Wrong monthly dues being charged for years

I live in a 32 unit condo development (townhouse style) in Massachusetts and incorporated as a trust. Also, we are completely self managed with no management company or agent. I moved in two years ago and joined the five member board of trustees earlier this year. This was my first condo so I really didn’t much experience or background. The more I got involved in board activities, the more skeptical I have become on past decisions. Our association President refuses to get quotes from vendors for many projects and instead chooses to use “our mason” or “our carpenter” for all projects. They claim to be using a reserve study form 1995 and refuse to get another one. She and another long time board member also seems clueless about any association rules and claims she has never read the master deed. So basically they have been doing what they wanted for 30 years (the length of her and another board member’s time on the board) while most the of the other residents seemed clueless because many have live there for decades as well.

Here’s where my problem started. Since I have nothing better to do on a Saturday night, I read our entire master deed. Every condo in my complex is slightly different resulting in a different beneficiary interest for each unit. However, they are charging the same flat monthly fee (around $400) for each unit. I did the math on what each person should pay and I overpaid by around $250 total last year. And if you have taken the time to read this long (and I thank you for that!) you might be surprised to learn my association President underpaid the most by $500 compared to what she should have paid under the master deed.

Here’s my problem: what do I do with this information? Do I contact my own lawyer? Do I contact the association lawyer? I’ve only been here for two years but some people have been overcharged for over 30 years.

Remember we are self managed. When we did the board election vote last summer someone asked about counting the votes using the ownership interest and the hoa President ignored them. So she probably understands that not everyone gets an equal stake in the property but chooses to ignore it because as she says for most things that seem wrong “that’s what we have always done”

Also note, I’m desperately trying to get a management company. This is one example why one is needed.

Thank you for any advice! I really really appreciate it!!!

Yes, the master deed says general and special assessments for common expenses “shall be allocated proportionately to each unit’s common element interest”.

So yes, the master deed says the dues and any special assessment are based on the Internet which is also outlined in the master deed.

I want to make sure I have this right. For each condo unit, does the Master Deed list the percentage interest, out to say four or so decimal places?

When you say you overpaid by about $250 last year, do you mean that $250 is the total amount for the year that you overpaid?

I agree. I honestly don’t know what to do. It’s a loose loose situation. And I’m trying to get a management company to come and take over operations. This will get brought up by them if we even get a company in here. Residents tried a few years ago to get a management company but the over-controlling board members scared many of the long-time residents into thinking it would increased monthly dues by a couple hundred dollars.

Mike

Depending on the duties of an MC, you can ball park one at about $10 per month per door so in your case $120 per year, per unit. At $120 per unit, per year, the services would be basic bookkeeping and little more. With some additional services one could easily run $20 to $30 per month or $240 to $360 per year, per unit.

Can you see people agreeing to pay $20 to $30 per month more for an MC? I doubt the average owner will see the advantage. Not that the advantages are not there, but being seeing the advantages is a different issue.

Now as far as them not applying the proper dues formula per unit based on unit size you could raise this to the BOD and see their reaction. One thing I would do is work up what each unit would pay under the revised formula and present that also. Do not present a problem without a solution. Typically in townhouse and private home associations, equal yearly dues is the standard.

This is the case where I live. We have different size condo's ranging from 1200-2000 square feet. It makes sense when you consider the cost of upkeep for each condo will vary based on how much siding there is, the size of the roof, etc.

I am familiar with different dues for high rise condos, some based on view alone but again my experience says single story and townhouse association generally have the same dues per home.

Actually, the reason behind dues based on square footage or number of bedrooms, is the utilities that are included. In many condos, gas and water may be included in the assessments. In addition, insurance to rebuild from a fire would be cost per square foot, so it would cost more to rebuild a 2000 sq ft unit, than a 1000 sq ft unit. Roofs are a less exactly science.

OP posted:

"Also note, I’m desperately trying to get a management company. This is one example why one is needed."

MC's are NOT the one's to interpret your governing docs and make any adjustments. They are there to collect the monthly assessments as stated due.

There may be miscalculations that date back many years. These calculations can be complicated.

Consult an attorney to review your documents and provide an opinion on how much the dues should be for each townhouse.

Unless your Reserve account is fully funded, ask the attorney if you are required to refund any over collected dues or if they can be retained by the HOA and new dues amounts calculated going forward.

Unless your HOA is in a surplus situation, do not offer to give any money back to the owner's legally required.

I suggest making a motion to have the HOA attorney review the situation. If the board does not agree then I would contact an attorney on you own. Yes, it may ruffle feathers and cause problems but you have a legal obligation to do what is right.

My expectation is that if some people have overpaid, others have underpaid. I wouldn't want to be the one conveying that info to those owners.

Respectfully, it is worth checking for at least a corporate resolution by your Trust's Board purporting to equalize the contributions, legal or not. And - whatever - getting the support of at least another Director to work discreetly with minimal direct challenge visible to the President.

As a newbie on your own Board you might be surprised how easy it is for the wagons to be circled. Long established volunteer governance groups can be extremely sensitive & intransigent, no matter what they profess.

I don’t think we have ever been audited. Is an audit normal or required by law?

Look in your bylaw or in your state's laws. My bylaws require an annual audit, and my sense is that this is pretty common. It's definitely good business practice and can help prevent shenanigans.

Keep in mind there are various levels of audits and in the OP's case I doubt any audit short of a Forensic Audit, the most costly level, would catch the error.

I'd show the board the master deed and tell them your understanding is that the dues should not be computed as equal fees from each member. Show them your computations. They should be especially disconcerting to the board since the president has been underpaying all these years. Find a management company! In my experience, they are worth their weight in gold. They're the bad guys when enforcement actions need to occur and they have connections to vendors, maintenance companies, companies who preform reserve studies etc. Your fees will be based on the level of service they provide. You have to live near your members so you likely don't want to be the one telling them they're in violation of anything. Good luck to you!

Why do the other Board members allow the President to have so much power when he has the same voting power as everyone else? The Board should be deciding on the number of bids not just the Pres.