CCOC Proposing Legislation To Improve Condo Living
We have asked you for your opinion on proposed laws that would give greater power to individual condo owners without limiting the associations from taking actions to benefit unit owners.
More than 130 of your have responded, filling out lengthy surveys. We will soon publish the results of the survey.
Based on your feedback and on separate emails we received from CCOC members during the year, we have come up with several proposals for the 2014 session. The proposals are a consensus of the CCOC executive committee as well as our Advisory Committee, which is comprised of Atty. Patricia Ayars, Atty. George Coppolo, Judy Doneiko, CPA, Atty. Jason Leister and Judith Rudikoff.
The most critical bill involves establishment of a pilot program that hopefully will develop as a vehicle to resolve disputes between condo owners and associations without have to go to Superior Court and spending tens of thousands of dollars.
CONNECTICUT CONDO OWNERS COALITION’S [CCOC] PROPOSED LEGISLATION FOR THE 2014 REGULAR LEGISLATIVE SESSION
1) ESTABLISH A PILOT PROGRAM IN ONE OR MORE LOCATIONS FOR RESOLVING MOST CONDO DISPUTES BETWEEN UNIT OWNERS AND THE ASSOCIATION THAT IS FAR LESS EXPENSIVE AND TIMELIER THAN THE NORMAL SUPERIOR COURT DOCKET.
The pilot will maintain the $5,000 limit on the amount in controversy but will expand jurisdiction to authorize the magistrate to issue declaratory rulings (for example: is the Board of is the unit owner responsible for making a certain repair or replacement?) The legislation should specify that the doctrine of claims preclusion does not apply to condo matters brought to the pilot program (see Background Below)*
a) The proposal can have a delayed effective date to give the department the opportunity to set up the program.
b) It can also require the creation of an advisory committee to assist the department (or Probate Court Administrator)
c) The Pilot would not apply to foreclosures or to disputes between unit owners.
d) It can require that the magistrate selected be trained in condo law.
e) The Department must report back to the legislature by January 1, 2016 on how the program has done with recommendations for improvement and if appropriate expansion.
Currently Small Claims court cannot issue declaratory rulings but this would allow declaratory rulings in condo cases as long as the amount in controversy is less than $5,000 at the time the case is filed. Otherwise all Small Claims procedures, rules, fees etc. would stay the same. The defendant can choose to remove to the regular docket as is the case for all other small claims cases.
The party securing the declaratory ruling would have to go to Superior Court to get it enforced if the loosing party refused to comply.
CCOC Reason for Legislation: It is evident from numerous complaints that the current system does not provide an adequate means of addressing most disputes with associations because of the cost of hiring an attorney to go to Superior Court as well as the initial filing fee.
The legislation can use the same definitions and standards as last year’s bill except it would not be mediation. Instead it would be a final determination if the parties chose to use the pilot program.
If the committee prefers it can use Probate Court instead or in addition to Small Claims Court just as in 2013 HB 6666.
* Background information on Claims Preclusion
Under the ordinary common law application of the general principles of claim preclusion, a valid, final judgment rendered on the merits by a court of competent jurisdiction is an absolute bar to a subsequent action between the same parties, or those in privity with them, upon the same claim or demand. Restatement (Second) of Judgments § 24.
The doctrine of claim preclusion, as opposed to issue preclusion, bars not only subsequent relitigation of a claim previously asserted, but also subsequent relitigation of any claims relating to the same cause of action which were actually made or which might have been made. Restatement (Second) of Judgments § 24.
For purposes of the doctrine of claim preclusion, whether a subsequent claim relates to the same cause of action initially asserted is to be determined by the transactional test, which is measured by the group of facts which is claimed to have brought about an unlawful injury to the plaintiff, and which also states that even though a single group of facts may give rise to rights for several different kinds of relief, it is still a single cause of action. Restatement (Second) of Judgments § 24.
2) REQUIRE THAT BOARD OF DIRECTOR MEETING MINUTES SPECIFY HOW EACH BOARD MEMBER VOTED ON EACH ISSUE VOTED ON AND REQUIRE EACH MEMBER’S VOTE BE RECORED
Require that Board minutes state how each board member voted for each motion or other action the board takes that require a vote. This will help unit owners to decide whether to support or oppose a board member when his or her term expires.
This concept is the same as the CT Roll Call Vote/Tally Sheet allowing constituents to view how their respective legislators vote.
3) INCREASE THE PENALTY FOR UNLICENSED COMMUNITY ASSOCIATION MANAGERS
Increase the mandatory fine for a CAM who manages without a license. Can also impose a waiting period before the unlicensed manager can apply to be licensed. The period can be determined by DCP or established by the legislation.
Currently there is a fine of up to $500 fine but it is negotiable by DCP. This results in typical fine of approximately $250. Once they are caught, the unlicensed managers simply apply for a license and the penalty does not seem to be much of a deterrent.
