CCOC Testimony On 2013 Proposed General Assembly Condo Legislation
CCOC submitted testimony on several bills brought before the Judiciary Committee at the Public Hearings that were held on March 25, 2013.
For clarification, HB 6477 [hearing 3/5] and HB 6662 [hearing 3/25] are similar bills.
Unit owners may still contact their legislators to provide input and the impact proposed legislation would have on your condo community.
To locate your senate or house representative, go to http://www.cga.ct.gov
To read the complete text of a proposed bill; go to the above link, go to upper left ‘Quick Search”, type in the bill number. You will also be able to read all the testimonials relating to that bill.
S.B. 1145 AN ACT CONCERNING THE BUDGET AND SPECIAL ASSESSMENT APPROVAL PROCESS IN COMMON INTEREST COMMUNITIES.
(NEW) (c) An association’s board of directors, as defined in section 47-68a, or executive board, as defined in section 47-202, shall ensure that any community association manager under contract to provide association management services to an association provides such services in full compliance with the association’s bylaws, as well as the provisions of chapters 825 and 828, as applicable.
The proposed bill is well intentioned, but making an Association’s Board of Directors or Executive Committee responsible for a Community Association Property Manager’s compliance with CIOA would defeat the purpose of the bill.
The objective of the proposal is to finally put some teeth behind CIOA. A Board of Directors or Executive Board is expected to comply with this legislation. However, there is no mandate in the statutes holding Community Association Managers accountable to follow and comply with CIOA.
The CT Department of Consumer Protection is currently responsible for the licensing/certification of Community Association Managers and, ultimately, the revocation, suspension, or censure for financial misdeeds such as theft, extortion, forgery, fraud commingling of funds to name a few.
In instances involving financial mismanagement, resolution has been a recommendation for law enforcement action and in instances involving unethical conduct, the resolution has been a recommendation to court as a civil matter.
As the certifying authority, the State should oversee and ensure that Community Association Managers comply with all legislation pertaining to condominium management as it currently does with others who are licensed and provide a service.
Currently it is presumed that a Board of Directors delegates tasks to a property manager but does and cannot delegate responsibility. However, ask Board Members these questions who have contracted with a property manager for their complex:
- Does a Board review each meeting notice or cancellation and/or rescheduled meeting notice for a monthly meeting?
Most likely not, then what does a Board do when a property manager sends a cancellation notice 2 days after the regularly scheduled meeting and only after unit owners came to a meeting room to find no one there?
1. Does a Board review the resale packet prepared by a manager prior to it being submitted
Most likely not. But the responsibility does fall to the Board.
- Does a Board review governing covenants prior to these being submitted with the resale packet?
Most likely not, since many property managers use companies as far away as California and are exceeding the statutory fee not for printing hard copies but for what is termed, disclosure package, a convenience fee, a delivery fee. [documents are sent on a CD and owner has to print the 80 plus pages or be charged as high as 25 cents per page for a company to print & mail]
- Does a Board review documents for their complex posted on the website used by the property manager?
Most likely not. Example: financial reports of Association ‘A’ posted on website for Association “B”.
Property managers come to the interview table touting their certification, training, education, and their ability to provide services to manage a condominium complex.
Therefore begging the question, “why should an Association Board or Executive Board be responsible to ensure property manager compliance with CT statutes? Property managers practicing in the State of Connecticut should be knowledgeable and comply with all governing covenants of an Association, standards and practices as may be established from time to time by an Association subject to all federal, state and local laws, ordinances, and regulations in effect where the Manager practices.
On a cautionary note, one caveat: property managers, if mandated to comply with CIOA should be exempt from Section 47-278 thereby having no litigation rights under CIOA. A major concern is the threat of the law suit and the possibility that a management company may prevail that is the issue. One uninsured law suit could do serious damage to a small association.
IN FAVOR OF
Sec. 2. Subdivision (5) of subsection (b) of section 47-250 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2013):
(5) Unless [the meeting is included in a schedule given to the unit owners or the] a meeting is called to deal with an emergency, the secretary or other officer specified in the bylaws shall give notice of each executive board meeting to each board member and to the unit owners. The notice shall be given at least five days before the meeting and shall state the time, date, place and agenda of the meeting, except that notice of a meeting called to adopt, amend or repeal a rule shall be given in accordance with subsection (a) of section 47-261b
IN FAVOR OF WITH EXCEPTION
Sec. 3. Subsection (c) of section 47-252 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2013):
2) The association shall provide a proxy form to any unit owner who seeks to vote pursuant to a directed or undirected proxy;
(3) If a vote is taken by ballot, any ballot cast by a directed or undirected proxy holder shall not include the name of the proxy holder;
CCOC is unsure of the intent of the above. A proxy form must be provided to all unit owners when notified of a meeting that will be calling for unit owner voting.
The proxy form whether sent by management or a board shall not name the holder of the proxy.
Currently, CIOA does not address how an owner receive a form of proxy thereby leaving the drafting of this document to a unit owner who then must ensure he/she drafts a form that satisfies the minimum requirements of Connecticut law or face the possibility of their proxy being invalid and their vote not counted.
IN FAVOR OF
Sec. 4. Subdivision (1) of subsection (a) of section 47-260 of the general statutes is repealed and the following is substituted in lieu thereof (Effective October 1, 2013):
(1) Detailed records of receipts and expenditures affecting the operation and administration of the association and other appropriate accounting records, including, but not limited to, records relating to reserve accounts;
This will ensure that unit owners are provided with all financial records including business checking, savings accounts, and restricted and non-restricted reserve accounts.
