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.
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.
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.
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