Q: All owners in our homeowners association received a demand notice citing “the community’s covenants regarding mandatory reserve funding.” This notice gives only an eight-day notice to make a $100 payment per household and a 38-day notice of a monthly increase in the “road” fund from $1 to $8. A search of recorded documents shows no trace of anything to support these demands. The word extortion comes to mind. Your thoughts would be most appreciated.
A: I will answer your question by giving you a little history of associations. Homeowner associations and cooperatives have existed for decades. Condominiums were legalized in 1962. But in 1978, California’s voters approved Proposition 13, telling government to reduce spending. Shortly thereafter several other states voted on similar propositions.
All the states faced a reduction in spending that meant they would have to find other ways to finance new facilities and repair existing structures. That was when states required developers to create associations to fund necessary road, utility, and other services within these communities. Locally some counties passed requirements that developers include in their budgets an adequate road repair reserve section.
I am assuming from your question that you live in one of these counties and more than likely the developer did not have an adequate road repair reserve account. I say road but there could be other necessary public utility repairs. Without knowing the details, I assume that a proper reserve budget as required by the county was not calculated.
The board has the responsibility to create an adequate budget and if it appears during the year that the budget was not sufficient to meet the necessary expenses, the board has the right and power to alter or adjust the budget.
Q: Condominium owners installed patio blocks outside their lanai at the rear of their condominium unit on what is considered to be a common element. The owners stated they had prior permission to install the patio blocks. In the absence of the owners providing any documented evidence of permission, a previous board requested that the patio blocks be removed. The blocks were removed.
The following year the owners of the condominium unit ran for the board and were elected to two of the three board positions (they own two units so although they were husband and wife, they were eligible to serve on the board). After being elected to the board, they made a motion to allow themselves to install patio blocks outside their lanai. Both of them voted in favor of the installation.
Did the board act within its authority by allowing the installation of the patio on what is considered to be a common element? Was it appropriate that the owners vote on a motion that directly benefited them?
A: The Condominium Act states that no owner can privately use the common area. The act also says that directors cannot benefit from their elected positions.
Having said this let me address your question in a different direction. Why were a husband and wife elected by the membership? We recently had a national midterm election and it’s hard to believe but only about one third of those qualified to vote voted. If your condominium members do not care enough to understand who they are voting for, like the U.S. citizens, and do not vote or vote for the wrong reasons, they have only themselves to blame.
I predict that your board of directors will continue to improperly manage your condominium. They will do this until someone sues the board or elects new directors who will act properly. It’s not up to me; it is up to you and your neighbors to call the board on its errors.