Tag Archives: arbitration

Difficult Condominium Trustees and Officers–The Enemy Down the Hall

Condominium, , , ,

Recently. I have experienced difficulty in dealing with Condominium “management”, so-called, with respect to matters which involve my clients. I am a Massachusetts title and real estate attorney, and in the course of my representing both Buyers, Sellers and current  Unit Owners of condominiums in Massachusetts, I have experienced an array of frustrations, including the following:
     1. Answering Lender Questionnaires.

Getting the condominium officials to respond to the Lender’s Questionnaire, so that a mortgage loan can be processed in connection with a sale. Recent underwriting restrictions have made the answers to the Questionnaire more important than ever. Most condominiums are not involved in litigation, or disputes with Unit Owners. The Lender needs to know these things, and the Questionnaire is the vehicle. Many times I have experienced situations where the Trustees just can’t get around to providing answers. There is no urgency for them, and they take theri sweet time.

     2.Disputes between the Trustees and a Unit Owner

These can range from permitting a Unit Owner to fix his or her Unit after a natural or other disaster to approving a request to do structural work to personal “vendettas” between neighbors. Most older documents do not have Arbitration provisions. In that situation, the affected Unit Owner often must initial litigation to rectify a perceived wrong. The irony of this type of situation is that once a litigation is begun, the affected Unit Owner  must pay not only his or her own legal fee, but a percentage share of the legal fee incurred by the Condominium Trustees to defend. As a practical matter, this unfairly inhibits the ability of a Unit Owner to protect his or her rights.

     3. Arbitrary or Capricious Trustees or Officers

There is not much that can be done with a person who wants to say “no” to every suggestion, even down to the need for the Trustees to have frequent meetings and keep minutes of meeting. If the difficult Trustee doesn’t like you. or doesn’t like anyone, you have a major problem, and the expense and stress of going to Court to have a Trustee removed is huge.
     4. Charges for Items that should be Free.

 Why is it really fair for a condominium to charge $150 for a Certificate that there are no Common Area liens on a Unit which is being sold? Why should a selling Owner be charged $200 for a “move-out” fee? Where is the justice in any of this, but, as most of you know, it happens, and it can chill transactions.

There are solutions to these problems, but they are not easy to effect, especially with the requirement that Mortgagees need to be involved in Master Deed amendments. These are some solutions which I would recommend, however, and they should improve the situation materially:

     1. Pay Trustees a decent stipend for serving. I would suggest forgiving two or three monthly common area fees for Trustees. That would encourage more people to become Trustees and eliminate the “Trustee for Life” people who have nothing better to do than frustrate the realistic requests of Sellers, Buyers and Unit Owners.

     2. Amend the Declaration of Trust to permit arbitration of disputes, with the losing party required to pay not only its fees and costs, but the fees and costs of the winning party. This approach would force more attention on reasonable compromises.

     3. Set term limits for management companies and Condominium officials. Change management companies every three years. Only permit Trustees to serve for two (2) terms. This will make it possible for new ideas and new approaches. it will, in effect, end “tyranny”  by the current regime.

Please let me know your ideas on this!!! I am quite willing to spearhead an offensive to change things in Condominium operations. Such changes are way, way overdue.

Condominium Operations–It’s Time for a Change

Condominium, , , , ,

Over the years, I have had many opportunities to become part of the Condominium process. I have drafted Condominium Documents, both conversions and new projects. I have closed literally thousands of mortgage loans, which involved either Condominium purchases or refinancing. I have also represented Buyers and Sellers of Condominium Units of all shapes and sizes. Based on my experiences, the following changes need to be implemented in Condominium operations, and we, as real estate professionals, need to be leading the way through our Boards and Legislative contacts to effect the following:

1. Condominiums Should be Required to file Annual Reports with the Secretary of State.     Most Condominiums do not keep current the names of the Trustees for the Condominium. I have, on many occasions, received 6(d) Certificates executed by individuals who are not the Trustees of record. In their Annual Report, the Condominium would be required to name the current Trustees, and affirm that the requisite filings have been made at the appropriate Registry of Deeds.

 2. Condominiums with Six (6) or more units Should be Required to produce, and keep current, Condominium websites. There is much too much inefficiency involved when a Condominium Unit owner attempts to sell his or her Unit. At the very least, the Condominium website will contain the following sections:

          a. Floors plan for each Unit. These are on record at the Registry of Deeds, but they are relatively easy to replicate on a website.

          b. A set of CURRENT Condominium Documents. Put them on the website as they exist at the Registry of Deeds, including all amendments. If nothing else, this will save the many trees which are killed to copy sets of Condominium Master Deeds and Declarations of Trust. The Buyer’s attorney can do his or her review of the Documents from the website. So can the Lender or the closing agent. Everyone wins, except Staples.

          c. The name of the current Management Company,if one exists, along with telephone number and email address of the contact person. Someone needs to be in charge of providing financial information to the putative Buyer. The website can designate that person.

          d. The website will contain a “ready to print” form of 6(d) Certificate. It is an outrage for a Seller to be required to pay $50 or $100 to the Management Company to deliver a 6(d) Certificate. It should be able to be printed out, at any time, and ready for Trustee(s) signature.

3. Condominiums Need to do a Review of their Documents, at least once every five(5) years. There are some very old documents in place, which are not responsive to modern Condominium living.  Rights of first refusal were in vogue in the 1970’s and 1980’s. What real purpose do they serve now? Some descriptions of common areas are prolix. Many lenders are requiring Condominiums to have arbitration provisions with regard to disputes. Older documents rarely, if ever, contain arbitration provisions.

4. Condominium Trustees need to be more vigilant in terms of collecting Delinquent Common Area fees. There is a statute in place which gives the Condominium Trustees broad powers to collect delinquent fees. Many of us in the Massachusetts Bar fought long and hard to have this provision enacted after some Condominiums in the late 1980’s and early 1990’s went bankrupt under the crush of non-paying Unit owners. We are in a difficult economy at present. That does not excuse non-payment of Common Area fees. Many Trustees are totally unaware of their rights to collect these fees. In case my readers do not know, the Trustees can commence a collection action, charge the Unit owner, in full, for attorneys fees and the obtain a judgement which will permit the Condominium to foreclose on the Unit, with rights ahead of even the First, and other,Mortgagees. That being the case, it has been my experience that as soon as this collection action is commenced by the Trustees, the Mortgagee(s0) steps in and makes the Unit current on its Condominium Fees. It should be a requirement in the Condominium Statute that the Trustees commence an action at any time a Unit is two months behind in paying common area fees.

The ideas set forth herein are not new, but they need to be acted upon. The current, inefficient way that Condominiums are being operated limits our opprotunities as real estate professionals. I would welcome any further suggestins any of you may have. I live with these probelms every day, and,probably, so do you.