Initiation Fee being charged illegally

Susan

My experience says that many Covenants do allow the association to recoup costs and this wording is what many use to justify such. Now as to the costs, that could be argumentative.

The governing documents must be followed. If the Board wishes to adopt an initiation -- or any other -- fee, or impose restrictions on leasing where none previously existed, or otherwise materially alter the covenants, conditions an restrictions, it must amend its governing documents to authorize that action.

Having said that, I am in FL and not CT, so soliciting a legal opinion from the Association's attorney is well-advised. If someone ends up suing you Association over this, it could get very ugly very quickly.....

P.S. I successfully litigated a case like that for 3 condominium purchasers just last year. I would strongly urge you to get a legal opinion so you can sleep soundly at night.

I am curious, how does your citation relate to the question of the OP?

There are associations where a fee specifically for the funding of the reserves is in the CCRs, and this fee is charged at closing of escrow. These funds may or may not be taxed as it would depend on number of factors. Any such fees you might suggest would differently be taxed as additional income. Transfer fees, if managed by a PM would go to that company as they are the ones maintaining all the records.

I have managed two association where a reserve fee was collected at closing. My former association had a $100 water fee in their documents, but no one every enforced it.

Unclear why you don't just change your docs to match your actual practices.

This fee is just like the "Transfer fees " or the "Capital funding fee" which has been talk about before. I bet you Board was encourage by the Management Company to do this so they(MC) could increase their bottom line by adding on their fees ,so your $500 is not as big after they get done taking their cut. How is this money being tax since it is not a Due's only collection which is tax at a lower rate? Most CC&R's state "Due's Only" are to be the source for maintaining and operating the HOA unless other amendments were made to the CC&R's to provide for this, that is the hammer you use on them to end this unethical procedure. The authority is in the documents, if there are no documents then there is no authority to do unless approved by a majority of the residents in the HOA. Follow the expenses regarding this money and you will fine this is less of a benefit then you thought after the MC gets their cut!