February 20, 2009
CONDOMINIUM ACT-RIGHTS OF UNIT OWNERS
By: George Coppolo, Chief Attorney
You asked what actions unit owners can take under the Condominium Act to contest decisions and actions taken by the association of unit owners' board of directors. You also asked if the act authorizes a unit owner to repair significant damage to his unit (but not the common elements) without the board's approval. Your questions assume the unit owner is in a condominium that is governed by the Condominium Act. Our office is not authorized to give legal opinions and this report should not be considered one.
You also asked whether HB 5367 of this session deals directly with this issue and if other bills have done so in prior sessions.
The Condominium Act requires the unit owners association and its board to comply with the act and with the condominium's declaration, bylaws, rules, and regulations. The act requires that the bylaws specify the method of selecting and removing board members and the board's powers, duties, and terms of office. Unit owners can use the method specified in their bylaws for removing board members who exceed their powers and duties. Unit owners can also file a lawsuit if the board or individual board members violate the act, the declaration, or the bylaws.
The court can award attorney's fees in such cases. If unit owners believe that the method of removing board members is insufficient they have the right to amend the bylaws to establish a better procedure. Of course their ability to do this depends upon their getting sufficient support from other unit owners to attain the necessary voting power to amend the bylaws. Unit owners also have the right to inspect financial and other condominium records and to vote to approve or disapprove budgets recommended by the board.
Regarding the maintenance of the units, the Condominium Act requires that the bylaws establish restrictions on and requirements respecting the maintenance of units that are not set forth in the declaration that are designed to prevent unreasonable interference with the use of units by other unit owners. But the act prohibits a unit owner from doing any work that could jeopardize the soundness or safety of the property, reduce its value, or impair any right or other interest constituting a common element without the unanimous consent of all the other unit owners. Unit owners who are not satisfied with the bylaws concerning the maintenance and repair of units can attempt to amend the bylaws to establish a different system. But the bylaws cannot eliminate the prohibition specified above. As noted above, a unit owner also has the option of going to court to compel the board to follow the bylaws and declaration.
House Bill 5367 is a proposed bill that would establish a state office to handle condominium disputes. Similar bills have been introduced in the General Assembly during the last couple of years. During the 2008 legislative session the Judiciary Committee reported out sSB 706, File 546. It creates the Connecticut Community Association Commission (CCAC) and places it in the Department of Consumer Protection (DCP). It empowers the commission to (1) authorize DCP to issue licenses to community association managers; (2) administer the provisions of the law regarding granting, renewing, suspending, or revoking community association manager licenses; and (3) receive complaints of violations of the Condominium Act and Common Interest Ownership Act (CIOA) by associations or their governing boards or officers. It puts the commission in DCP. The Senate referred it to the General Law Committee, where it died.
The Judiciary Committee reported out a similar bill in 2007 (sHB 7288, File 605). The House referred it to the Appropriations Committee where it died.
Three different sets of laws govern condominiums, depending on when they were created. The Common Interest Ownership Act (CIOA) governs the creation, alteration, management, termination, and sale of condominiums and other common interest communities formed in Connecticut after December 31, 1983 (CGS § 47-200 et seq.). The Condominium Act governs condominiums created from 1977 through 1983 (PA 76-308; CGS §§ 47-68a to 47-90c). The Unit Ownership Act governs condominiums created before 1977 (PA 1963, No. 605, July 10, 1963; CGS §§ 47-67 to 47-115 Rev. to 1975).
The law allows condominiums created before January 1, 1984 to amend their declaration, bylaws, or surveys and plans to achieve any result CIOA permits regardless of what the applicable law provided before January 1, 1984 (CGS § 47-218). Thus, a condo owner who wanted to know what law applied to his or her unit would have to also examine the declaration.
But any such amendment must be adopted in conformity with any procedures and requirements for amending the documents specified by those documents. If these documents do not specify such procedures, they must be adopted in conformity with CIOA. If an amendment gives anyone any rights, powers, or privileges that CIOA permits, all related obligations, liabilities, and restrictions contained in CIOA also apply to that person.
