Ct Attorney General Last Year Supported Condo Reform Legislation

March 24, 2011
By

Connecticut Attorney General George Jepsen has presented the General Assembly’s Judiciary Committee with prepared testimony in support of  legislation that would level the playing field for condo owners against unethical condo associations.

Jepsen said he supports House Bill 6620 which would create the Office of a Condominium Ombudsman within the Consumer Protection Department.

The new office would be funded by charging condo owners an annual $4 fee. That would raise about $960,000 since there are roughly 240,000 condominiums in Connecticut.

The bill is similar to the Office of Condominium Ombudsman in Nevada, that appears to be working well in solving disputes between condo owners and the boards of directors that run them.

“The ombudsman would review any disputes and, if necessary, it would hold a hearing and issue orders to resolve problems and ensure that bylaws and state laws are respected,” Jepsen says in his prepared remarks.

His complete testimony is at the end of the article.

This bill is hotly contested and controversial as most condo associations and management companies oppose regulations that would limit their authority. They feel it would open the door to unfounded claims by disgruntled condo owners.

Farmington Atty. Scott Sandler, whose firm represents hundreds of condo associations, says all condo boards and unit owners should not be made to pay for the small percentage of associations that are not governing properly. In a debate I hosted on the Watchdog News Hour this month Sandler said unit owners can band together and oust board members who are breaking the law or they can take legal action in small claims court.

However, representatives of condo owners said that too many boards abuse and pick on some unit owners and the elderly are especially vulnerable.

Click here to read all the testimony that has been sent to the General Assembly so far on the issue.

[ad#uconn468]

The following is a synopsis of House Bill 6620:

To: (1) Establish an Office of Condominium Ombudsman to provide a means of resolving disputes between condominium owners and condominium associations; (2) require that the budget of a common interest community be approved by a majority of the unit owners voting instead of a majority of all unit owners; (3) provide that insurance requirements apply to common interest communities having units divided by either horizontal or vertical boundaries, and provide that such insurance be maintained on behalf of attached units; (4) exclude stand-alone units from insurance requirements when the declaration and bylaws indicate that the maintenance, repair and replacement of entire freestanding units are the responsibility of the unit owner; (5) exempt certain common interest communities created before January 1, 1984, that elect to be governed by the Common Interest Ownership Act, from the requirement to obtain new surveys, plans and certificates of completion when adding units if a public offering statement is not otherwise required; (6) allow an assessment against a unit owner for common expenses caused by ordinary misconduct or negligence, rather than willful misconduct or gross negligence as currently provided; (7) define the “internal business operating procedures” that are not required to be adopted as rules; and (8) prohibit criminal prosecutions of members of condominium board of directors or executive boards of common interest communities unless such members are acting outside the scope of their authority.

TESTIMONY OF
ATTORNEY GENERAL GEORGE JEPSEN
BEFORE THE JUDICIARY COMMITTEE
MARCH 25, 2011

I appreciate the opportunity to support House Bill 6620, An Act Concerning Condominiums and Common Interest Ownership Communities.

This proposal creates a state office within the Department of Consumer Protection to review condominium unit owner complaints concerning violations of state condominium laws by the association’s board of directors, officers or professional managers.  The ombudsman would also review complaints about violations of condominium bylaws concerning finances, calling or conduct of association meetings or access to public records of the association.  The ombudsman would review any disputes and, if necessary, it would hold a hearing and issue orders to resolve problems and ensure that bylaws and state laws are respected.

The proposal encourages settlement of unit owner-association disputes by requiring that the association establish a dispute resolution procedure.  A unit owner complaint must proceed initially through this procedure unless the association has failed to establish such a process.

The intent of the proposal is to ensure that the costs of the ombudsman will not be borne by Connecticut’s taxpayers.  Instead, the ombudsman would be funded through a small $4 per unit annual assessment on condominium associations in the state.  This charge is the same amount as has been assessed in Florida in order to pay for that state’s ombudsman program.  There are approximately 240,000 condominium units in Connecticut so the $4 charge will yield $960,000.

