2017 Condominium Legislative Update - Part II

“Congress: A place where there are too many Democratic congressmen, too many Republican congressmen – and not enough U.S. Congressmen.” - Anonymous (likely for good reason)

Continuing on from the last column, the Legislature passed two additional bills that the Governor signed into law which have a direct impact upon condominium associations. One has to do with food, which is always a good thing; the other helps with further financial transparency.

Grills. One of the big problems in condominium associations is people frequently have decks. Decks in and of themselves are not the problem, but we as a country like to barbecue and otherwise use our grills. Unfortunately, in all municipalities of which I am aware there is an ordinance that bars the use of open flame grills from being within 10 or 12 feet of a structure. (Depending upon the municipality this can mean 10-12feet from the unit or 10-12 feet from anything attached to the Unit, such as the deck itself.) Of course, most owners put and use their charcoal or propane grill on the deck.

I have never seen or heard a municipality fine someone, but the larger concern is that if there is a fire caused by the use of the grill on the deck, the carrier can void coverage. That can be a huge problem.

To help address this issue, the Legislature passed a bill that says, “(f)or all dwellings, including multi-unit dwellings, electric grills with a safety certification from a nationally recognized testing laboratory, such as Underwriters Laboratories (UL), shall not be considered open flame cooking devices under the state fire code.”

How should this work in condominium associations? Pass a rule that requires anyone who uses a grill on their deck to use an electric grill from a recognized testing laboratory and provide proof of same to the Board of Directors. This process would properly balance the desire of owners to grill against the need for the Board to protect all owners both from a fire hazard and from the potential denial of insurance coverage should something go wrong. (Some associations bar grills from decks so as to prevent grease drippings from marking and ruining the deck. Such associations can require a drip pan, like those frequently found under washing machines, to be used. In my experience, owners will do anything to keep grilling.)

This law became effective August 15 of this summer, so there's still time to put some burgers on the grill and enjoy what's left of summer.

Financial Information Access. In the quest to make matters more transparent at associations, the Legislature passed a bill that will grant owners the right to see certain financial information, and an association must provide the information with fifteen (15) days of a request. This is good as an association is not owned by a board, but by all of the owners. Unfortunately, as with so many things, the theory and the reality don't always mesh well.

For instance, an association must make available to all owners a profit and loss statement at least thirty (30) days prior to the Association's annual meeting. That reads well. The problem is it does not define what a profit and loss statement is, setting up a problem with rogue boards.

More importantly, as you may remember, a board has to adopt a budget and within thirty (30) days thereafter send a “summary” of it to all owners. Once it sends the summary, the Board must set an association meeting within 10-60 days after that to ratify the budget. Of course, that's a bit of a problem.

The budget is now required to be ratified at an association's annual meeting. The statute requires the Association to send notice of the Annual meeting at least 21 days in advance of the meeting, yet the budget section says it can be sent anywhere from a minimum of 10 days to a maximum of 60 days. And the new law says a profit and loss statement has to be sent at least thirty (30) days. Clearly we have some math challenged legislators who think “math” is nothing but a four letter word.

What to do? After a board adopts a budget, it should send out the budget summary and a profit and loss statement together, put them on the Agenda for the Annual Meeting and send the Annual Meeting Notice out for a meeting set 30-40 days later. That will cover the 10-60 day period required by the law, cover the 21 days minimum required for setting an Annual Meeting, and cover the new requirement of sending a profit and loss statement at least 30 days prior to the Annual Meeting. A classic case of the left legislative chamber not knowing what the right legislative chamber is doing.

In addition to the profit and loss statement, owners are now allowed, “access to all financial information regarding the profits and losses associated with the operation of the condominium, including any contracts, mortgages, loans, and the terms of such loans, and any outstanding debts and balances of all accounts held by the association.” I have no idea what “access” means, but putting the information on an association's website would cure all ills. (For those who do not have a computer and therefore do not use the internet, courts have noted you can access the information from your local library. Personally, I am sure your librarian would like nothing better than to know more about condominiums.)

Clearly, the account numbers on all such mortgages, bank accounts and loans should be redacted. I don't yet know of an Association that has had its accounts hacked, but that day will come, and anything you can do such as redacting account numbers from anything posted will likely sway a hacker to go hack someone else's account.

Further, Owners “shall have access to the names of all employees of the association and the salaries paid to employees with association funds, including any third party arrangements for services.  If an employee is related to a board member, or is a former officer of the association, the board shall disclose this fact to the unit owners at the next regular or annual meeting.” Most associations don't have employees, but they may have a third party contract, such as having a Board member also be related to the owner of the landscaping company.

All of this information, if requested, must be provided to an owner within fifteen (15) days.

Finally, though signed into law in July of this year, the financial reforms do not take effect until January 1, 2018, giving associations time to create a way to upload documents but still block out access to account/loan/mortgage numbers.

The reality is the Legislature is trying to ensure all owners have access to the financial goings on at their associations, and that's a good thing. It's just too bad they had to make a law to force associations to do what should be done willingly.