RELEVANT PROVISIONS OF THE CONDOMINIUM ACT
Following is a summary of the provisions of the Condominium Act that appear to be relevant to the questions you presented concerning the authority of unit owners over the association's board of directors, and the power of a unit owner to make substantial changes to his or her unit after it has been significantly damaged. Following are summaries of relevant portions of CIOA that automatically apply with respect to condominiums otherwise governed by the Condominium Act.
Duty to Comply with the Act
The Condominium Act requires that each unit owner, and the association of unit owners, comply with it, the condominium instruments, and the rules and regulations adopted pursuant to the act and the condominium instruments. The law authorizes the unit owner and the association to sue for damages or for injunctive relief, or for any other relief to which the party bringing such action may be entitled, for violating the act. The act authorizes the association of unit owners to file a suit against any unit owner or owners or, in any proper case, by one or more aggrieved unit owners on their own behalf, or as a class action. The law authorizes the court to award reasonable attorney's fees against the losing party (CGS § 47-75(a)).
Limitation on Repair Work
The act prohibits a unit owner from doing any work that may jeopardize the soundness or safety of the property, reduce its value, or impair any easement, right, or other interest constituting a common element without the unanimous consent of all the other unit owners(CGS § 47-75(b)).
The act requires condominiums to be governed by bylaws. A copy must be annexed to the declaration and recorded as a part of it on the land records. It specifies that no amendment to the bylaws can be effective until it is set forth in an amendment to the declaration and recorded on the land records (CGS § 47-80(a)).
The act gives each residential unit in the condominium, the right to a vote in the unit owners' association in proportion to its interest in the common elements. If a unit is owned by more than one person, the bylaws must specify the method by which the vote attributable to such unit is to be cast and counted (CGS § 47-80(b)).
The act requires that the bylaws provide for the following:
1. the election from among the unit owners of a board of directors;
2. the number and term of office of such board members;
3. a provision that the terms of at least one-third of such board must expire annually;
4. the board's powers and duties;
5. the directors' compensation, if any;
6. the method of removing board members;
7. the powers of the board in engaging the services of a manager or managing agent;
8. the method of calling meetings of the unit owners, and the percentage, if other than a majority, of unit owners that constitutes a quorum;
9. the qualifications, powers and duties of the officers of the association;
10. the manner of selecting and removing officers and their term and compensation, if any;
11. maintenance, repair and replacement of the common elements and payments for them, including the method of approving payment vouchers;
12. the manner of assessing against and collecting from the unit owners their share of the common expenses;
13. designation and removal of personnel necessary for the maintenance, repair, and replacement of the common elements;
14. the method of adopting and amending administrative rules and regulations governing the details of the operation and use of the common elements;
15. restrictions on and requirements respecting the use and maintenance of the units and the use of the common elements as are not set forth in the declaration, designed to prevent unreasonable interference with the use of their respective units and of the common elements by the several unit owners;
16. provisions governing the alienation, conveyance, sale, leasing, purchase, ownership, and occupancy of units as are desirable;
17. provisions for the establishment of reserves to provide for maintenance, improvements, replacements, working capital, bad debts, depreciation, obsolescence, and similar purposes as are desirable, except that for a conversion condominium, provisions for reserves for capital expenditures are required;
18. the manner by which the bylaws may be modified or amended, consistent with the Condominium Act's requirements; and
19. other provisions deemed necessary for the administration of the condominium consistent with the Condominium Act (CGS § 47-80(c)).
Unit Owners Association
The Condominium Act gives the unit owners' association, except to the extent prohibited by the condominium instruments, and subject to any restrictions and limitations specified in them, the power to:
1. employ, dismiss and replace agents and employees;
2. to exercise and discharge the association's powers and responsibilities;
3. make or cause to be made additional improvements on and as a part of the common elements;
4. grant or withhold approval of any action by one or more unit owners or others entitled to occupancy of any unit, which would change the exterior appearance of any unit or of any other portion of the condominium, or elect or provide for the appointment of an architectural control committee to grant or withhold such approval;
5. acquire, hold, convey, and encumber title to real property, including, but not limited to, condominium units and the common elements appurtenant to them, recreation facilities, and personal property;
6. sue and be sued in any court, appear on behalf of all unit owners before any state or municipal officer, agency, board, commission, or department, and appeal from any judgments, orders, decisions, or decrees they render; and
7. grant easements through the common elements and accept easements benefiting the condominium or any portion of it.
