July 2nd, 2010
In the news recently are two articles about misappropriation of condominium association funds. The first one was a Portsmouth, NH bookeeper who allegedly stole funds from two condominium associations in that town. The second concerned a person who allegedly stole money from a condominium association in Biddeford, and also from a festival which celebrates the French heritage of that town. Several other recent articles detailed misappropriation of funds from businesses, from municipalities and even from attorneys trust accounts by employees.
As numerous as the newspaper articles are, they report only the tip of the iceberg. Many organizations do not report embezzlement out of embarassment or the fear of bad press. For small associations especially, financial controls are loose and it is relatively easy to steal funds and to get away with it for a significant time. Fidelity insurance, purchased as part of the association’s insurance package, can cover these risks. It is relatively inexpensive and can help you recover from those occasions when a treasurer or someone else has made off with association funds.
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October 27th, 2009
A reader of this blog asks:
“Joe – We are currently doing a rules revision at [our condominium]. The question came up: Can the board restrict the usage of political signs posted in windows in such a way that they are visible from the common areas? Can you tell me what Maine and/or Federal law has to say about this?
The fall elections come in two weeks, and until then we see campaign signs blooming like mushrooms along our highways. Can they be placed on the common elements? In windows? Isn’t this a matter of free speech?
The answer is no. Although the first amendment to the Constitution prohibits interference with free speech, it applies only to government entities, not private condominium associations. The common elements of the condominium are controlled directly by the condominium association, acting through its Board of Directors, and they can prohibit political signs from being posted there.
In addition, Section 1602-111 of the Maine Condominium Act says that a unit owner may not change the exterior appearance of a unit or any other portion of the condominium, without permission of the association. This gives the association the authority to prohibit political (or any other) signs in windows or other areas of the unit which can be seen from the common elements.
It should be noted that federal law prohibits condominium associations from limiting the right to fly the American flag.
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October 26th, 2009
This morning I received a large number of identical letters from the Smoke-Free Housing Coalition of Maine, each sent to me as the registered agent of a condominium association I represent. Apparently the Coalition obtained a list of condominium association clerks from the Secretary of State’s office. Each letter contained a flyer about making Maine condominiums smoke free. Unfortunately, this flyer is misleading.
However desirable it may be to make Maine condominiums smoke free, it is stretching things to say, as the Coalition states in its flyer, that “Condo owners and associations have a legal right to make their units and buildings smoke-free” . The likelihood that an individual unit owner would succeed in getting a court order prohibiting another unit owner from smoking in their unit is slim, and the ability of a condominium association to amend its documents to prohibit smoking in units has not been established by case law or statute in Maine.
The Board of Directors of a Maine condominium does have control over the common elements of a condominium, and they have plenty of authority to ban smoking in the common elements if they want to do so. However, the Board does not have similar authority over uses within the unit. Any attempt to ban smoking within a unit by an amendment to the declaration or bylaws must be based on the effects of that smoke outside the unit – in common areas or other units.
The most commented on case involving this issue comes from Golden Colorado, where the Heritage Hills #1 Condominium Association approved an amendment to its governing documents prohibiting smoking on the property, including within the units themselves. Rodger and Colleen Sauve, unit owners, sued the association seeking to overturn the amendment. A local court upheld the restriction, saying that secondhand smoke or its odor, which wafted into other units and the common areas, was a nuisance under the condominium documents. That case was a lower court case, not necessarily binding on other courts in Colorado, much less Maine.
Whether or not smoke meets the legal definition of nuisance under either the condominium documents or under state law depends on the circumstances of the particular case. And unless an aggrieved unit owner can get other owners to pass an amendment to the condominium declaration or bylaws prohibiting smoking within the units, they will have a difficult time getting relief. And if the amendment is not adopted unanimously by all unit owners, it is not a sure bet that such an amendment would be legal, since the condominium act says that restrictions on uses within a unit cannot be adopted by a two thirds or three quarters vote: it must be unanimous. For those who are interested in the exact language, see Section 1602-117 (d) of the Maine Condominium Act.
Maybe the Legislature or the courts will give condominium associations the right to prohibit unit owners from smoking within their unit, based on the theory that second hand smoke is dangerous and will inevitably affect neighbors. But there is no precedent yet in Maine for this proposition.
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September 28th, 2009
Recently a client developer told me that he spend an enormous amount of time and money mailing out notices of the annual meeting of unit owners, especially since the documents said that these notices had to be sent “certified mail”. This caused me to wonder whether there was an easier way.
It turns out that the simple matter of giving notice is in fact not so easy; the Maine Condominium Act mentions that notice of an annual meeting of unit owners is given by U.S. mail.
There is a way to legally give lots of such notices by email. It requires a little up front work, but the payoff is enormous.
Got your attention?
Email me at joe@mainecondo.com. By the way, my answers to this one are not free. You will have to pay for it (I need to eat too).
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September 28th, 2009
Question from a board member:
If a condo owner is not paying his/her condo fee, can the Board “hold off” on cutting the lawn around his/her condo and refuse to trim the shrubs and not do “winter clean up” in the Spring, for example, until they resume paying. What can the Board do in such a case?
No, the Board has an independent duty to maintain the common areas and besides, the association has plenty of ways to collect the condo fees, with interest. The flip side of this coin is that a condo owner has an independent duty to pay condo fees, even if the association doesn’t cut the lawn around the condo unit….
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September 27th, 2009
The Community Associations Institute hosted its third annual forum for condominium association directors on September 12, 2009, at the Clarion Hotel in Portland. The forum featured programs on conduct of meetings of the board of directors, with actual condominium directors role playing a meeting of the board. The forum then heard from James O’Donnell of Dirigo Management Company about association budgeting and reserves, and Joseph Carleton about rules and rule enforcement. Also in attendance were about a dozen vendors of condominium related services.
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August 11th, 2009
Is it accurate to say that the Board of Directors is authorized by the Maine Condominium Act to manage the condo association effectively and efficiently?
Yes, the Board actually has almost exclusive power to manage the condominium association – some say too much power. It is easier to list the things that only the unit owners can do. They are:
A. amend the Declaration, the Articles of Incorporation and, if provided for in the Declaration or Bylaws, approve amendments to the Bylaws.
B. terminate the Condominium
C. elect members of the Board or determine the qualifications, powers and duties, or terms of office of Board members, but the Board may fill vacancies in its membership for the unexpired portion of any term.
D. ratify the budget (but the Board has the sole power to adopt the budget, subject to such ratification.
E. remove a Director by a 2/3 vote, after proper notice, according to Section 704 of the Maine Nonprofit Corporation Act.
F. other rights given to owners found in the Declaration of Bylaws.
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