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player ready...Q: I live in a condominium complex with a healthy reserve fund. However, the board recently voted to adopt a special assessment to pay for necessary repairs instead of using money from the reserve fund. Can the board special assess the unit owners for such repairs when there is sufficient money in the reserve fund to pay for the repairs?
A: Under the Condominium Act, and all declarations and bylaws, the board has broad authority to administer the common elements and authority over the association’s funds. While it is within the discretion of the board to use reserve funds for maintenance, repairs and replacements of common elements, it is perfectly allowable for a board to determine that it is in the best interest of the association to adopt a special assessment in lieu of using its reserve funds.
The board should consider a variety of factors in determining whether to use reserve funds or adopt a special assessment, such as whether specific items were allocated for use from the reserve fund and/or whether the reserve account has enough funds to address unexpected repairs or replacements given the age of common element components.
Q: I live in a town house association that has a provision in its declaration that upon the closing of the initial sale of each unit by the declarant, an owner is required to make a capital contribution to the reserve fund in an amount equal to twice the monthly installment of the annual assessment. Our board has been assessing this initial contribution to subsequent purchasers of units. Is the board exceeding its authority and wrongfully assessing subsequent unit owners?
A: When an association is initially being developed, a common provision in governing documents by developers is a provision requiring initial purchasers to contribute to a reserve fund to create the reserve fund. Such provisions usually state that the initial contribution is due only from owners buying from the developer or declarant of the association.
It would be improper for an association board to assess subsequent purchasers such amounts when the provision is limited in applicability to those owners who bought from the developer or declarant. A refund of such contributions from subsequent purchasers is in order.
Q: I live in a vintage building. After the building was converted to condominiums, the board hired an architect to design balconies and retained a contractor to install the balconies. The balconies are classified as limited common elements.
Seven years later, the balconies need structural repairs and the board intends to assess the individual unit owners the repair costs because the declaration allows the board to assess limited common element repairs to the unit owners. While I understand I have to pay for the repairs, does the board have an obligation to initiate legal action against the contractor or architect?
A: It is logical for the board to consult with its legal counsel to determine what rights, if any, it possesses against the contractor or architect for faulty design or construction; however, there is no legal obligation upon the board to take such action or initiate litigation on behalf of the unit owners.
In the event the board does elect to do so, pursuant to Section 9.1(b) of the Condominium Act, the board may assert claims on behalf of the unit owners and such costs will be a common expense.