The act specifies that these listed powers do not prohibit the grant by the condominium instruments of other powers and responsibilities to the unit owners' association, or to divest an association incorporated as a stock or as a non-stock corporation of any powers which it may exercise under the applicable corporation laws((CGS § 47-80a(a)).
Adoption or Ratification of a Proposed Budget
The act requires that at any meeting of the unit owners to consider the final adoption or ratification of any proposed budget for the condominium, or on a day before such meeting, the board of directors must provide a reasonable opportunity for all unit owners to express their views concerning the proposed budget before its adoption or ratification. At least one copy of the proposed budget must be available for inspection at such meeting (CGS § 47-80a (b)).
Repairs Regarding Damage to or Destruction of Any Building or Other Improvement Serving the Condominium
The act requires that any damage to or destruction of any building or improvement located on the condominium parcel or serving the condominium must be promptly repaired and restored by the declarant or the association, using insurance proceeds if any. It further requires that all costs for repair or reconstruction in excess of available insurance proceeds, regardless of whether such excess is the result of the application of a deductible under insurance coverage, be a common expense ((CGS 47-84 (a)).
Under the act, if the condominium is damaged to the extent of two-thirds of its replacement cost, and three-fourths of the unit owners and the holders of mortgage liens affecting at least three-quarters of the units vote not to proceed with repair or restoration, the property remaining is deemed to be owned in common by the unit owners, and each unit owner owns that percentage of the undivided interest in common as he previously owned in the common elements. Under such circumstances,
any liens affecting any of the units are deemed to be transferred in accordance with the existing priorities to the percentage of the undivided interest of the unit owner in the property. The property is subject to an action for partition at the suit of any unit owner, in which event the net proceeds of sale, together with the net proceeds of the insurance on the property, if any, must be considered as one fund and be divided among all the unit owners in accordance with their interests, after first paying all liens out of each of the respective interests (CGS § 47-84(b)).
PROVISIONS OF CIOA THAT APPLY TO OLD CONDOMINIUMS
CIOA makes certain of it's provisions automatically apply to any large residential condominium (over 12 units) created in Connecticut before January 1, 1984, but only with respect to events and circumstances occurring after December 31, 1983. The following provisions that automatically apply appear to be relevant to your request.
Powers of Unit Owners' Association (CGS § 47-244)
Subject to the declaration's provisions, the association, even if unincorporated, may:
1. adopt and amend bylaws, rules, and regulations;
2. adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses;
3. hire and discharge managing agents and other employees, agents, and independent contractors;
4. institute, defend, or intervene in litigation or administrative proceedings in its own name on behalf of itself or two or more unit owners on matters affecting the common interest community;
5. make contracts and incur liabilities;
6. regulate the use, maintenance, repair, replacement, and modification of common elements;
7. cause additional improvements to be made as a part of the common elements;
8. acquire, hold, encumber, and convey in its own name any right, title, or interest to real property or personal property (but, common elements in a condominium may be conveyed or subjected to a security interest only pursuant to CGS § 47-254);
9. grant easements, leases, licenses, and concessions through or over the common elements;
10. impose and receive any payments, fees, or charges for the use, rental, or operation of the common elements, other than certain limited common elements and for services provided to unit owners;
11. impose charges, interest, or both, for late payment of assessments and, after notice and an opportunity to be heard, levy reasonable fines for violations of the declaration and association bylaws, rules, and regulations;
12. impose reasonable charges to prepare and record amendments to the declaration, resale certificates, or statements of unpaid assessments;
13. provide for the indemnification of its officers and executive board and maintain directors' and officers' liability insurance;
14. assign its right to future income, including the right to receive common expense assessments, but only to the extent the declaration expressly so provides;
15. exercise any other powers conferred by the declaration or bylaws;
16. exercise all other powers that may be exercised by legal entities of the same type as the association;
17. exercise any other powers necessary and proper to govern and operate the association; and
18. require, by regulation, that disputes between the executive board and unit owners, or between two or more unit owners regarding the common interest community, must be submitted to nonbinding alternative dispute resolution in the manner described in the regulation as a prerequisite to beginning a judicial proceeding.
