Money is a topic people are often skittish about discussing—especially when the discussion involves rising fees, or having to pay more money for something. When you’re a board member or the property manager of a condo building or residential association however, there’s no benefit to skirting financial realities just because they may be difficult or contentious. On the contrary, not talking openly and candidly about a community’s financial picture, or the need for a special assessment or fee increase can have serious consequences for the entire community.
A Necessary Evil
Nobody likes fee increases or even one-time assessments—but both are periodically necessary in order to keep a community or building financially solvent. Special assessments come up to make an unforeseen repair, or for some other expense outside the scope of either the normal operating budget or replacement reserve funds.
Those projects could include emergency situations like major storm damage, a sudden HVAC system breakdown, or a code violation of some sort that must be addressed ASAP. In such cases, an HOA board usually has the power to impose an assessment unilaterally, without soliciting input from residents. On the other hand, a board usually does need unit owner approval if they want to do a special assessment for something large but non-essential—i.e., to build a new tennis court or to spruce up the building lobby.
According to the New Jersey Condominium Act, under section (e) The association may levy and collect assessments duly made by the association for a share of common expenses or otherwise, including any other monies duly owed the association, upon proper notice to the appropriate unit owner, together with interest thereon, late fees and reasonable attorneys’ fees, if authorized by the master deed or bylaws.”
And be sure you’re on solid legal ground, according to Attorney Ronald L. Perl, a partner with the law firm of Princeton-based Hill Wallack, LLP. “There are firm rules about how much a board can spend without resident approval,” Perl says. Sometimes the board’s lawyer may be tasked with finding ways to interpret those documents to meet the need of the particular situation in question. That’s a very dangerous way to do business.