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Condo Quick Tips

Posted by Robert E. Ducharme | Feb 14, 2015 | 0 Comments

While the book below is a work in progress and it goes into depth on the operations of condominium associations in New Hampshire, what follows are quick notes, thoughts, and observations … essentially quick tips.

  1. Many residential condo associations limit the number of occupants to “family” members. This can become a problem because the definition of family is changing and depends upon one's perspective. Limiting it to a certain number potentially opens an association up to a discrimination against children suit. Best to simply have occupancy regulations mirror those of the local town or city. If the amount or type of occupants becomes a problem because of noise, damage, paring etc. Your condo documents should have provisions to deal with these issues. Dealing with them by way of limiting the number of occupants is not the best way to handle the situation. Four or five quiet, respectful people are always better than one or two, loud, disrespectful residents.
  2. Smoking, or more accurately, the smell of smoke is frequently a problem at associations. The solution is to draft a policy, after input from the other members, regarding where smoking can take place. The key is balance. Smoking is not illegal for those above 18, so barring it outright is not necessarily fair to those who have the nicotine addiction, those who enjoy an occasional cigar, and those who have relatives who visit and who smoke. Provisions can be crafted for a designated smoking area, or to ban it within a certain distance of any open windows.

It is important to keep in mind that if smoking is allowed in Units, and the smoke can be smelled outside the Unit, then it has entered the common area and has become an association problem.

  1. Associations must, per federal law, allow the installation of satellite dishes. However, Associations can also put limits on where they can be placed to make them as unobtrusive as possible. It is also a good idea to require pre-approval of the size, place and method of installation, as well as to require a deposit to make any repairs should the owner leave and take the dish with him/her and causing damage to association property.
  2. Despite the advance of technology, the Condominium Act has not yet caught up with such rudimentary advances as email, and never mind about Twitter, Skype and whatever comes next. While Boards can adopt policies to allow for the appearance at Board meetings via such tools as Skype, and it can allow for communication between meetings via email, it is important to note Association meeting notices are still guided by the Condominium Act which requires that all such notices be sent by first class mail. Any other type of delivery opens your Association up to legal challenges on anything that was voted on and passed, or even not passed at any such, improperly noticed meeting.
  3. Common area problems. There are always cases where an association has been found liable as a result of accidents that have occurred on the common area, including pool accidents, poorly maintained roads, blocked sight lines, etc. The best way to prevent problems is to take regular views of the common area and spot problems beforehand and make sure they are repaired. The second best way is to make sure you have sufficient insurance coverage for accidents on the common area.
  4. “Holiday decorations for the following holidays are permitted on balconies and doors, but must be taken down two weeks after the Holiday. No decorations are allowed on the lawns, bushes, trees, or any other common area that is deemed inappropriate by the Board of Directors.”
  5. Rental restrictions. In addition to the typical issues regarding leases and their lengths, one of the more frequent issues is whether there should be a limit, number or percentage, on how many rental s there should be in any association. The New Hampshire Supreme Court has given much latitutde to Boards to operate the Association. However, although there is, as of yet, noe case law in New Hamphire regarding how many rentals there may be, it is likely such questions cannot be left for a Board to decide. Boards have control over the common area. Units are not common area. While Boards can, indeed, control what happens in units, e.g. noise, pets, it would be stretching a bit much to believe a Board can institute policies that do not control what can happen in a Unit but the larger perspective of
  6. Boards can govern and implement rules for what the governing documents, the declaration, bylaws, site plan and floor plan establish. But going further than that and actually creating new provisions of operation is questionable at best, and likely beyond the power of Boards to do. If an association wants rent restrictions, it is best to have the governing documents amended. The Board can then enforce, but it cannot create governing provisions.
  7. When I was young, I lived in a condominium with my wife. We had a wonderful neighbor, a tenant who loved flower gardens. She loved them so much that in the short span of one summer water cycle, quarterly billing, she ran up a wtter bill for the owner of $900.00. I now realize how luck y we were that the units were individualy metered. Many associations are not. As CAI (Common Ground January/February 2014) has pointed out, the lack of individual water metering can cause a problem as, to be frank, there are people who will take advantage of a situation, increasing cost for everyone. To many associations spend precious hours trying to figure out ways to talk to the person, put ocntrols in place, try and figure out who the high water users are, etc. The associations are few and far between that woul pay for everyone's electricity, but so many pay for every'eons water. Most municipalities will not install them. (Sadly, they should be required, much like separate electric meters, and if the municipality allows a developer to not put them in, then the municipality should pick up the cost.) But there is nothing to prevent an association (as part of its maintenance budget or a capital program) from installing separate water meters through a proper contractor. Those who complain will do so because of the cost, but the cost, over time, of paying for the high water users, is much higher than the one-time installation fee.
  8. Boards should LEARN (Listen, Explain and Apply Rules Neutrally) and should never CHEAT (Challenge, Hurt, Evade, Attack or Threaten)
  9. On the other hand, never throw mulch up against the foundation. It absorbs water and can create rot and mildew/mold. Best to have it 12” or so away and fill the rest with crushed stone.
  10. Pots are another good way to decorate an association, especially commercial ones where lawn is usually sacrificed for parking, but what a nice way to attract visitors by having flowering plants in pots of all sizes either clustered in certain areas or lined along the walkway.
  11. Electronic voting. In this Internet day and age, it would seem voting on issues could take place electronically, particularly useful for snowbirds who wish to be warm, but still participate in their three season home. The problem is the New Hampshire Condominium Act has not kept pace with the technological advances in our State. There is nothing in the Act currently that allows for the use of electronic voting. There is nothing that prevents it, either. As such, seemingly it would pass scrutiny if an Association voted in a measure to allow for electronic voting. The Association, to be safe, should, at the same time, implement security provisions to ensure the person voting by, for instance, email, has not had their address hijacked by a spouse, friend, or eight year-old son or daughter.

