Publications

Dispelling the Myths

Published October 12, 2002 as
Finding the truth behind condominium myths

“Once upon a time there was a beautiful fairy princess who was locked in a tower by an evil ogre. One day a handsome prince came along and rescued the princess by converting the tower in a condominium and paying her assessments.”

As you can see, even fairy tales can come true! However, there are many other myths prevailing in the land of condos and co-ops, that so long as they are believed, make life difficult for owners, board members and managers alike.

Here are some basic myths that should help clarify fundamental terminology and beliefs:

“Maintenance free living.” The number one myth, THERE IS ALMOST NO SUCH THING. Most condominiums and homeowners associations provide maintenance to some degree, but there is a shared responsibility where such areas as windows, patios, garage doors, etc. may be the responsibility of the owners. It is important to check the Declaration to determine what is covered and what is excluded.
“Management association.” There is no such term. A common misnomer, it confuses the role of the association!. The association is a legal entity, administered by an elected board of directors. It’s organizational structure is established in the By-Laws. The property is managed by either the board of directors or a professional property manager.
“The association’s insurance covers everything.” Even with recent condominium statutory changes, certain basic truths remain. The interior of a dwelling unit, including wall and floor coverings, furnishings and personal property, are the responsibility of the owner. That is why every owner should have their own insurance, in addition to the coverage provided by the association. The association’s insurance only covers common areas and those items specified in the Declaration or by statute.
“I motion.” Either “I would like to make a motion” or the chair person can “entertain a motion.” (Do not forget to get a second, have a discussion and vote.)
“Managing Agent.” Another misnomer. There is a property manager, which is hired by the board. There is a registered agent for the not-for-profit corporation, whose name is on file with the Secretary of State to received legal notices such as lawsuits. (This should be the association attorney.) A manager can act as the duly authorized agent of the board (the principal), but this term is really a misapplication of concepts and it is confusing.
“We don’t need a reserve study.” If you do not conduct a reserve study and do not update it every few years, how can you possibly determine the scope and extent of the useful life of major amenities in order to set enough money aside for future repairs? Without a scientific basis, it is purely a guess.
“We don’t need an audit.” In light of current corporate scandals in the news, need I say more? In the last ten years, several management companies and countless board members have been accused of misappropriating association funds. Without an independent review of the financial records, how would anyone ever know?
“If I get a permit, I can install it.” Although additions and improvements to homes generally require a building permit, just because a permit is issued only means that the proposed construction conforms to local building codes. It may still violate the express covenants or rules of an association. The owner must also get board approval or he may wind up on the defensive side of a lawsuit.
“If I don’t’ like the maintenance, I don’t have to pay my assessments.” The assessments levied by an association cover insurance, management, landscaping, snow removal and maintenance, among other things. If disgruntled owners decide to withhold assessments, it can adversely affect the providing of essential services. Just like taxes, assessments must be paid, regardless of satisfaction levels, or else there are dire legal consequences.
“The president runs the association.” The truth is, the president runs the meetings. No director or officer has any power greater than any other, unless expressly authorized by a majority of the directors, i.e., signing a contract, supervising a service provider, spending month, and so on. Without the express authority granted by the board, that person would be acting outside the scope of their authority and could be personally liable for those actions, if refuted by the board.
“If I am unhappy, I can speak my mind at the board meeting.” A board of directors meeting is just that, a meeting of and for the board. Although members have a right to be present at a board meeting, it is improper for them to interrupt the board’s proceedings. Time should be set aside at the beginning or end of the meeting for owners’ questions, but the board consists of duly elected representatives of the owners’ interests and just like Congress, is supposed to act in the best interests. Owners’ issues should be communicated to the manager (or to the board) in writing, at a homeowner open-forum or at owners’ meetings. The board meeting is not the place to request maintenance or air complaints.

As you can see, Condoland is populated by mythical creatures besides wizards and dragons, and by understanding the terminology and homeowner rights, fairy tales still have happy endings.