Condo Maintenance fees

bump: anyone? don't make me e-mail the NYT with my stupid questions.

as far as I know, the board can increase the fees as they please. in coops, unless there's a waiver, they need to file an amendment. this is the problem with coops and condos, if you have a shady board, they can increase your fees as much as they want. the only way to lower them is by electing a new board.

if it's a sponsor then they probably didn't follow procedure. how much are you willing to spend to set them straight? It's all comes down to practicality. If lawyers didn't cost anything, the world would be a better place.

correct. legally, a board is protected by sound business judgement. if there is a rational reason why they feel increases are necessary, then they may increase. per whether it need be in writing - rationale shoudl be but doesn't have to be. again, not every sound business decision need be in writing or disclosed to other owners.

Thanks, that's the part I need to figure out; how much should I spend to fight something that's probably not kosher in the first place. This type of behavior is so annoying, to fight them from stealing $2,000 a year, I would spend 20 grand. It's kind of interesting that there is no rule about filing an amendment or even bothering to write down anything.

quick question what is your concern here? You should be receiving financial statements each year so do they show the building operating at a loss? Is it that you feel the sponsor somehow is pocketing money by paying himself for expenses?

I just bought into a new condo and while sponsor is retaining 2 seats of the 5, there are others on the board.

ARe there any owners on the board currently or just the sponsor?

Do you have the right to review the books?

All I am trying to get at is that before running to a lawyer see what you can do on your own. At the end of the day if you get a lawyer involved it costs you on both fronts because the condo would then need to pay an attorney, so in a way you are paying for one whole lawyer and part of another.

If you do get financials and the building has two solid years of operations behind it you just need to do a comparison of expenses and see what has gone up and then find out why.

I am sure they are supposed to keep minutes as every year they should be doing a budget that gets approved by the board. how much did the fees go up?

Mike, 20%, and according to them, they don't keep minutes, and have nothing in writing. I've seen the statements, and they are not operating at a loss. I do suspect the sponsor is nickel and diming the building.

get other owners together at the next elections and get the board out. this way you can fix this problem from the inside.

if you have numerous members who are with you on this and you can't find a solution on your own, get all of those people to give a little and hire an attorney.

There has to be more to this. How old is your building and how many apartments does the sponsor still own?

Do the statements show close to break even or is it running up a large reserve? Is he attempting to get a big reserve for some sort of improvement?

I'm still not sure how a lawyer can help unless there is more that is not being said. If the only thing that is sketchy is no minutes, but the financials themselves look in line, what is it you feel that he is taking?

I am by no means on a sponsors side, but you have not really made it clear what the sponsor is using the extra funds for.

Mike, of course there is more background info, but I tried to keep it relevant. I don't trust the statements at all, they are not verified, and will not open their books. There's supposed to be a reserve of about $4,000/unit for the building, but again, I haven't seen a statement from a bank, just the financial documents produced by the management co/sponsor.
To complicate the matter, I own a commercial unit in that building, and as such I don't have a voice on the board. I will follow ab' recommendation, but as far as I can tell, the sponsor still controls over 50% of the voting rights.

if the sponsor still controls the board, you cant vote them out. when must they rescind control assuming they dont sell 51% anytime soon?

They have skated past that issue by selling one unit to his daughter and one to his employee; so nominally, they're under 51%, but in reality, they have full control. Ack! Just typing it out it's aggravating me.
I just need to get the 47% other and get a shared lawyer.

not sure that is, um, kosher... related party transactions. Why dont you get your stuff together and have a chat with a condo/sponsor type lawyer, see what they say.

The reason why I am so suspicious is that the sponsor was barred from developing buildings for fraud, back in the 80's. Nominally, everything is in his wife's name. However, if you call the office, guess who's there, managing his little crooked heart away?

why if you had done your homework would you have purchased a unit from this sponsor if you knew about prior fraud?

There is probably nothing wrong with related party transactions as long as price was market. If there is still a bank loan in place they have minimums that have to be sold for until bank loan is gone.

normally an audit is required of the financials, if you are telling me you got audited financials and do not trust them, then there are other issues. Keep in mind though if he is knowingly pushing things through that would have been caught in audit, the audit firm will have issues as they will get sued.

As i said i realize you are giving more info, but without seeing financials it is hard to understand the real issue, other then trust.

Ha Mike, I wish I had known all this before I purchased the unit, because then I wouldn't have. I stupidly trusted my real estate lawyer, which I now realize was a pretty big mistake. Anyway, I now use a different lawyer, but I'm still stuck with this annoying $#@%.
I don't have audited financials, just statements from the sponsor.

