Live in a home governed by a condominium, co-op or homeowner’s association? Have questions about what they can and cannot do? Ryan Poliakoff, an attorney and author based in Boca Raton, has answers.
Question: We are a small 18-home HOA that is dealing with a major infrastructure repair. Long story short, it’s an area that we didn’t think we were responsible for, but we have been assured by several lawyers that we are in fact responsible. This involves the only access into our community and so it cannot be ignored. Needless to say, we have no reserves for maintaining this area, and so we are facing a large special assessment of about $9,000 per home.
The problem is that several homes will not be able to come up with the funds in a reasonable amount of time. I know we can put liens on their homes and so forth, but that takes time; and in the meantime, the contractor needs proof of funds before beginning work.
My question is, if we must take out a loan to cover the unpaid assessments, do the payments have to be shared among all homeowners, or can they be charged only to the ones who didn’t pay the assessment? It doesn’t seem right to make those who did pay the assessment to also pay for the loans to cover those who did not pay. Our documents do not mention anything about this at all. Signed, C.S.
Dear C.S.,
There are a lot of moving parts to your question, and so you should coordinate your response directly with the association’s attorney; but there are ways to accomplish your goal.
Of course, the first thing to point out is that many owners can take out secondary loans on their home to cover these kinds of costs. You might be able to coordinate with a bank that is able to offer loans to such owners — these are not very large loans and so it’s something that may not need a tremendous amount of collateral.
Short of that, what you might want to do is to take a loan for the full cost of the repair, but one that can be partly paid off early and reamortized. Then, specially-assess the owners for the total amount of the borrowed principal. Make the assessment due and payable in full on a specific date. For anyone who pays on that date, you pay back that amount and have the loan reamortized (or, if it’s a line of credit, simply don’t draw down those funds).
For everyone else, they are technically delinquent in paying the assessment — but you can settle that delinquency by having them enter into a payment plan over the term of the loan, including interest (because you almost certainly have the right to charge interest on delinquent assessments). Typically, you would make that interest equivalent to the interest on the loan. That will effectively get you where you want to go but gets around the fact that the interest on the loan is technically a common expense.
I’m sure there are other ways to accomplish the same goal, but this is my preferred method. I don’t think any of these methods have been particularly tested in court, but it is legally-sound and should work, depending on any barriers in your own governing documents (for example, an outright prohibition on borrowing money).
Question: My condo association has put a sticker on the main entry glass door to each building indicating that a camera is on. There are other entries without such a sticker. A resident could consider this a security measure. Is the association liable if someone enters a building and commits a crime? Signed, T.C.
Dear T.C.,
I do not think that your condominium association becomes automatically liable for crimes committed on the property simply because they have installed one or more cameras. Most condominiums have camera systems.
These cameras are useful for issues that are unrelated to crimes — for example rules enforcement, or determining who damages association property, or to record injuries to guests and residents (and sometimes to disprove the cause of their injury), or to see who refuses to pick up after their dog, or even to confirm if a particular employee was actually on the job when they claim to have been there. There are lots of non-security related reasons to have a camera. Yes, they can sometimes be useful in the event of crimes, but anti-criminal security is not their primary purpose.
Generally speaking, condominiums are not responsible for preventing crimes or protecting your home. In all community associations, security guards are there to serve as watchpersons and to help with access control — not to be a private police force. I can perhaps manufacture a theoretical situation where a community could become responsible for a crime due to their negligence (for example, they know that the main entry door is broken and unsecured, and they fail to repair it for many months or take any other steps to prevent unauthorized access), but that would be a lawsuit premised on their carelessness, not because they have some strict liability to guarantee owners’ protection.
Ryan Poliakoff, a partner at Poliakoff Backer, LLP, is a Board Certified specialist in condominium and planned development law. This column is dedicated to the memory of Gary Poliakoff. Ryan Poliakoff and Gary Poliakoff are co-authors of “New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living.” Email your questions to condocolumn@gmail.com. Please be sure to include your location.
This article originally appeared on Palm Beach Post: How can HOA divvy up cost of pricey repair when some can’t pay fee?
Reporting by Ryan Poliakoff, Special to the Palm Beach Post / Palm Beach Post
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