Lawyers Stumped on Limited Common Elements

I think if I was a betting person I will get a better answer here than the lawyers.

On another message board I posted the question. I got some answers from three lawyers but this was one way communications and not an interactive discussion.

In reviewing the condo docs the condo association is responsible for maintenance, repair, replacement cleaning and sanitation of the common elements and the limited common elements.
"Such owners will also be responsible for ordinary maintenance of an appurtenant limited common element, including such cleaning as may be appropriate. All other repairs, or maintenance with respect of the limited common elements shall be responsibility of the association".

The cost is a common expense for the condo.

In other section under administration we have "Such powers and duties which shall be exercised in the manner provided by the condominium documents shall include the following, the cost of which shall be common expenses: The maintenance, repair replacement, cleaning and sanitation of the common elements, and limited common elements." 

I am interpreting that to mean that the condo is liable for the maintenance, repairs replacement of that limited common element. Also the payment for that works is done through the condo association. The lawyers straightened me on that.

The collection of the expenses is the following.
Section VII Ownership of condo units, maintenance and alterations. Part E. Ownership Share and Voting rights 3. Allocation. "The annual common expense levied against each unit shall be computed as follows: The general common expenses shall be allocated among all units in the condominium. THE LIMITED COMMON EXPENSES FOR EACH TYPE OF LIMITED COMMON ELEMENT SHALL BE ALLOCATED EQUALLY. Until the conveyance of title to the first unit, sponsor shall be solely responsible for all common expenses. Following the first conveyance, the owners of units to whom title has been conveyed shall be responsible for the proportionate share of all common expenses and the sponsor shall be responsible for payment of all common expenses assessed against units which have been completed but which have not been conveyed to an individual purchaser."

The bold expression by not having allocated among all units but the expression allocated equally means that expense is collected from the ones who benefit from the limited common element. We are small building and each unit has their own limited common element used solely by their specific unit and each element are unique to each other.  

Here is Law Insider on definitions of limited common expenses.
https://www.lawinsider.com/dictionary/limited-common-expenses#:~:text=Limited Common

This limited common element expense is really a pass through. This is better explained in this article in Arizona. 

https://goodlaw.legal/passing-common-expenses-in-a-condo-association-to-owners/

Two states MA and Rhode Island has verbiage on this one. MA they can make the repairs and payment by condo or shift one or the other to the owners. Rhode Island has limited common elements maintained at the cost of the appurtenant unit owner. Those lawyers responded. One lawyer was mystified. NJ nothing on the books for this.

Scenario is this limited common element to unit F is a patio and needs to be refurbished. Who does the work and who pays. Docs say condo does work and condo pays. However that expense should have been collected from F unit owner over time as a reserve. What are your thoughts?

Thanks a bunch.

Here is the deal when you ask the "Condo/HOA/POA" to pay for something. This means that EVERY member is subject to paying for it. Be it an insurance claim, repair, or maintenance. The Condo/HOA/POA is ONLY funded by it's members for it's members. The money for these requests come from that pool of money every member pays their dues to. That can mean if the expense requested by a member exceeds what is in the bank account, then EVERY member is subject to a special assessment or raise in dues. You or your neighbors may not be happy to hear they have to pay an extra $50 a month or a $500 bill to fix "Mr. Doe's" porch.

This is why the HOA kicks back many people's requests. Can everyone afford it? Is it their responsibility or the homeowner? Even if you think "insurance will cover it". There can be a $20 K deductible on an insurance policy the Condo/HOA/POA has. That means raising the $20K just for the deductible. If it doesn't meet that deductible for repairs, then again everyone contributes.

I see people always wanting their condo/hoa/poa pay for stuff. They don't realize that means ALL members pay for it. It is why it needs to be approved and agreed to.

I bungled it. If the refurbishment goes beyond "ordinary maintenance," then the association pays.

If you posted solely the relevant verbiage from your governing documents, and then your questions, then I think you would be getting more input. People here are in fact highly experienced in the matter of LCE maintenance, repairs et cetera. There is no "one size fits all."

Patio is the exclusive common element for unit H . (I think we are in agreement here).
Ordinary cleaning etc of the patio is unit H. (I think we are in agreement here).
Anything else repair, replace, the big stuff is the condo will manage the project. (I think we are in agreement here).
The payment for the big stuff if from the condo. (I think we are in agreement)
That collection of money is coming from who. I do not think is from all units in the condo. It sounds like it is coming from the exlcusive element owner in this case H. (This is the question).

