Q. I have lived in my townhome association for more than 20 years, but, even as president, never faced the dilemma that now exists in our development. Almost two years ago, the next door unit sold. A problem surfaced immediately. Far too many people appear to be living in the unit. Parking and noise problems have steadily increased. My neighbors have complained that every night 10 to 12 people emerge from the unit and roam the neighborhood together. It now appears that there are 15 adults and one child living in the townhome. They are not related to each other. I understand that the head of the group charges each occupant several hundred dollars to live in the unit. Apparently, there are barrack style sleeping arrangements in the home. We understand that when someone rings the doorbell, the other occupants are under instructions to hide in the basement.
I have always felt that the primary duty of an association board is to protect the property values of the community. However, our new board staunchly refuses to do anything about this situation. The declaration states that the homes should be occupied as single family residences. Initially, the board was reluctant to spend the money necessary to litigate. The board is also afraid of about some bogus counter-suit alleging discrimination. The on-going noise from this group has made my home uninhabitable. Unfortunately, despite my protest, my fellow board members are afraid to proceed.
I have no desire to sell my home, but I believe that the board is derelict in its duty. Has the board breached its fiduciary obligation to the owners? Is there are defensible reason for the board to enforce some rules, but ignore this problem? Have they exposed themselves and the association to potential liability? If I am forced to sell my unit, can I still be a member of the association for purposes of filing suit?
A. The situation you describe appears to be a clear violation of the use and occupancy restrictions of your association by-laws. Regardless of whether the persons in the townhome are legally related, the continued occupancy of one townhome by 10 to 12 people or more is a nuisance or annoyance. The situation may also violate occupancy limitations of your municipality. Federal courts have upheld occupancy limitations of a cooperative in a 1995 Federal District Court decision entitled United States v. Tropic Seas; and residential limits under local zoning restrictions in the 1995 United States Supreme Court decision entitled City of Edmunds v. Oxford House, Inc. The board is not meeting its fiduciary obligation by failing to take action. The proper steps are a notice to bar the excessive number of people living in the unit, followed by a lawsuit to enjoin the occupancy violation. Your declaration may also provide for a forced sale of the unit.
While a counterclaim alleging civil rights violations is always a possibility, it would appear to have no merit in this case, since the board is focusing on the excessive number of people in the unit, not their familial status or racial identity.
The board must take action to enforce regulations on a consistent basis. While the occasional failure to enforce rules will not bar future enforcement, there is no excuse for ignoring this problem. The legal fee issue is not a realistic concern because your declaration should provide the board with the right to recover attorneys' fees for its rule enforcement action. As an individual owner, you probably have the right to sue to enforce rules; but you will lose your right when you sell the townhome.
Q. While I reside in the northern suburbs, I own a condominium in Arizona. Recently, I received a letter from the managing agent of the Arizona association stating that we had to paint the newly installed screen storm doors in one of two colors.
Is it within the power of the board to require that doors be of a certain color? Screen doors have been maintained by the association as a common element.
A. Yes. A condominium board can regulate the exterior appearance of the homes. From the association's letter, it appears that doors are equivalent to limited common elements; portions of the common elements under the exclusive control of an individual owner. The board can require unit owners to bear the costs of maintaining a uniform appearance on this portion of the common elements.
Q. My condominium association has imposed a special assessment to pay for extensive building fa?ade repairs and elevator upgrades. The board has thoroughly explained the need for this work, and unit owners are basically in agreement that the work must be done and the assessment is necessary. Is there any possible provision in either the Federal or State tax laws that allows for some tax relief or deduction for an individual unit owner or the association from a special assessment?
A. Assessment payments are not deductible, but under certain circumstances, may serve to increase your tax basis. Based upon Internal Revenue Code Section 1016(a)(1), the portion of your assessments attributable to capital projects may be added to the cost of your condominium. Special assessments for major repair and replacement projects or loans to pay for these expenses can, on a percentage basis, be used by an individual owner to increase his or her tax basis in the unit. This benefit will serve to reduce the capital gain an individual may incur upon the sale of a unit. Considering the current level of exemptions on the gain of the same of a principal residence, however, this benefit may be of limited value.
Are you a satisfied member of a homeowners association who seeks more information about improving your community; or a frustrated owner who needs to vent? In either case, attend and participate in the Homeowner's Forum sponsored by the Community Associations Institute. Issues for discussion will include safety, developer turnover, rule enforcement and insurance. This regular event is held by CAI at various locations throughout the Chicago area. For further information, call the Chapter Office at 630-980-0251.