A friend asks: Are condo associations the spawn of Satan? p2
1/12/2015 | Real Estate Blog
We are picking up our discussion about condominium associations and a dilemma a friend found herself in (here). As president of the association board, our friend has been involved with major repairs for her 14-unit, 80-year-old building. Her building is in an urban neighborhood where parking is a problem, but the property includes a detached garage.
The garage is just as old as the building, and in somewhat worse repair. The roof needed to be replaced, and there were no two ways about it costing much more than the association’s reserve could absorb. There would be an assessment. It should have been a straightforward project, but it was not.
The process took a year. From November 2013, insurance companies came in, engineers looked at it, construction companies looked at it, carpenters poked around the interior beams. By October 2014, our friend was frustrated and just wanted to get the thing taken care of. The association had put other projects off until they had an estimate for the garage project, and that number didn’t come in until October.
Condo associations have reserves on hand to cover major repairs like this. This association had a reserve of about $40,000 that had neither increased nor decreased much for a few years. The board had looked into various investment options, but the money had to be liquid if there were an emergency repair.
The construction company has yet to invoice the association, but the foreman had told the board and the association’s business manager that the total would run to somewhere between $18,000 and $19,000. Again, it was clear the homeowners were looking at a special assessment, but for how much?
It was at this point that our friend should have called us for help, because Pennsylvania law has some very specific laws about condominium association reserves. We’ll finish this up in our next post.
Source: 68 Pa. Cons. Stat. Ann. § 3302, Powers of unit owners’ association, via WestlawNext