The declaration may not impose limitations on the power of the association to deal with the declarant that are more restrictive than the limitations imposed on the power of the association to deal with other persons.
Unless the declaration or CIOA grants greater authority, an association can only adopt rules and regulations that affect the use or occupancy of residential units to:
1. prevent any use that violates the declaration;
2. regulate any occupancy that violates the declaration or adversely affects the use and enjoyment of other units or the common elements; or
3. restrict the leasing of residential units to the extent those rules are reasonably designed to meet first mortgage underwriting requirements of institutional lenders that regularly purchase or insure first mortgages on units in common interest communities, but no restrictions are enforceable unless notice is recorded on the land records and indexed in the grantor index in the association's name.
The association may not otherwise regulate any use or occupancy of units.
If a tenant of a unit owner violates the declaration, bylaws, or association rules and regulations, in addition to exercising any of its powers against the unit owner, the association may:
1. impose charges, interest, or both, for late payment of assessments on the tenant;
2. after giving notice to the tenant and the unit owner and an opportunity to be heard, levy reasonable fines against the tenant, unit owner, or both, for the violation; and
3. enforce any other rights against the tenant for a violation that the unit owner as landlord could lawfully have exercised under the lease, including the right to evict the tenant if the tenant or unit owner fails to cure the violation within ten days after the association notifies the tenant and unit owner of that violation.
Association Records (CGS § 47-260)
The association must keep financial records sufficiently detailed to enable it to comply with the requirements the law imposes for the resale of units. All financial and other records must be made reasonably available for examination by any unit owner and his authorized agents.
Resale of Units (CGS § 47-270)
A unit owner must furnish to a purchaser or his or her attorney before the closing, a copy of the declaration other than any surveys and plans, the bylaws, the rules or regulations of the association, and a certificate containing specified information including such things as:
1. the amount of the periodic common expense assessment and any unpaid common expense or special assessment currently due and payable from the selling unit owner;
2. any other fees payable by the owner of the unit being sold;
3. any capital expenditures in excess of $1,000 approved by the executive board for the current and next succeeding fiscal year;
4. the amount of any reserves for capital expenditures;
5. the association's current operating budget;
6. any unsatisfied judgments against the association and any pending suits in which the association is a defendant;
7. the insurance coverage provided for the benefit of unit owners;
8. any restrictions in the declaration affecting the amount that may be received by a unit owner on sale, condemnation, casualty loss to the unit or the common interest community, or termination of the common interest community;
9. a statement describing any pending sale or encumbrance of common elements; and
10. a statement disclosing the effect on the unit to be conveyed of any restrictions on the owner's right to use or occupy the unit or to lease the unit to another person.
The association, within 10 business days after receiving a written request by a unit owner and payment of a fee of not more than $75, must furnish a certificate containing the information necessary to enable the unit owner to comply with this section, and any other documents required by this section.
The association must, during January in each year, file in the office of the town clerk where the condominium is located a certificate setting forth the name and mailing address of the association officer or managing agent from whom a resale certificate may be requested.
Cause of Action for Violation of CIOA Punitive Damages, Court Costs, and Attorney's Fees (CGS § 47-278)
If a declarant or any other person subject to CIOA fails to comply with any of its provisions or any provision of the declaration or bylaws, any one adversely affected can file a law suit. Punitive damages may be awarded for a willful failure to comply with CIOA. The court may award court costs together with reasonable attorney's fees.
Parties to a dispute arising under CIOA, the declaration, or the bylaws may agree to resolve the dispute by any form of binding or nonbinding alternative dispute resolution. But, a declarant may agree with the association to do so only after the period of declarant control passes. An agreement to submit to any form of binding alternative dispute resolution must be in a writing signed by the parties.