Nearly 30 years ago, the Connecticut legislature passed the Common Interest Ownership Act (CIOA) in an effort to modernize and consolidate the law of common interest communities — condos, co-ops, planned communities.
Hoping to make community associations run more smoothly and transparently, revisions were made to the CIOA in the summer of 2010.
A major purpose of the revisions — which force the sharing of more types of expenses and financial disclosures to incoming unit purchasers — was to address strong complaints from some unit owners about lax, and/or unresponsive condo boards. Further, the changes make it easier for unit owners to remove board members, restrict when unit owners can be sued to foreclose unpaid assessments, and clarify the board’s powers and discretion to enforce rules.
Now, two years later, many are struggling to fully understand and comply with the revisions, which have presented both new challenges and new opportunities.
“I’d say the three biggest changes in the 2010 amendments relate to the way meetings are held, the information owners are entitled to receive, and who pays for property damage,” said Adam Cohen, an attorney at Pullman & Comley in Bridgeport. “The new laws were designed to make associations run more transparently and more like the mini-governments that they are.”
Cohen has experience representing municipal and private communities throughout the state. His practice involves complex commercial litigation, including creditor’s rights, defamation, business evictions, consumer credit and lien foreclosures.
“Associations are still struggling to comply with the 2010 legislation,” Cohen said. “They need lawyers, managers and insurance advisors to guide them and to change their declarations, bylaws, rules, forms, policies and practices. Ambiguities in the new laws also leave them guessing how best to comply and expose even well-intentioned associations to lawsuits.”
Along with keeping unit owners better informed and providing better access to condo meetings, records and the board itself, the revisions also result in more paperwork, postage, manager’s fees, legal advice and insurance coverage — time and money. The additional administrative burdens, costs and risks are causing a few boards to lose volunteers and some property managers to raise their rates, according to Cohen.
Bob Gourley, board president of the Captain’s Walk PUD Homeowners Association in West Haven, said he fears the revisions might impact the very spirit of association volunteerism.
“Serving on a condo board as president or in any other capacity is a strictly volunteer job. It routinely involves hours of work, after hours meetings, and taking abuse from your fellow residents when the going gets tough,” Gourley said. “Many condominiums have difficulty in recruiting volunteers to do the work of running the community. I think the new laws may actually detract potential volunteers from serving. I know that wasn’t the intention but I fear it is an unfortunate side effect.”
Gourley is hopeful that association volunteer leaders will embrace the spirit of openness promoted by the CIOA law revisions.
“The ultimate goal of an association should be to provide an open environment of mutual respect and accountability between condominium unit owners and their fellow unit owners who volunteer to lead their communities. That may seem lofty but the CIOA laws are one more tool everyone can use to achieve that goal.”
Jim Banno, a property manager at Imagineers LLC in Hartford which manages 14,000 units in 156 communities in Connecticut, said although the revisions are an improvement, confusion remains.
“Neither set of pre-2010 statutes provided much guidance in the mechanics of running a community leading to a wide variety of styles — some very haphazard or a small number being downright dictatorial and abusive,” said Banno, who has been with Imagineers for 30 years. “The new CIOA gives lots of ‘how to’s’, including the process of disseminating information and educating the populace… my experience, the better informed a community, the more likely it’ll function as one.”
“The negatives are the time and cost associated with compliance and some very confusing language on enforcement procedures that can lead to some potentially disturbing outcomes.”
According to Banno, three issues face associations today — the Federal Housing Administration (FHA) recertification process, funding for infrastructure (roofs, roads), and dues collection.
“FHA has created some very difficult obstacles for condominiums wishing to be qualified for FHA mortgages,” Banno said. “Their process is cumbersome, expensive and time consuming in a housing market that does not need additional obstacles.”
“The bad economy and housing market has created a rash of foreclosures. Associations are relatively low on the totem pole of creditors in foreclosures and can take some serious hits to bad debt when a holder of first mortgage takes title to a unit through foreclosure. Fortunately, it appears that many mortgages that are in trouble are being worked but there’s a lot of exposure to ‘bad debt’ in associations in bad times,” Banno said.
While he feels the revisions will ultimately work and associations and unit owners will get used to them, Banno cautions against seeing the two parties as being in opposition to each other. He also notes the industry buzz swirling around the use of outside parties or ombudsman for dispute resolution.
“Hopefully the whole industry will settle down a little and get accustomed to the new CIOA requirements and how they can be used to foster a better democratic process,” Banno said. “I am concerned with a growing attitude of ‘We vs. Them’ and think a conscious effort not to feed that fervor will be needed.”
“Condos and common interest communities are probably the closest example of grass roots democracy that exists. While I think the revisions are good in that they provide for more informed communities and more open governance, I absolutely abhor discussions regarding an ombudsman or third-party type of dispute resolution between unit owners and associations as, in my opinion, this is antithetical to the concept of democracy.”