The proposal also requires a filing fee of $35 (the same as in small claims court prior to the recent increase adopted in 2009) paid by the complainant and an additional $35 fee on associations to appear and defend against a complaint.  I respectfully recommend that the fee on associations be eliminated.  Charging an association a fee to simply appear and defend against a complaint raises fairness and potential due process concerns.  Even absent a fee on associations, the filing fee will raise additional revenues.  If there are 1,000 complaints filed, this fee will yield $35,000.

Finally, the proposal increases the condominium manager’s filing fee from $100 annually to $400 biennially.  There are 258 registered condominium managers in Connecticut, so this fee will generate approximately $103,200 in revenue every two years.

My office has received hundreds of complaints from condominium unit owners regarding violations of state condominium laws or condominium bylaws by their association board of directors.  Sadly, no state office exists to effectively assist these unit owners.  The state agency established in House Bill 6620 would provide help to outmatched, overwhelmed unit owners who are fighting for their basic rights under our condominium laws.

Under this proposal, the Attorney General, upon referral by the ombudsman, may bring a civil action to enforce the provisions of the condominium bylaws or state statutes regarding condominiums.  House Bill 6620 contains an important provision allowing for the ombudsman to impose a civil penalty of not more than $200 for any knowing violation.

Many of the complaints received by my office concern failures by association boards of directors to follow basic governance principles such as adopting an annual budget with notice to the unit owners, holding fair elections for the board of directors, providing key financial information about the association, and fairly imposing association fines.

Some of these complaints are based on deliberate indifference by association boards to association bylaws or state condominium laws.  Others are probably due to a lack of full understanding of condominium association responsibilities.

The current law is unfair to unit owners.  The law imposes certain responsibilities on condominium association boards of directors and establishes certain rights for unit owners.  The unit owners must hire — at their own expense — a lawyer to enforce those rights and responsibilities while the association boards of directors can defend themselves using association funds, raised through assessments on the unit owners.  Thus, unit owner funds are used to defend lawsuits brought by unit owners themselves.

A Condominium Ombudsman will provide much-needed assistance to unit owners and provide an important enforcement tool for our condominium laws.

I urge the committee’s favorable consideration of the provisions establishing this critical state agency contained in House Bill 6620.

Similar Posts:

Share

3 Responses to Ct Attorney General Last Year Supported Condo Reform Legislation

  1. George Gombossy on March 27, 2011 at 10:21 am

    CONNECTICUT CONDO OWNERS COALITION SUPPORTS COMBINING CONDO LEGISLATION

    Hartford, Connecticut (March 28, 2010): The Connecticut Joint Committee on Judiciary heard testimony Friday, March 25, 2011, on proposed legislation that will affect owners of condominiums and common interest properties throughout the state. Rep. Jack Hennessy spoke in support of the establishment of an Office of Ombudsman in HB 6620. In addition the Attorney General’s Office submitted detailed written testimony, explaining that this office would be revenue neutral and would be set up under the Department of Consumer Protection. Several members of the volunteer-run Connecticut Condo Owners Coalition (CCOC) offered moving, personal testimony, documenting persistent and intractable problems they have had with their condo boards and management companies.

    Testimony in opposition to passage of HB 6620 was delivered by members of Community Association Institute, a national organization whose Connecticut chapter (CAI-CT) represents the interests of condo lawyers, property managers and condo associations. They also provide instructional programs that are designed to educate condo boards on how to conduct business properly and lawfully. The CAI-CT testified to the fact that while a very small percentage of condominiums and common interest properties actually are dues-paying members of their organization (estimated at 1-2% of the state’s 250,000 condo owners), the vast majority of their membership consists of attorneys and property managers. In addition, they have a paid lobbyist who promotes their issues with CT legislators. CAI-CT charges various levels of dues for annual membership, depending on the category of involvement.

