Author Topic: Small condo association is a mess  (Read 2318 times)


  • Handlebar Stache
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Small condo association is a mess
« on: February 16, 2017, 09:41:55 AM »
We bought a condo in a four unit building almost two years ago.  Over time, I have realized that the condo association is completely mis-managed and perennially short of money due to very short term thinking on the part of the unit owners.  Building is 19 years old.  Our condo board "president" recently sold his unit and I was "elected" president, and honestly I am sort of at a loss for what to do.  Here are the big issues.

1. The condo association is not running in compliance with the Decs and Bylaws.  "Board" composition is different in the bylaws than what is functionally has been since I moved in.  Bylaws call for a three member board, which means in a four unit building, one owner is unrepresented on the board.  So the association had been running with each unit having one representative and everyone voting on every decision, which seems more fair, but not how it is "supposed" to work.

2. Former president let our nonprofit status lapse two or three years ago, which apparently can be corrected by paying some fees and re-registering.  Condo association has not been filing tax returns, even though we are required to.

3. Monthly assessments (which we have raised twice since I moved in) are way less than needed for reasonable upkeep of the building.  The other co-owners always massively underestimate costs for repairs, then refuse to authorize repairs when I obtain reasonable market-value quotes for the work.  This is getting to the point where it could affect resale capabilities of our unit.

4. Building has water infiltration issues, but the board refuses to authorize an inspection to determine the extent of the problem, worried about the associated repair bills and the need to disclose the findings to potential buyers.

I'll address the obvious question - why did I take on being president of this mess.  First, I thought it was the best way to provide leadership to correct some of the ongoing issues.  Second, some of these issues (nonprofit status, true tax status) didn't come to light until the full books were turned over to me after I'd already agreed.

Basically there are two problems here - the fact that as president this is all now my responsibility to somehow correct, and the potential effect it has on our ability to sell our unit.  We have about $200k of equity in the property (half our investments, half market growth), and part of me feels like we should just cut our losses and sell.  But it also feels wildly unethical to punt this to some poor unsuspecting buyer, and then we have to undertake the task of finding somewhere to live where the association is in better shape.



  • 5 O'Clock Shadow
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Re: Small condo association is a mess
« Reply #1 on: February 16, 2017, 11:39:04 AM »
I'm currently on the Board of two associations (16 years on one, 8 on another).

First step - create what YOU think is a realistic evaluation of the situation.  In other words, create an accurate annual budget for operating costs and then also how much would be needed for the one-time projects.   Plan this out for the next 30 years.  Fix everything (get taxes filed, get non-profit status, either rewrite Decs and Bylaws or have a proper election).  For big repairs, get estimates where needed, or just make phone calls to get an idea of current prices and then just use inflation if it's for something in the future.

Second step - determine how much monthly dues would need to be currently to afford the next 30 years.  Build in an annual percentage increase into the dues (I recommend 2-3%) and if that's not enough, then build in an up-front one-time assessment.

Finally - with these numbers, you know the real situation and you can either sell and get out... or present this to the Board and see their reaction...  and then you'll know if this is possible or if you need to sell.

Example:  Maybe you find that everyone would need to be assessed $15,000 today and then dues would need to be double today's prices, and go up 3% every year, to be able to afford the maintenance.  You can decide if that's okay for you or not.   Then present that to the Board and gauge their reaction.  From their reaction, you'll likely have your answer within a few minutes.

If they are in agreement and you decide to stay, then document that assessment effective immediately (and list the date by which it has to be paid) and start the due increase ASAP.  That way it's all documented before someone decides to try and sell, as the assessment will become part of the purchase agreement.

Then with the appropriate funding, you can get all the problems fixed.
« Last Edit: February 16, 2017, 11:42:16 AM by MNBen »