New England Condo Q & A with Jack Facey
Posted on Feb 21, 2012
Q: I am on the board of directors in a Connecticut leasehold. For some time, we have wanted to nominate one of our leaseholders but she keeps refusing to be on the board because she says that as a lawyer/accountant she holds herself to a higher standard and that she would be in peril of losing her license. Is this true?
A: The short answer is no, this is not true. There is no particular code of ethics that applies to condominium directors other than the requirements set forth in most states' not-for-profit corporation law. By statute and case law, all board directors owe a fiduciary duty to the condominium association. A fiduciary duty is the “highest duty” there is under the law. Some, not many, associations have a code of ethics in their bylaws or have adopted other provisions which may not rise to a “legal” obligation but could open up a director to a claim of a violation of one of those duties. I am not aware of case law or the law of any state that holds an attorney or an accountant to a “higher” ethical obligation than that of a non-attorney/ accountant condominium board member.
Your reluctant owner/lawyer may be concerned about the fact that she has a specific code of ethics to follow. It is debatable whether more “specific” means “higher.” There may be some professional conduct rules that could be perceived to be “higher.” For example, the commission of a felony or other crime may get you in trouble with a state professional conduct board but may not disqualify you from participating on a condominium board. She may also be concerned that a lawyer can be disbarred or suspended for issues unrelated to his or her practice of law.
Another aspect of your owner reluctance may derive from the fact that lawyers have an obligation of candor to the tribunal or court they are practicing before. A condo board member’s duties are probably limited to not lying or concealing requested information. If a board member is held in contempt for something that probably doesn’t affect his or her professional life, but if she is a lawyer she could experience further problems with the professional conduct board. In general, however, the professional conduct rules and the obligation of candor apply to an attorney acting as an attorney so it is hard to imagine a situation where a person acting according to her fiduciary duty as a board member could be found to be violating her professional canons.
Q: The board of our condo issued a ruling that any unit owner who is behind in payment of common charges cannot vote at the annual meeting. Our bylaws only say that each owner is entitled to one vote. No mention is made about denying the vote. Doesn't this ruling require a change in the bylaws? This would require a 2/3 vote from the unit owners. The board also now charges delinquent accounts nine percent per month or 108 percent on an annual basis. Is this legal?
A: If you and your condominium are located in a state that has already adopted the condominium Bill of Rights (also referred to as UCIOA II), and your condominium was created on January 1, 1999 or later, your board is way off-base as section 3-102 (18) provides that the Association ". . .may suspend any right or privilege of the unit owner that fails to pay an assessment but may not … (B) suspend the unit owner's right to vote.”
If you and your condominium are not located in a state that has adopted the most current version of the UCIOA Bill of Rights, and your declaration and bylaws are silent on the issue of whether or not the Association (or the board acting on behalf of the Association) may suspend the right of a delinquent unit owner to vote, my opinion is that this is a sanction that would not be upheld by most courts. The right to vote on matters affecting a condominium association is a fundamental right of a condominium owner and, in the absence of any statutory authority, unless there was language warning owners that one of the possible sanctions for nonpayment was loss of vote, it is unlikely that the sanction would be upheld.
If you and your condominium are not located in a state that has adopted the most current version of the UCIOA Bill of Rights and your declaration or bylaws do specifically allow the suspension of the right to vote in the event that an owner is delinquent, a court would probably uphold the sanction at least unless and until that particular state adopted the UCIOA Bill of Rights for condominiums created at the time yours was.
As to the 9% per month interest charge on delinquent accounts, most states have usury laws. In states that do, the maximum interest rate that can be charged is the percentage rate specified in the statute, unless the owner has signed a written agreement agreeing to pay an interest rate in excess of the maximum interest rate applicable in that state. If the declaration, bylaws or rules and regulations, as recorded, specified the 9% monthly rate, a court could conclude that unit owners were charged with knowledge of the rate and it might be upheld. If the board has adopted an interest rate in excess of the usury rate without having the full Association vote to levy it and thereafter to publicize it in a recorded declaration, bylaw or regulation, it is very possible that, upon challenge, a court would strike down any interest being charged over and above that state’s usury rate.
Q: I own an apartment in an eight-unit condo. The board is composed of all eight owners, of which there are four officers. My apartment is on the top floor, and over the past few years I have sustained over one dozen water leaks due to a faulty roof. In the past the board did quick repairing and flashed the roof to prevent leaking, but now it appears that there is serious buckling and a large portion of the roof may need to be replaced. The Association does not have the funds to repair it, and the owners will not vote to make an assessment to repair it. In addition, the rest of the board challenges me when I have asked for reimbursement for internal damages due to their negligence. The board has spent a lot of money on hiring others to clean the building and empty the garbage, and I feel that this money could have been put to better use. The rest of the board will not listen to my financial suggestions, and, since their units have not been affected by the leaking roof, they do not care about it. The board president actually referred to the roof as my issue. What legal recourse do I have? Is the board responsible for my internal damages? The bylaws say that the building must be kept in first-class condition, but no mention is made of who should pay for internal damages to my unit due to their negligence.
A: Section 3-107 of the UCIOA Act, assuming you are in a UCIOA jurisdiction, entitled “Upkeep of Common Interest Community” provides that the Association shall be responsible for maintenance, repair and replacement of the common elements.” While the language is mandatory, the devil, of course, is in the details. The Association could take the position that each time they effect a band-aid approach to the problem their intention was to effect a final solution. I recommend that you arm yourself with a building inspection done by a professional engineer (PE) who would, presumably, conclude after inspecting the roof that more than a band-aid repair must be done to prevent continuing damage to your unit. Getting a PE involved would have the added benefit that you could ask the PE to conclude, in writing, that the water damage that you have incurred is directly resulting from the failure to maintain the common element involved, namely the roof. I would then present the PE report along with a carefully drafted letter demanding that your board either perform the work identified by your PE within a reasonable amount of time or else you will be hiring an attorney and going to the appropriate civil court seeking declaratory and injunctive relief, reimbursement of your expenses including the professional engineer's expense, and your attorneys fees. Hopefully, they will see that you mean business before you are required to hire an attorney. Finally, you may not withhold payment of your condominium fees in an attempt to force attention on your issue. You may, of course, pay them under protest.