    The CCOC members, many of whom have served on their association boards, recounted to the legislators how their current boards refuse to follow current Connecticut laws that govern condominiums. Among the most common violations, was the denial of members their lawful access to financial documents–especially in communities where association funds have been used to benefit the property owned by board members and where contractors with personal connections to the board members or management companies have done inferior work. One management company even claims it has lost a year’s worth of financial records–coincidentally, when a very expensive renovation project seems to have been done improperly. Boards refuse to allow members to attend board meetings and/or refuse to allow members to speak during the meetings on matters that affect the entire community. Many owners objected to the excessive, misuse of executive session by their boards. Some boards don’t hold annual elections. Other boards monopolize their positions for decades, refusing to allow others members to serve on the boards by manipulating the nomination and election processes. One owner pointed to a 2005 press release from the CAI entitled The enemy is among us and they are not foreigners or terrorists! as evidence of their true disrespect for condo owners. When owners have attempted to correct their boards’ unlawful conduct, the owners have been either ignored or have been subjected to hostility. And these are but a few of the examples of the complaints that were reported to the legislators.

    By way of contrast, the CIA-CT’s attorneys, property managers, administrators and board members countered that these complaints represent rare cases. They point to a 2005 Zogby International study (the details and methodology of which were not disclosed, but may have been based on as few as 5,000 participants nationwide with no indication of how many respondents, if any, included Connecticut condo owners) that claims most condo owners are happy with their boards and associations. They also refer to the fact that there have been less than 500 complaints made by CT condo owners to the Attorney General’s Office during the past 3 years. Given that the Attorney General’s Office has no jurisdiction over condos at this point, it is hard to understand the significance of this point. Even so, a study by the Harvard Business School looked at written complaints filed by consumers. They found that for every one written consumer complaint mailed to a business, there were 25 consumers who were equally dissatisfied, but who did not actually write in. Accordingly, when applied to the issue of condo complaints filed with the Attorney General’s Office, this translates into approximately 11,000 condo owners who have unresolved problems with their condo boards and/or property managers. Further, a representative from the Attorney General’s office reported that they continue to receive approximately 12 complaints per week from condo owners.

    The CAI-CT, also, attacks this legislation, as being superfluous. They say that there have been significant new changes made to the laws that govern condo and common interest properties which only went into effect on July 1, 2010. As a result, they counsel that “we should give the laws some time to become implemented.” The problem with that point, according to the CCOC, is that the new laws actually were passed two years ago–long before the July enactment date; associations should have updated their practices by July 2010. In pont of fact, to date many associations have not adopted the changes, as required by law even with nearly two years’ notice. Some have ignored these requirements and have simply refused to make any changes, so the CCOC asks what indicates that they will modify their behavior willingly now or any time in the future? The CAI-CT repeatedly emphasizes their belief that the solution to these objections remains that condos should be given time to avail themselves of the CAI-CT-sponsored educational programs–programs they have been offering for years. Countering this perspective, the CCOC presented much testimony to the effect that there are boards that are not willing to relinquish any of their power and control–that this is not a matter of lack of education, but rather a lack of willingness to accept and to respect the rights of their fellow members. After all, the CAI-CT has refused for years to work with or to support the efforts of the Connecticut Attorney General to craft legislation, establishing a Condominium Ombudsman, that would be acceptable to their membership and to condo owners. They steadfastly ignore the fact that many condo owners seek relief.

    Another area of concern for CAI-CT is that any Ombudsman legislation proposed should be “fair and balanced” to allow associations as well as owners to file complaints. The CCOC points to the fact that associations already have the power to issue fines, liens and to foreclose on property in order to gain compliance, while the owners have no recourse other than to sue–that is if they can find an attorney who will represent an owner, since most represent only associations and boards. This argument, the CCOC worries may be a CAI-CT canard, designed to distract the legislature and to disrupt the process by which an Office of Ombudsman could be created.

