state law deals with parking of recreational vehicles, so the drafter of your legal documents gave the authority to the "association" to designate where recreational vehicles can be parked.

And, typically, if there is a board of directors, the legal documents delegate authority to the board to make such decisions.

Has the board formally authorized the manager to make his decision? You should demand a copy of the minutes where such a decision was made, if at all.

Here’s my suggestion: Do you have any support from other neighbors who dislike where the RV is parked? It would be very helpful if you could muster a number of owners and then prepare a petition to the board, demanding that it rescind the parking authorization.

Otherwise, if you are alone in this fight, you may have to consult with legal counsel to assist you.

DEAR BENNY: Our association has 120 owners and nine board members. What is your opinion on a board member getting between an owner and renter, and siding with the renter? –Charlete

DEAR CHARLETE: That’s an interesting question, but I need more facts. If, for example, an owner is violating the rules and regulations of your association and the renter is trying to stop that violation, then it might be appropriate for a board member to intervene.

However, in general, boards of directors — and individual board members — should refrain from getting involved (and/or taking action) when there is a dispute between owners, or between owners and renters. Obviously, if the dispute rises to a situation where the health, safety or welfare of the association is involved, then of course the board should step in.

But then, it should be a board action and not a decision by just one board member.

If you want to provide me with more facts, I may be able to provide you with a specific response.

DEAR BENNY: If I have a good cause to postpone a trustee sale date, can I (as the real estate broker involved) or the owner sue to stop the sale? I have one right now, for example, and may need an attorney’s help.

Briefly, the facts are as follows: The first-trust lender approved a short sale, which has to take place within 120 days from date of approval. There is a second trust, but the sellers did not know that it was transferred from one bank to another. It took us a couple of weeks before we learned the name of the new second-trust lender. Accordingly, we are still waiting for second-trust approval.

Unfortunately, the lender will not postpone the foreclosure sale until the second trust provides approval of the short sale. The foreclosure sale is scheduled to take place very shortly.

What can I do to help these people? Can we file to stop on the trustee sale? And, if so, what do you charge, as I will be paying it, or can I do this if you do not have time, and how? –Patrick

DEAR PATRICK: Thanks for thinking of me, but even if I were licensed to practice law in your state it would be unethical for me to get involved. I practice law and I write real estate columns, but never write about a case in which I am involved. Of course, if I get a good decision from a judge, I will report that in a future column, with full disclosure.

Your interest in helping salvage the short sale is commendable. You should immediately find a lawyer in your area who has experience with stopping foreclosure sales. As you no doubt know, there have been numerous cases throughout the country where judges challenged (and stopped) foreclosures on technical grounds, such as (1) the lender does not have the promissory note; (2) the lender did not follow the notice requirements in the deed of trust (mortgage document) regarding default; or (3) the foreclosing party was not authorized to proceed to foreclosure.

I find it interesting — indeed shocking — that banks continue to pursue foreclosure when a cheaper resolution (such as a short sale) is imminent. Quite often, when there is a foreclosure, the bank ends up owning the property. Thus, it has to pay real estate taxes, carry insurance, and pay a real estate broker a management fee and/or sales commission.

But, I am not a banker.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.

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