So unit H patio is in bad shape. The condo needs to get involved. There are no reserves setup for H's patio. Does the condo assn say H we will do the work but you will need to make the payment? Another scenario is for the future all units who have exclusive common elements to start contributing to their exclusive common element reserves and the condo keep track of that. The last scenario which is not in the docs is that all unit owners who are in this situation handle their own repair and replace themselves.

With the expectation that all limited common elements are the same (patio/balcony):

You are correct that the expense to refurbish the patio should have been collected over time.
The reserve study should have shown this work and the reserves should have been fully funded.

Unfortunately, it sounds like John is correct and your annual assessments are simply too low to fully fund the reserves
OR
Your reserve study didn't address the work that is needed.

Per your citations, I would say that the Association pays unless the patio needs refurbished due to damage caused by the owner.

Sure, if the stuff people ask the HOA to pay for aren’t required by the declaration, the board has the discretion to approve the request - hopefully on an equitable basis to everyone.

Too many times Boards under budget then try to pass HOA expenses to the owners rather than maintaining sufficient assessments and reserves. Owners in this situation should take their HOA to court to recover losses and end these silly games.

Just as a data point, according to my condo's Declaration, unit owners are responsible for maintenance, repair and replacement of the limited common elements (decks or patios) for which they have exclusive use.

This has always struck me as odd, since "replacement" can involve heavy equipment that may or may not fit in the area behind the buildings and that will damage the ground in that area. And it introduces the possibility of injuries (liability) if you have owners climbing around on ladders outside. Finally, in my community the second floor decks form the roof of the patio below them, you can't replace the deck without affecting what's going on underneath it.

Also, modifications such as a gate, fence, hot tub, etc. are not permitted in my community. The fencing and awnings are especially an issue since they can involve modifications to common elements or enclosing common elements (thus unapproved amendments to the Declaration). In addition, our Declaration also has a catch-all paragraph that essentially says that any modification that changes the association's insurance requirements is prohibited - that can cover a lot of things.

It may make more sense for this work to be performed by the association, with costs passed to the individual owner if that's what the CC&Rs require. But that may not be possible, at least in communities where the CC&Rs make these things the responsibility of the unit owner - not least because the master policy and unit owner's HO6 policy assume it will be otherwise.

In other words, nothing is ever simple with condos. Every time I think about how the CC&Rs work in real life, I end up going "hey, wait a minute...". It's especially worrisome that condo board members are often newbies in every sense of the word and particularly unqualified to sort things out.

Hi all,

Just to give out some info.

The units all have unique limited common elements to each only.

One has a patio, one has a deck, one has a driveway. The problem is the language used in the collection of money for an example to replace a deck.

Section VII Ownership of condo units, maintenance and alterations. Part E. Ownership Share and Voting rights 3. Allocation. "The annual common expense levied against each unit shall be computed as follows: The general common expenses shall be allocated among all units in the condominium.

"""The Limited Common Expenses for each type of Limited Common Element shall be allocated equally.""""

The word equally is not "all units". It looks like common expenses is for all units. However Limited common expenses for each type paid by equally might mean equal to the folks who can use it. In this case since everything is exclusive to a unique unit the condo is collecting from that specific unit. This is why it looks like Unit H ideally paying an extra amount for its patio in a reserve. When the time comes the condo can manage the project and pay for the project when the time comes. If something needs to be done and there is no money it could be a special assessment for Unit H.

That is just me thinking and I agree there is no reserves! I am trying to get the condo moving in the right direction. NJ just passed mandatory reserve funding in response to the Champlain towers tragedy.

Ellen

The Buckeye State is more advanced than the Garden state. I did not find anything in the condo docs and NJ Condo law with the expression you mentioned.

The Arizona statute is more advanced in its writing. Here is the website writer's viewpoint.

"The Arizona Condominium Act’s “pass-through” provision in A.R.S. 33-1255(C) provides:
Unless otherwise provided for in the declaration all of the following apply:
Any common expense associated with the maintenance, repair, or replacement of a limited common element SHALL BE EQUALLY ASSESSED against the units to which the limited common element is assigned.
Any common expense or portion of a common expense benefiting fewer that all of the units shall be assessed exclusively against the units benefited

Essentially, these provisions require a condo association to assess charges against owners when those charges benefit LESS THAN ALL the owners. For example, if a roof on a building that houses four units needs repairs, then the Association must assess the costs of those repairs equally among the owners of those four units. The owners whose units are not in that building are not responsible for any portion of those charges.
As mentioned in the opening sentence of the pass-through provision, the pass-through does not apply if the declaration provides otherwise.
Is passing common expenses onto these owners an option or a requirement?