    Given the economic difficulties Connecticut faces, the cost of any proposed legislation must be taken into consideration. The concept of an Office of Ombudsman was first introduced by Attorney General Blumenthal. This year it was endorsed by Attorney General Jepsen. In both instances, the office has been designed to be revenue neutral which is to say that it will not cost the taxpayers-at-large anything. Instead, a nominal fee of $4/year would be charged to each condo owner and collected through their associations, as fees are currently paid annually to the Secretary of State. This pay structure is based on the model Nevada has used successfully to fund its Office of Ombudsman, since 1998. It also is similar to other user fees that are assessed to contractors and health clubs. In addition, the CCOC has suggested that volunteers, comprised of property managers, attorneys and condo owners, working alongside an ombudsman in the Department of Consumer Protection, as they do now with other consumer complaints, might mitigate some of the costs of this program. Allegations by CAI-CT of huge cost increases remain unsubstantiated.

    The CCOC endorses the passage of HB 6620, as well as HB1205 and HB1208, all of which are designed to protect the financial health and investment many have made in their condominiums and common interest properties.

    The CCOC and its members continue to work to protect the investments and the lifestyles that have made condominium-living in Connecticut so attractive in the past. The Connecticut Condo Owners Coalition is open to all condo owners statewide, with hundreds of members from 102 cities and towns across Connecticut. There is no membership fee. To join, Visit us at http://www.ctcondonews.com

  2. Sandi on March 29, 2011 at 7:57 am

    Personally with heart and passion:

    I am writing IN FAVOR for Bill HB 6620 (Ombudsman Bill).

    I have been a board member, and have networked with dozens of condo complexes and continue to be a unit owner, CAI member and an advocate for the unit owners since 2004.
    .
    My perspective is the condo lawyers, property managers, board members and CAI…does truly use their political monopolized ego and money power to stomp and abuse unit owners. The majority dominates the unit owners and an estimate of 2% does not.

    Unit owners have been in mental anguish and stuck on where to go without spending thousands of dollars on their own. Where board members and property managers are able to access the thousands of dollars easily through the condo fees.

    It is not has easy to remove a board member with 7 Associations, a Master Association and 462 units in our complex. It took 7 years to make a slightest change; however, there is more to do and with your vote it will help unit owners with our heavy emotional and physical load.

    CAI- CT is in favor of the bill; so I am slightly confused when they are in opposition. See link below and text from their website.

    http://www.caict.org/LAC_%20priorities2011.html The CAI Site reads:

    Manager licensing and State Ombudsman: CAI-CT supports the establishment of a licensing process for Community Association Managers. Licensure would ensure that managers receive training throughout their careers. Several states have such requirements. This proposal should have no impact on the many self-managed associations in our state.
    Common Interest Ownership Ombudsman: CAI-CT supports the establishment of a fair and equitable Ombudsman program to: resolve disputes between associations and unit owners without the need for protracted litigation and provide the Attorney General with the legal authority to enforce decisions of the ombudsman.

    Another item is when you become a CAI member it is mandatory to pay fees so CAI can have a hired lobbyist for their Legislative Actions. So who has the strong hold…

    Boy, government for the people….Work for us!!!! Have a good day.

    VOTE YES!!!!!!!!

  3. Al Leavitt on February 13, 2012 at 9:52 am

    I am a condo owner who is very frustrated with our association board. they have not registered with the state and the treasurer does not allow anyone to look at the books. We have not had a meeting in two years and the treasurer tries to control and discriminate against renters and some owners. We need to get her removed. She has not continued in the good faith of the association and has even gone so far as to hire a live in friend to do work at the complex and pays that person who is not licensed.
    We have called several attorneys who deal with condos associations and nobody will talk to us. Help

Leave a Reply

Your email address will not be published. Required fields are marked *