Like Mikev said, usually the By-laws require audited financial statements.

The more usual problem with sponsors is their wanting to keep the maintenance/CCs too low, since they're impacted more than anybody else.

Maly,
I think this might be helpful, from NYS Attorney General's Office:
www.ag.ny.gov/bureaus/real_estate_finance/pdfs/Condo.Problems.pdf

Q. How long can a sponsor control the Board of Managers?
A. Condominiums are generally established by a sponsor which files an offering plan with the Attorney General's office and then can sell condo units to the public. When the condominium becomes effective (established), the sponsor usually owns most of the units and thus controls the Board of Managers. In most cases the Attorney General requires sponsors to promise, in the offering plan, that they will give up their control of the Board of Managers after they sell over fifty percent of the common interest, or after five years have passed since the first closing, whichever comes first. This may not be true, however in a newly construction or vacant condominium where sponsor may control the board for a longer time.

Q. What does giving up control of the Board of Managers actually mean?
A. It means that the sponsor cannot designate or nominate the majority of the managers. But a sponsor is not prevented from voting its percentage of common interests for unit owners who have similar views, as long as the unit owners are not on the sponsor's payroll or otherwise given money by the sponsor.

Q. How can the Attorney General's office help me?
A. The Attorney General's office regulates the offer and sale of real estate securities (which includes condominium units) by the sponsor. If the sponsor of the condominium is still controlling the Board of Managers or is not keeping the commitments which it made in the offering plan, the Attorney General's office may intervene on your behalf.

Regarding the question as to whether cc can be increased w/o written notice, refer to the same PDF:
Q. I'm confused about how much power the Board of Managers of my condominium has. What can it do and what can't it do? Are there any legal standards it must meet?
A. Boards of Managers in condominiums have two basic legal obligations. The Board must follow the condo's internal rules (as set forth in the by-laws, the condominium declaration and the house rules). It must also exercise prudent business judgment in making decisions, just like any corporate board.

Q. Where can I find the condominium's internal rules?
A. Copies of the original by-laws and declaration (plus house rules, if any) can be found in the offering plan that was distributed when the building first converted.

Q. What if there have been changes in the rules since then?
A. Any changes should be contained in amendments to the offering plan. But if there are no unsold units in the building or if no units are being offered for sale, it is possible that the offering plan is not current and might not contain an updated version of the condo's documents.

Q. If I can't find an offering plan, where can I find the by-laws and declaration?
A. The Board of Managers is required by law to make copies of the declaration, by- laws, floor plans, and any rules and regulations available for inspection in its office.

Q. What kind of information is contained in these documents?
A. The by-laws, declaration and rules will set forth the following: The powers and duties of the Board of Managers.
Dates when annual unit owner meetings and elections to the Board of Managers are held, and how notice is given.
The number of seats the sponsor can have on the Board of Managers and when the sponsor must give up control.
Whether unit owners have the right to call extra or special meetings (a very valuable right if you wish to ask the board to focus on particular matters).
The quorum for voting. Sublet provisions although, generally, there are no restrictions. How the declaration can be amended (including percentage required). The method of adopting or amending rules. The procedure for amending the by-laws. The restrictions on the use of units and common elements. The obligation to repair. Pet restrictions, if any.

Q. If something isn't specifically addressed in these documents, can the board do whatever it wants?
A. No, there are legal restrictions. The Condominium Act is the New York State law which governs the establishment of condominiums. The decisions made by courts in cases involving the Condominium Act are the case law which interprets the statute.

My gut feeling is that cc cannot be increased verbally. I'm betting that it must be in writing & prior written notice is probably required. Suggest you call the NYS Atty Gen & see what they say.

The condo bylaws spell out the board's obligations and the owners' responsibilities. Review them carefully , then make a direct appeal to the other aggrieved owners prior to the required annual meeting. Audited financials with a statement by a CPA are routine. This board's issues may be more a problem of crappy communication than deceit or fiscal subterfuge. Boards do have the ability to adjust fees based on their fiduciary responsibility to the building and owners, no matter what any specific owner believes.

Thanks Dwell!

Yr welcome, maly.
I'd call the AG & then get the documents referred to, particularly the bylaws.

Yr main question was can cc be raised w/o written notice. A related issue is whether sponsor "controls" the Bd w/in the meaning of the law.
Additionally, see if yr condo documents give unit owners the right to call a meeting.

Hope you post back & let us know what you found.

maly
was this issue ever resolved ? i have found the AG helpful. do you get minutes for every board meeting, accordning to the AG office you not only have a right to them but you should be getting a copy.