On a related note, there is nothing that allows Board members, unless such a provision is adopted, to appear at Board meetings electronically, such as through Skype. Board proxies are not allowed under NH law as proxies are limited to Association meetings. Once such a provision is adopted, however, it could make Board attendance much easier.

  1. FFederal Housaing Authority (FHA). Condoninums that are sold thorgh FHA backed loans have to privde a certificate

  2. Some associations allow for “transient uses”, i.e. rentals of less than thrity days (beach condos, AirBnB type arrangements). It is apparently not unusual for condominium insturments to allow bansktaht foreclose to recipu mone anyway they see fit, including having such transient rentals. Upon notice of this provisoin, FHA was in the habit of denying financing. The solution? Amend the condominium instruments to eliintat etheability of the lender to have such transient uses and/or submit a (form) letter signed either by the Associaiotn, or the Associatin's attorney, that states no units in the community are currently leased for less than 30 days and that no tenants receive sercrvices aking to those of an inn, hotel or bead and breakfast. That should do the trick.

  3. This is a change from a few years ago. FHA, because of the implsion of the real estate market, it began scrutinizing condominium instruemts to ensure FHA does not like short-term rentals. It acuses turnover which rpesumabbly leads to a higher incidence of damages in condominiums, making it harder if FHA has to sell a property and get its money back. The problem

  4. Establish a policy that all complaints must be in writing, paper or email. This protects the Board and the owner. It also helps for documentation purposes should things get worse and it ends upon litigation as there will be a record.

  5. Bullies are, sadly, a part of life. And they can appear in condo associations, either at Board meetings (or be on the Board) or at Association meetings. The right to attend a meeting does not mean they have the right to speak, except at the invitation of the presiding officer. So the way to quiet bullies is to not allow them to speak. If they continue, call the police. They love dealing with bullies.

If the bully is the presiding officer, the other Board members have the right and duty to vote to silence the presiding officer.

  1. Pets. People frequently love pets or hate pets. People more particularly love some types of pets and hate other types of pets. Think dog lovers versus cat lovers. Most associations at some point will have the pet discussion, i.e. what pets should be allowed and what pets should not. Boards will make their best effort at what should be allowed, yet later run into fierce responses to any policy drafted. Best to work in reverse. Solicit input from Unit owners as to what pets they would like in their association. Then draft the policy.

  2. Reserves – Occasionally, Assns run over budget. When they do, they tap into reserves. This can cause tax problems, although rarerly so. The more likely problem is they are borrowing money from one fund to pay for another. Never have seen an Assn with sufficient reserves. Should not be touched. Specially assess.

  3. Some condo documents require funds left over in the operating account each year to be returned to the Owners. Don't count on it. Boards have the power to transfer any excess into the Reserves, essentially leaving the Association with zero dollars in the account at the end of the year, starting fresh each year. No Association has ever had too much in Reserves. Just look at the number of times a Board has to specially assess or take out loans for maintenance projects. Putting extra money into Reserves helps reduce the chance of that happening.

  4. Tenants. In documents have all rentals be in writing; incorporate association rules in lease; note that if violate, subject to eviction; have landlord provide written evidence that tenant has read and understands rules and agrees to obey them. Require landlord to begin eviction and follow through with certain number of violations in addition to any other sanctions imposed on landlord and/or tenant.

  5. Biggest problem in Associations is, of course, not paying dues. Second problem, however is lack of communication from Boards. Expected to use good business judgement, i.e. to make decisions after carefully reviewing pertinent data and considering alternative solutions. My prudently determine that good business judgment requires contracting with specialists and hiring consultants to assist with the review of the data and possible solutions as the best course of action. Bu as fiduciaries of the trust with the owners, the BOD has an agency relationship with the unit owners and is charged with certain duties in that capacity. As an agent, the Board is required to maintain the trust and confidence of the beneficiaries, generally including care, obedience to lawful authority, accountability, loyalty, and disclosure of material facts.

For the board of the self-managed association, the task of disclosing the material facts in the decision-making process to unit owners.

Have owners participate in the process. Have open meetings to discuss problems, solicit suggested solutions, names of contractors,

Don't want to come. Apathy. Unit owners are busy people with lots of demands on their time and who are invested in their own lives, relationships, and careers. After all, they may have purchased a condo because it was carefree living. It's far simpler for self-managed BOD to give into frustration and abandon the idea of engaging homeowners. But informing the community is the board's responsibility as fiduciary agents. The horse may not drink, but the Board's duty is to lead him to water and make him thirsty.

  • Communicate clearly, consistently, and constantly, via emails, newsletters, web site

  • Hold a special meeting to talk about unexpected expenses, depth of maintenance problems, and enhance unit owner understanding of the situation

  • Bring in an expert who can assist in providing info and explain

Authority and responsibility; agency; informing the community.

  1.  

Condo facts in America.

http://www.caionline.org/about/press/Documents/State%20and%20National%20Statistics,%202013.pdf

About the Author

Robert E. Ducharme

Attorney Robert E. Ducharme is a Seacoast resident whose civil law practice is limited to Condominium Law. Attorney Ducharme has owned and lived in a residential condominium, owns commercial condominiums, has worked as a condominium property manager, and has practiced condominium law since 2000....

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