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KASS: Property liens and neighbors

Q:     We live on a use-in-common road that has a small bridge serving 3 families. According to our deeds, we shall share maintenance and repairs, and/or costs thereof, evenly. However, there is one family that refuses to pay for, or do, anything, ever. What recourse do the other two families have to recover costs expended? Suing is an expensive and time-consuming venture that we’d rather avoid, if possible. Can individuals, solely or collectively, put a lien on the another person’s property? Are there any other alternatives? Earnest.

A:   As I get older, my memory starts fading; I think I either already answered this question from Earnest or from another reader. So be it! Earnest, lien law – like smoke detector law – varies by state. I suspect you could file a lien, but suggest you contact a local attorney who can guide you on the right path.

Depending on the amount in question, you may be able to sue the third family in your local Small Claims court. While I believe it is useful to have an attorney involved in the process, it is not required nor necessary. I have found that most clerks in those small claims courts are very helpful.

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Q:   I have a question about a small condo association. I purchased one unit in a 3 unit condo building. The building was converted to condos in 1966 and was always managed by one of the unit owners. Assessments were received and bills paid. Are they required to file an annual report with the IRS? When I asked the other owners, they said they are not required to file anything. Is that correct? Jerry.

 

A:   No, it is not correct. Every association – large or small – must file some kind of form with the Internal Revenue Service. If the only income is from the association dues, then you only have to file what is known as an “information return”. However, if your association gets income from other sources, then you have to report that income and may even have to pay some tax.

You should also find out what the legal requirements are for filing tax returns in your state.

Jerry, asking the other owners may not always get you the correct answer. You should consult a local accountant/CPA. If you need assistance, I would contact the Community Association Institute (caionline.org). This is a national organization whose members include associations, lawyers and accountants. There are local chapters and you should be able to get some referrals.

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Q:       Read your column every Sunday. I have a question I have not seen addressed. I am the board president. We have levied fines for various infractions covered by the rules. There are owners who do notpay these fines. How can we, the board, get them to pay? I should add that we are managed by a property management company. Joseph.

A:    My condolences on your election. It’s a tough, thankless job, but someone has to come up to the proverbial plate and do the job.

This first thing I would do is tell the property manager “you’re fired”. If a community association property manager does not know how to collect fines, he/she should not be in that occupation.

Your legal documents should spell out what rights the board has when it comes to collection of any moneys owed the association. In most states, you can file a lien against the unit for the amount of the delinquency. In most states, you can actually foreclose on the unit to recoup the unpaid moneys.

Please read your bylaws. Many states require that before you can fine any unit owner, the board must give that owner an opportunity to appear before the board (or a committee appointed by the board) and provide an explanation and a defense why there should be no fine. In some cases, the board may be sympathic and decide not to issue a fine; but regardless, if your state law – or your bylaws – require such a hearing before any fine can be levied, you will most likely lose in court if you have not carefully – and meticuously – followed your own rules.

Finally, please consult a local attorney versed in community association law. Typically, while the attorney will charge the association legal fees for the collection activities, if the attorney is successful, those fees will be paid by the unit owner in addition to the delinquency.

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