Q: We live in a six-unit condominium in need of guidance on how much to charge for monthly assessments as well as how much to allocate for reserves. A recent analysis of for-sale vintage condominiums similar to ours showed an average monthly assessment of $350 per month; our assessment is $521 month. Additionally, our reserves are $75,000, which is almost twice our yearly operating expense of $43,000.
What guidelines do you suggest in setting assessments and reserve funding?
A: Budgets should be set based upon the actual expenses to administer the association. It is not a best practice to set assessments based solely on the assessments of similar buildings. In reality, what appears to be a similar building could have a vastly different cost structure due to the other association providing a different level of service or amenities, and the age of common element components may be different, resulting in different maintenance/repair costs.
In terms of reserve funding, Section 9(c) of the Condominium Act sets forth various factors for an association to maintain reasonable reserve funds. The most important factor is the remaining useful life of common element components. While a reserve fund with twice the yearly operating expense might sound reasonable at first blush, it would be insufficient if necessary repairs in the next two years are 10 times the yearly association budget, for example.
Q: Our association recently sent us an information form requesting personal information and occupancy information such as car make, model and license plate, pet registration and emergency contact information. The letter stated there would be a $100 fine for noncompliance. This seems illogical to me since the census does not ask for this much information. Please advise.
A: The purpose of the census versus a community association's residency information inquiry is vastly different.
Associations have a vital interest in obtaining information about the occupants in its community for purposes ranging from declaration and rule enforcement to contacting someone on a unit owner's behalf in the event of an emergency.
Associations are expressly granted rule-making authority per statute, and their declarations, to govern their community and may require such residency information. The census is used to obtain population figures. For a violation of any rule, including failure to fill out an information request form, the association may assess a fine.
Q: I live in a 44-story condominium building that is undergoing facade work. It is nonstop noise Monday through Friday. The work will continue through September. I work from home and the noise is unbearable. What are my rights?
A: While exterior construction work on the common elements is inconvenient to those unit owners remaining home during a construction project, the board of directors has a fiduciary obligation to maintain, repair and replace the common elements, which may include noisy construction work from time to time. Such owners have no recourse against the association for performing necessary maintenance, but they do have the right to rent an office off-site during the construction project.