4) REQUIRE EMAIL VOTES BY DIRECTORS TO BE RECORDED
IN THE FOLLOWING BOARD MEETING MINUTES
Add language to 47-250b(8) to require email votes by Board members be recorded in the following Board meeting minutes. Currently, there are associations that do not comply with current law to give notice to all unit owners of any action taken by unanimous consent.
5) REQUIRE THAT THE RESALE CERTIFICATE SPECIFY IF THE ASSOCIATION AUDITS THEIR FINANCIAL RECORDS, AND IF THEY DO REQUIRE THAT THEY SPECIFY THE DATE THE ASSOCIATION’S FINANCIAL RECORDS WERE LAST AUDITED, WHO PREFORMED THE AUDIT, AND THE AUDITOR’S PROFESSIONAL CREDENTIALS
Passing laws regarding Condos in Ct is a waste of time UNTIL there is an agency which is authorized to ENFORCE the laws…especially the ones we already have. The CT Attorney General is barred by CT state law from having anything to do with condominiums …
ONCE THERE IS AN AGENCY WITH THIS AUTHORITY, your proposals are very good.
You are absolutely right Barbara. The pilot program we are proposing is start to the solution.
Hi George,
I see nothing is being done to follow up on the lack of ability of the state of Ct. to enforce the RESERVE REPORTING REQUIREMENTS implemented previously. One of the major problems almost every single association has is for the ability of board to cover up how funds are being spent. They can assess unit owners but there are no teeth in the law that require the board and treasurer to report every month how the cash in all the reserve funds are being spend. They don’t have to return any excess funds because there is not a way for anyone to make them do it. The treasurers can co-mingle all the Restricted Reserve Funds and not have to return any excess funds.
Our association has (4) Reserve funds , (3) of which are restricted. Our (3) currently active Restrictive Reserve funds had over $1,000,000 run through their accounts without any monthly report showing the sources or destination of he cash
In fact, there is some unaccounted for cash they they refused to account for and there is nothing anyone can do without hiring an attorney and filing a law suit.
The most recent laws passed dealing with reporting of reserve funds did NOTHING TO CHANGE WHAT IS GOING ON. We are DANCING AROUND THE REAL PROBLEMS. WE NEED TO FOCUS ON THE MONEY.
Perhaps the author is not familiar with either managing or reading financial statements. The primary responsibility of a board of directors is to oversee the annual budget together with the management company. If a management company is competent the board/association will be presented with accurate income/cash disbursement sheets on a monthly basis. There should NEVER be a question as to whether or not a bill is paid and what funds are available. That financial statement should also reflect the balance of the association’s reserves.
Also keep in mind that all HOA fees are collected on a monthly basis and although a budget may reflect a total amount budgeted, there may be times when vendors need more money than may be available from that particular line item (especially in the beginning of the fiscal year)–making it necessary to use some reserve funds to pay the bill. In any instance, if the management company is not presenting the board/association with understandable accurate monthly financial sheets, they should be replaced immediately.
Again, you don’t need government to intervene. What is needed is a board of directors who are willing to put time and effort into understanding and managing budgetary expenditures, and at times helping the residents understand the budgetary process.
It’s been my experience as a board member that many unit owners find it more satisfying to accuse and complain than to try to understand or have a productive dialogue with board members. You can’t legislate attitudes!
Reply from Alan Fishman
Perhaps the author is not familiar with either managing or reading financial statements. AM VERY FAMILIAR.
The primary responsibility of a board of directors is to oversee the annual budget together with the management company. THE ISSUES I’M REFERRING TO ARE MOSTLY NOT RELATED TO OPERATING FUNDS (APPROVED BUDGETS) BUT OF RESTRICTED AND UNRESTRICED RESERVE FUNDS THAT HAVE TO BE PROPERLY REPORTED AND SEGRETATED FROM THE OPERATING CASH. IF YOUR ASSOCIATION DOES NOT HAVE ANY RESTRICTED RESERVE FUNDS THEN ALL THE MONTHLY REPORTING SHOULD BE FOCUSED ON THE REGULAR RESERVE FUND AND THE OPERATING FUND.
If a management company is competent the board/association will be presented with accurate income/cash disbursement sheets on a monthly basis. CAN’T DISPUTE THAT BUT IF THE MANAGEMENT CO. IS FAILING TO REPORT THE CASH COMING AND GOING IN ANY UNRESTRICTED OR RESTRICTED RESERVE FUND THEN THEY ARE NOT REPORTING PROPERLY; AND ARE NOT COMPETENT. THERE ARE STATE LAWS THAT REQUIRE ANY EXCESS FUNDS IN RESTRICTED RESERVE FUNDS TO BE RETURNED OR CREDITED TO EACH UNIT OWNER ANNUALLY AND IF THEY ARE NOT TRACKING THE RESTRICTED CASH, THEY WILL NOT BE ABLE TO COMPLY WITH 47-256 , 47-260 AND 20-456 OF OUR CT. STATUES.
