Q I have a question about raising the maintenance fees on a condo. Is there any set limit or percentage? Case in point—our maintenance fee has been the same for 17 years. Now the board of managers has raised it 40 percent. I was paying $307.11 and will now pay $419.43. Is such a jump allowed? Plus, I was not aware of a meeting held where this was discussed. Is the board allowed to implement this change without owners’ approval?
—Less Money in the Bank
“Having said that, of course, the board is always being mindful of making appropriate and reasonable decisions and not creating a mutiny in the building. There are always elderly people in the building, with fixed incomes, who are greatly affected by such increases, as well as young people with tight budgets. If the maintenance increases, it is probably because it needs to go up based on anticipated expenses. It is possible that extensive renovation work needs to be done in the building and the board foresees the need to raise revenue.
“The real problem with your building is having such a large increase after no increase at all for many years. It does make you wonder about the management of the building. They clearly held off on raising the maintenance until they could no longer do so. One would expect periodic increases every couple of years in order to avoid one very large increase. The size of this increase also makes me concerned about the effect it will have on people wanting to purchase co-ops in the building. A 40 percent increase would make most people a bit apprehensive about what will happen in the future.
“It also makes you wonder about whether alternatives were considered. One common way to raise cash is by refinancing the mortgage. There may be other revenue producing areas in your building that could be used before there is such a large maintenance increase. For example, there may be a real estate tax refund coming to the shareholders. Instead of distributing that money to the shareholders, the board could vote to make an assessment to use that money. That is a less painful way to raise money because it has not yet been returned to the shareholders and into their bank accounts.
“The board does not need shareholder review or approval in order to do this. It can be voted on and agreed to at a regular meeting of the board of directors. There may be discussion at the annual shareholders meeting, but that is more to vent frustration and to influence who may be voted on to the board or not re-elected because of it.”
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