Condo Board Finances

We own a unit in an 8 unit Condo in New Hampshire.

Our Condo fees are not enough to cover our expenses. Over the last few months we have had to ask unit owners to pay condo fees in advance just to pay our bills.

we have had discussions about either increasing the condo fees or having a special assessment so that we can have some money in our account to pay bills. However, the developer who still owns 4 of the units and thus has half the votes(he is also the board president)has been in financial difficulty for the last 4 to 5 years and has voted down any attempt at raising the condo fees or a special assessment.

we do not have any money in the condo account and we do not have any reserves to cover any major repairs that might arise,like the roof or docks needing repair.

What can the other owners do so that the financial situation of one owner does not negatively affect the other owners who know that we need to have money in our account for expenses and money in reserve accounts for major repairs? Can the state Attorney General do anything?

What do your documents state with regards to period of declarant control?

I would recommend discussing the issue again with the developer, let him know according to law he needs to insure a reserve fund set up and adequate funds collected for reserve and expenses. If he still does not do so then I would recommend the homeowners consult an attorney as he would then potentially be violating his fiduciary duty with regards to the association and homeowners.

You are correct in that not taking care of this issue could hurt a lot down the road when no money is available for repairs.

Here is your state statutes and below are a few areas which may help:

http://www.malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter183a

Section 10
Corporation, trust or unincorporated association; owner’s interest; powers and duties; management
(i) All condominiums shall be required to maintain an adequate replacement reserve fund, collected as part of the common expenses and deposited in an account or accounts separate and segregated from operating funds. The requirements of this subsection may be modified pursuant to subsection (m) of this section.
(j) The declarant shall not use any funds of the organization to fund expenses relating to the initial construction, development, and marketing of the project, to pay the declarant’s share of common expenses, or to pay for any costs that are not directly related to the operation of the condominium.
(m) After control of the condominium has been transferred from the declarant to the organization of unit owners, the organization may by an annual vote of sixty-seven percent in beneficial interest or more of the unit owners modify any or all of the following provisions: the requirement regarding the review of financial records for condominiums comprising fifty or more units in the second paragraph of subsection (d), but such review shall be performed not less frequently than every two years as provided in said subsection (d); the frequency with which written reports must be prepared by the manager or management agent pursuant to clause (1) of subsection (f); the signature requirements in subsection (g); the requirement for fidelity insurance coverage in subsection (h); and the reserve fund requirement of subsection (i); provided, however, that any such modification may be rescinded at any time by the vote of a majority in beneficial interest of the unit owners.

Section 11
By-laws; mandatory provisions
Section 11. In addition to other provisions required or permitted by law, the by-laws of the organization of unit owners shall provide at all times for at least the following:—
(a) The method of providing for the necessary work of maintenance, repair and replacement of the common areas and facilities and payments therefor, including the method of approving payment vouchers.

NOTE: A receivership as posted above would potentially cost thousands above the usual fees as you would be paying an attorney or other court appointed individual for said services. This would hopefully be a last resort.

We all realize the need for an increase of the condo fees and/or a special assessment, however since the person with the most votes in the association does not have any money to pay either the increased fees or a special assessment every time the matter is brought up he votes against any increase and says owners should volunteer to prepay their fees. We have a situation where some people have prepaid to August and we still have no money in the accounts as all the money has already gone to pay bills.