There should NEVER be a question as to whether or not a bill is paid and what funds are available. AGREE AS LONG AS THE ENDING CASH BALANCE ON THE REPORT MATCHES THE CASH BALANCE IN THE OPERATING ACCOUNTS BANK ACCOUNT.
That financial statement should also reflect the balance of the association’s reserves. YES IT SHOULD AND IT SHOULD BE A COMPLETLEY SEPARATE STATEMENT SHOWING ANY CASH INTO AND OUT OF THE RESERVE FUND EVERY MONTH. IF ANY CASH IS BORROWED TO TEMPORARILY FUND THE OPERTING ACCOUNT NEEDS, THE OPERATING ACCOUNT SHOULD SHOW AN AMMOUNT PAYABLE TO THE RESERVE FUND AND VICE VERSA. THE RESERVE FUND MONTHLY REPORT SHOULD SHOW A LOAN OR RECEIVABLE IN THE AMOUNT LOANED TO THE OPERATING FUND. THE RESTRICTED RESERVE FUND HAS TO BE TREATED DIFFERENTLY. THE RESTRICTED RESERVE FUND IS NOT ALLOWED TO USE ITS FUNDS FOR ANY OTHER PURPOSE OTHER THAN FOR WHICH THE UNIT OWNERS VOTED TO USE IT FOR. I.E. NO FUNDING OF OPERATING EXPENSES; NO FUNDING OF PROJECTS NOT APPROVED OF.
Also keep in mind that all HOA fees are collected on a monthly basis and although a budget may reflect a total amount budgeted, there may be times when vendors need more money than may be available from that particular line item (especially in the beginning of the fiscal year)–making it necessary to use some reserve funds to pay the bill. SEE COMMENTS ABOVE.
In any instance, if the management company is not presenting the board/association with understandable accurate monthly financial sheets, they should be replaced immediately. VERITAS… DOES YOUR ASSOCIATION HAVE RENOVATION PROJECTS THAT ARE FUNDED BY ASSESSMENTS OR BY TEMPORARILY INCREASING THE COMMON CHARGES; WHICH IS REALLY A RESTRICTED RESERVE FUND. IF SO DOES YOUR MANAGEMENT CO. REPORT SEPERATELY THE MONTHLY ASSESSMENTS COLLECTED AND CASH PAID OUT EVERY MONTH THAT IS USED TO FUND AND PAY FOR THE RENOVATION PROJECT? DO DO THEY, AT END OF YEAR, REPORT IF THERE ARE ANY SURPLUS FUNDS LEFT OVER FROM ANY TEMPORARY ASSESSMENT MONEY COLLECTED TO FUND A NEW RENOVATION PROJECT. HAS YOUR ASSOCIATION EVER BEEN GIVEN THE OPTION OF HOW TO HANDLE ANY EXCESS RESTRICTED RESERVE FUNDS?
Again, you don’t need government to intervene. THERE ARE MANY DIRECTORS THAT ARE NOT VERY GOOD WITH MONEY AND EVEN SOME DIRECTORS OR MANAGEMENT COMPANIES THAT ARE NOT HONEST. CURRENTLY IT’S NOT VERY EASY FOR AN INDIVIDUAL THAT DISCOVERS PROBLEMS WITH A BOARD TO FUND A LAW SUIT AGAINST A BOARD MEMBER OR MANAGMEENT CO. IF THAT INDIVIDUAL IS ABLE TO FILE A LAW SUIT THE BOARD HIRES THEIR ATTORNEY TO RESPOND AND ITS FUNDED BY EVERYONE. RESOLVING LIGITIMATE DISPUTES CAN TAKE YEARS AND DISCOURATGE MOST UNIT OWNERS.
What is needed is a board of directors who are willing to put time and effort into understanding and managing budgetary expenditures, and at times helping the residents understand the budgetary process. THIS IS NOT VERY HARD TO DISAGREE WITH BUT IT’S A FANTASY THAT VERY RARELY EXISTS IN THE REAL WORLD.
It’s been my experience as a board member that many unit owners find it more satisfying to accuse and complain than to try to understand or have a productive dialogue with board members. CAN’T DISAGREE WITH THAT.
You can’t legislate attitudes!
Hi Veritas,
I’d like to talk to you personally and explain to you what is going on. I have built condos, managed existing condos. written declarations and bylaws,been a president of board, member of boards, treasurere of boards and consider myself a financial expert in how condominium associations are run and managed.
My personal email is Fishtell@optonline.net
I have not yet seen a condo association that is properly reporting how their restrictive reserve Funds are being used.
Would love to chat with you.
Alan