CCOC has received queries from unit owners that they are not provided with financial information relating to transfers between checking, savings and reserve accounts.
CCOC is aware of the complexities of existing legislation and the efforts of legislators to correct and/or modify law for the betterment of condominium communities.
The 2009 CIOA amendments were enacted to ensure condominium and cooperative associations were more transparent and its intent was to significantly change how the communities and their associations are managed. The new measures included many changes regarding meeting procedures and other issues intended to protect the interests of unit owners in these complexes.
The catchphrase in 2009 was “transparency”. The Connecticut Common Interest Ownership Act is to promote transparency in Association governance. While some positives came from the 2009 legislation, like anything else, it is a work in progress.
H.B. No. 6662 IN FAVOR OF
AN ACT CONCERNING THE RECOUPMENT OF MONEYS OWED TO A UNIT OWNERS’ ASSOCIATION DUE TO NONPAYMENT OF ASSESSMENTS.
To: (1) Extend the number of months for which common expense assessments due a common interest unit owners’ association may be counted for purposes of a lien from six months to twelve months; and (2) provide greater statutory protections to unit owners’ associations seeking reimbursement for unpaid assessments that are incurred during the pendency of a foreclosure action
On behalf of our Advisory Committee, George Gombossy and I strongly urge lawmakers to vote YES on this bill. This legislation is crucial for Connecticut condo owners, especially for those who live in smaller complexes.
Two judges have ruled that banks were only required to reimburse condo associations for up to six months of management fees in foreclosure cases.
Unfortunately it takes more than six months for many foreclosure actions to be completed, many times because banks are in no hurry to take title to property that is worth less than the mortgage. This leaves the association of having to maintain the unit on the bank’s behalf after the six month period.
Imagine the hardship imposed upon smaller complexes with less than a dozen units, there are many in Connecticut, if one or more units are in foreclosure? It would dramatically increase the condo fees for the remaining owners, possibly forcing others into foreclosure.
H.B. 5661 OPPOSED
AN ACT CONCERNING COMPLAINTS MADE BY UNIT OWNERS AND TENANTS IN COMMON INTEREST COMMUNITIES
On behalf of our Advisory Committee, George Gombossy and I urge lawmakers to vote NO on this bill.
Complaints to any Board of Directors should be in writing and should include pertinent information such the date the complaint was filed, the date of the occurrence bringing about the complaint, individuals involved, a summary of the occurrence and, if available, any supplemental information/documentation that would support the allegation being made.
Acting on a complaint, a Board usually follows procedures for Notice of Hearing, more so if offense is subject to penalty. Without documented proof substantiating any complaint, a Board may then be accused by the offending unit owner claiming Board harassment or retaliation.
Verbal complaints are insufficient for a Board to bring any kind of action against an offending unit owner. The association would have no real proof of the complaint.
Human nature being what it is, individuals would tend to be more careful and factual when writing a complaint.
H.B. 6513 OPPOSED
AN ACT CONCERNING THE BUDGET AND SPECIAL ASSESSMENT APPROVAL PROCESS IN COMMON INTEREST COMMUNITIES.
On behalf of our Advisory Committee, George Gombossy and I urge lawmakers to vote NO on this bill.
If unit owners are dissatisfied with the proposed budget they would either attend the annual budget meeting or send their proxies back to vote no.
Presently, most unit owners do not attend annual budget meetings.
A condominium association is really a corporate/governmental entity hybrid. Assume that the Association is operating as a corporation. Looking at corporate law, the Board alone usually has the power to determine the budget of the corporation. The ability of 1/3 of the shareholders to undermine the budget would inconsistent with the structure of board control of the corporation.
This bill will allow for a vocal minority to reject a proposed budget versus current legislation that requires rejection by a majority of all unit owners.
H.B. No. 6666
IN FAVOR OF
AN ACT ESTABLISHING TWO PILOT PROGRAMS FOR THE MEDIATION OF CONDOMINIUM-RELATED DISPUTES
On behalf of our Advisory Committee, George Gombossy and I offer the following:
Existing legislation does not permit regulatory authority of a state agency to intervene in actions between unit owners and Boards of Directors.
CCOC is in favor of attempting to mediate disputes between board of directors and unit owners. Clearly an experiment, this proposal merits a trial period.
By requiring a $250 filing fee (Probate District) or a $175 filing fee (Judicial District) to have the case heard, this may weed out nuisance complaints and hopefully pay for the cost of a mediation session. This would also provide an alternative for condo owners who now have no other choice but to sue in Small Claims or in Superior Court if they feel they have been wronged.
Under this pilot program, whether cases are mediated in a Probate or Judicial District if not already in place, a method to analyze data, is essential in order to assess if the pilot program is be used and the effectiveness of the pilot program.
H.B. No. 6666 NEUTRAL
RELIEVING A COMMUNITY ASSOCIATION MANAGER OF ANY RESPONSIBILITY FOR CERTIFYING THAT A CONDOMINIUM UNIT OWNER IS COMPLIANT WITH A MUNICIPAL ORDINANCE REQUIRING THE INSTALLATION OF CARBON MONOXIDE DETECTORS AND SMOKE DETECTORS.