The word “shall” in A.R.S. § 33-1255 is instructive. Associations are required to pass these charges onto the benefited owners. If the Association pays for these repairs or expenses with common funds, then it opens itself up to liability from other owners who are not required to cover those charges. The principle behind this requirement is that owners do not pay regular assessments to cover costs that only benefit other owners.
Hence, in a condo association, you pay for what you get."

More advanced written law than my doc and state.

From very rough memory, it is the buckeye state and states west of it, roughly, where "less than all owners" clauses seem to appear quite often.

Put in another way: New York, Massachusetts, New Hampshire, New Jersey, and Maine folks come here and have HOA/COA governing documents and statutes that are a lot different from everyone else's.

At least, this is the attitude I have when someone from these handful of Northeast states posts here.

Example: "Master Deed" is a thing from the aforementioned northeastern states, roughly. Everywhere else it's a "Declaration" that would be saying what you are saying. (Your association might have both a Declaration and a Master Deed?)

I expect these differences have a lot to do with the age of the aforementioned states and how land development proceeded for many decades before say, Colorado was even a state.

If the declaration does not say otherwise, it is a statutory requirement.

For "western" states: Sometimes it is a state statute that has such a requirement. Sometimes it is the Declaration. Sometimes it is both.

Back to your tiny New Jersey association:

The lawyers and this forum are not so much stumped. Instead they find the wording vague and ambiguous. It's also possible this was a scrivener's error by whoever prepared the Master Deed.

I will say that when I google on "shall be allocated equally" there seems to always be a phrase after this explaining what the "allocated equally" means.

Practically speaking, whatever way the HOA wants to interpret this will stand until someone challenges this interpretation in court.

And no one wants to go to court. Court is the enemy. Seriously. It's too much money spent on lawyers. It takes forever. Courts like to split the baby, probably to discourage people from suing in the first place.

If owners are wise and can do basic arithmetic, then they would realize that each owner undertaking the cost of major repairs to his/her exclusive use LCE, as these major repair arise, is best. Because all owners are going to have to pay for their exclusive use LCE's refurbishment at some point. So as far as the expense is concerned, it is a wash.

See Tim's above. Jeff nicely nails it:

"Your master deed provides that the expenses for your limited common elements, as opposed to other expenses, are to be collected in equal proportion from your three owners.
IMO 'equally' does not mean that the unit owner pays for their own limited common element. It means that all three owners pay equally for the expense of maintaining these elements.”

Owners pay equal proportions. I don’t find the words in Gregory’s docs to be ambiguous.

I did respond twice along Jeff's lines at length very early to this post and both disappeared. Hugely frustrating.

80% of our 200-unit multi-story condo building’s units each have one-100sf balcony, including mine. The rest of the units have a wide variety of patios, balconies and decks of varying sizes. Some units have 3. A few units have over 300sf of these “exclusive use common areas” (CA HOA lingo). All owners pay the same portion of their dues into reserves to repair/replace these surfaces.

Language in our CC&Rs is “on an equal basis.” Am I thrilled that I’m contributing to some really huge balconies/decks’ good health in upper story units—some of which are 2-story “penthouses— that are extremely expensive to purchase? No. But this is what our covenants state.

Equal does not mean “fairly,” as is possible Gregory supposes. It appears that Gregory’s HOA will have to pay, via special assessment or perhaps a loan, to refurbish the unit’s patio. And the HOA needs to start paying into reserves for repair/replacements of the other LUCAs.

Gregory, it'll help if you'll refer to your association as association or HOA. "Condo" make it s little confusing.

To Dean: “Appurtenant” as used in CC&Rs are the items I also own whether physically attached to my Unit or not. In my, case, my balcony is attached, my 2 parking spaces and my storage locker in a Storage Room area are appurtenant to my condo —they are a part of my separate interest — and are listed on the deed. They are in our underground garages. As with Cathy’s HOA, owners may not add anything like awnings,, etc. to the exclusive use balconies, patios & decks.

Everyone on this board did not get stumped but solved it!

I know now that other than cleaning it's an expense shared equally amongst all units. Thanks for the enlightenment.

There is no litigation but this will help when the reserve study is done and reserves need to start.

So it looks like subsidization for the LCE. The small units will be happy that they get assistance on their items and angry that they have to pitch in on the bigger complicated projects. The big units might be not too happy with condo interference and selection of contractors. In any case a bridge to cross when we get there.

Thanks everyone!