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Taking on condo commandos
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Q: I have lived in a four unit condo for almost four years.  In that length of time we have never had a condo meeting nor have we received any financial statements.  I have been fine with that until recently.

A: meeting was called because we needed a special assessment to address some problems.  It was also brought up that in order to save money we would be firing lawn maintenance workers, purchase a lawn mower and the person in one particular unit would do the lawn. With that in mind, the people living in the other condos would now be responsible for cleaning the common areas.

I objected to this as I bought a condo when I retired because I wanted to get away from taking care of a large house. But I was told if I didn’t want to do it, I had to hire someone to do it in my place.

After that I asked for financial statements from the time I bought my condo and the President  became very irate. He said get a lawyer and then he would give the lawyer the info, not me.  That I was not to contact him at all except in writing.

I know he is by law, supposed to give me the financial statements, but my question is:   can they force me to do the cleaning of the common areas or pay someone out of my pockets to do this?    I suggested raising the condo fees but they do not want that.  Stella.

A: Dear Stella.  Having represented both community associations as well as disgruntled owners over the years, I have come to the conclusion that living in a community association is democracy at its best and at its worst. Incidentally, the disgruntled owners are often referred to as “commandos”.

First, you are absolutely entitled to the financial information from your association. The person who told you to get an attorney was wrong – and impolite. You should go back to him/her and point out that the board is violating its fiduciary duties to all owners and that unless the financial information is turned over to you (or at least give you an opportunity to inspect and copy), you will have no alternative but to file suit against the association.

The board can – if it so decides – curtail services, such as landscaping.

What can you do?  Are you alone in this fight or can you get to more owners to join you? Typically, when owners are dissatisfied with the board, there are procedures to “throw the rascals” out of office. However, in a four unit condo, you will need a majority vote.

Do all four units have the same voting percentage? That’s important, because if that’s the case, then you need three votes, which from what you say will be impossible.

My advice to everyone in this situation (which you may not appreciate) is that you really only have three alternatives. First, try to get elected to the board; next, put up with the situation as best you can unless you want to fund a lawsuit, or third, sell and move out.

Q: We own two vacation homes. A condo we just recently purchased and a river cottage we have owned for about 25 years. My question: if and when we sell the River Cottage can we apply the money without tax penalty toward the mortgage on the condo? These two properties have the same use and we only need one. Robert.   

A: Robert.   Oversimplified, the answer is yes. If you sell property, after paying any appropriate federal, state or local tax, you can do what you want with the net sales proceeds.

However, that’s not the end of the answer. I suspect your real question is: will you have to pay capital gains tax when you sell the river cottage?  To determine whether there is any federal tax, we look to the “use and ownership” tests. If you have owned and used the property as your principal residence for two out of the five years before it is sold, you can exclude up to $250,000 of gain if you file a single tax return, or up to $500,000 if you file a joint return.

In your case, you clearly have owned the cottage but was it your principal residence?  If not, you will have to pay capital gains tax on the gain. And if you have rented the property out for any period of time, and took depreciation, you may have to recapture that depreciation.

I can only provide basic, general information. I suspect that your river cottage has greatly appreciated over the years and you may be looking at a large capital gains tax to pay.

So please talk to a financial advisor or an accountant before you take any steps to sell. You may be able to do a like-kind exchange – also called a “Starker exchange” (under section 1031 of the Tax code) if the property has been held for investment. There may be other alternatives that a competent professional can advise you about.

Q: Here is our problem.  Earlier this year we built our retirement home in a newer community which has a small lake as its focal point. One of the strongest selling points was the view of the lake as our house sits on the lake side of the main road with our patio facing towards the lake.  Our garage door also faces the lake and they had to put in a small  access road to our driveway (which is on common property). 

 A few months after  we moved in, the homeowners association said the contractor had to install a guard rail on the lake side of the access road. When I contacted the county, they told me the contractor knew about the guardrail  several years before; long before we put a down payment on the lot.  We feel we were deceived as the guardrail blocks the view of the lake from our patio which was a big selling point.   The plot we received when we closed on the house did not have the guard rail on it. After they announced that the guardrail would be installed, they gave us a new plot showing the guardrail.   Also the county said there were other options than a rusted guardrail, which the contractor did not consider.

The bottom line: do we have any legal recourse to have them remove the guardrail (even though it is a county requirement) or any monetary recourse because we were basically deceived during the selling process.  Joseph.

A: Joseph. Are you the only one impacted by the guardrail or are there other homeowners with the same concerns? If so, perhaps the homeowner association should be asked to get involved – especially since I suspect that a rusted guardrail can impact on the value of everyone’s property.

Have you discussed your concerns with the contractor? What other alternatives are there? Could the rail be put high (or low) enough so that it  meets the county’s requirements while at the same time not completely blocking your view?

As for monetary recourse, you will most likely have to go to court, since I suspect the contractor will not gratuitously give you any money. You will have to get a couple of appraisers to testify as to the monetary loss that such a guardrail creates, and this is going to be difficult. On the one hand, you have lost a portion of your view; on the other hand, the guardrail is a safety measure which might be attractive to families with children.

My only suggestion: see if you can get the contractor to work out an acceptable solution short of litigation.

Q: My income is low but I have a substantial pension plan. Can a mortgage lender use my other assets in determining whether I can qualify for a loan? Terrie.

A: Dear Terrie. Recently, Freddie Mac – one of the largest federally controlled mortgage investment companies – announced that mortgage lenders will now be able to use assets in IRAs or 401(k)s in calculating whether you will be eligible for a mortgage loan. This only applies to such pension plans that are currently not being used as income.  In fact, you would not have to take money out of  your pension plans even though those assets will assist in boosting your income.

I understand that Fannie Mae has similar arrangements. Talk with your loan officer, and make sure he/she understands the new procedures and that you have provided all of the necessary information about your pension plans.