Special Assessments

[DMorris]

Hi, I'm Darryl, a condo owner in Hot Springs, Arkansas. Last year, the members of our horizontal property regime (members of our property owners association) were levied a "special" assessment in excess of $25,000.00 total above our normal assessment (general POA dues), all proportionately shared in accordance to our By-Laws. However, our board of administration gave no explanation or details what the money was to be used for, becomes very defensive when questioned about it, and it is rumored that over half the money is now locked into a CD. (Which is another issue: gaining access to our financials is not accessible and if you do full disclosure is not given.) I was informed that according to Arkansas state law a board of administration cannot issue a special assessment for general purposes or to build a reserve. Of course, I want the facts and not hearsay, so I have searched the internet concerning this and have found nothing. Any help would be appreciated.

[Paddy Reagan]

Condo, Co-op, and HOA laws vary by state but most are based on similar principals. Almost universally, any move by a board of directors involving increases in fees or special assessments must be approved in a meeting with adequate notice to all owners. For special assessments a specific purpose should be defined at the approval meeting and in the notice of assessment sent to each owner. Usually, boards are bound to use the assessment funds for the stated purpose and, in many cases, have the option of returning unused assessments to the owenrs.

In every state where I've done research, the books and records of the association must be open for owner inspection and, in many states, severe penalities may be levied for those who refuse. Your Arkansas Statutes addesses the issue in this way:

18-13-110. Book of receipts and expenditures - Examination.

(a) The administrator, the board of administration, or other form of administration specified in the bylaws shall keep a book with a detailed account, in chronological order, of the receipts and expenditures affecting the building and its administration and specifying the maintenance and repair expenses of the common elements and any other expenses incurred.
(b) Both the book and the vouchers accrediting the entries made thereupon shall be available for examination by all the co-owners at convenient hours on working days that shall be set and announced for general knowledge.

If you want to know more about this issue, you can explore your State Statutes by using the following link:

[url]http://www.arkleg.state.ar.us/NXT/gateway.dll?f=templates&fn=default.htm&vid=blr:code[/url]

Protect your rights. If you can't get answers from your administrator, manager, or board of directors, contact the state agency that is responsible for regulating horizontal properties and ask about complaint procedures.

[JoshuaB]

I'd like to ask a follow up question to this as it pertains to Illinois Condo Law.

Our Association has a rather large outstanding debt which coming due next year. Currently questions are being raised as to how this loan was originally created, how it has been handled in terms of being paid off and how the funds have been used.

I am planning to shortly request full disclosure on all documents pertaining to the loan and it's usage, which I believe I am entitled to under section 22 of the Illinois Condo Act. I assume that documentation should contain the specifics on how this load was created and it's intended use.

My main question(s) is/are - can a Condo Board vote to levy a special assessment (and a considerable one at that) to pay off a loan which used for general purposes? Is that not a backdoor method of creating a special assessment for general usage itself? If the money from the loan has been used for projects outside of the original intent, would that not fall under this situation?

My secondary question is - what limitations are on a board to continue to seek loans to pay off existing loans? What vote is required to theoretically increase my current debt?

Thanks in advance,

Josh in Illinois