THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, August 5, 1995 TAG: 9508030379
SECTION: REAL ESTATE WEEKLY PAGE: 02 EDITION: FINAL
COLUMN: COMMON GROUND
SOURCE: G. ROBERT KIRKLAND and MICHAEL INMAN
LENGTH: Medium: 77 lines
Q. Several of my neighbors and I are very upset over a change in the pool rules that limit the hours the pool is available. This means we can only use the pool on weekends. Since we are being denied services covered by our assessment we want to withhold the assessment to make the board change the rule back. Are there any problems with us putting our assessments in escrow until the Board changes the rule?
A. Yes, there are major problems if you withhold your assessment. Remember that the Board has established the assessment based on the overall expenses for operating the association. These expenses include far more than the cost of running the pool.
Insurance, repairs, management fees, the newsletter and many other items are paid from the assessments.
If you and some of your neighbors refuse to pay, you cause the burden of those expenses to be carried by your neighbors. Also it is possible, if enough owners withhold payment, that the association might not be able to pay its bills.
This could result in the insurance being canceled and the pool being closed completely.
Another issue to consider is that your documents probably provide, as do many association's documents, that you may not withhold your assessments because of the failure of the association to provide a service. As part of the declaration, this means that you agreed in writing to waive this defense.
Also, it is generally accepted that you may not place monies in an escrow account because of a dispute with a court order permitting this action.
In other words, you would have to go to court, at your expense, to have the right to place the monies in an escrow account.
The association has a number of remedies that it might use to collect any delinquent assessments. The first is to take a judgment against you and then to garnish your wages or bank account. Second, the association may perfect its lien for assessments and then foreclose on your property to collect the delinquency. Other remedies could include the withdrawal of other privileges such as parking, pool use or certain utilities.
Any of these decisions could result in a bad credit report as well as considerable added expense for you. You will be responsible for not only your legal expenses but the expenses of the association as well. As an example, a $100 delinquent assessment could have more than $100 in legal cost and late charges added.
A better solution would be to ask the board to reconsider their decision. Provide the board with a list of owners who are opposed to the change. Ask the board for the reason they made the decision.
It may have been a financial decision, for example, in many cases, the decision was made because there were too few people using the pool in the late hours to justify the cost. A compromise of opening the pool later on two or three nights week might be suggested.
But if you are adamant about the hours or the board is non-responsive, review your documents for the provisions for changing rules. Often the association documents provide a method for owners to adopt rules when the board does not take action the community desires.
There are few things more important to a successful association than its financial health. When owners fail to pay assessments they are not only hurting the board in its ability to manage the association, they are also hurting themselves as they are part of the association. An association that cannot properly maintain the community means that the property values will fall instead of rising. Don't cut your nose off to spite your face.
Find a line of communication and compromise. MEMO: G. Robert Kirkland, president of a Virginia Beach property management
consulting firm, and attorney Michael A. Inman specialize in Virginia
community association issues and are affiliated with the Southeastern
Virginia chapter of the Community Associations Institute. Send comments
and questions to them at P.O. Box 446, Virginia Beach, Va. 23458. To
submit questions by phone, call 430-3617; by fax: 431-0410.
by CNB