PROBLEM SOLVED - NEW HAMPSHIRE SUPPLEMENTAL ASSESSMENTS
Problem: A New Hampshire condominium board voted to approve a supplemental assessment to finance a community-wide roof replacement project because the association’s reserves could not entirely cover the cost. Owners are furious. Some say they won’t pay the assessment; others are threatening to sue to prevent it. What can/should the board do?
Solution: As with most condominium problems, the solution to this one begins with a review of state law and the association’s governing documents.
New Hampshire is one of the few states in which state law gives owners the right to reject a board-approved assessment if two-thirds of them vote against it. Note: The statute requires a two-thirds vote of all owners in the community, not just those attending the special meeting the board is required to hold before approving an assessment. That is not an easy hurdle even if owners are furious. The statute tries to strike a balance that gives owners the opportunity to block an assessment without allowing a minority to tie the board’s hands.
The New Hampshire statute also allows boards to bypass owner approval entirely for an assessment that is required to address “emergencies”, defined as situations that:
Threaten the structural integrity of common areas;
Pose a danger to the life or safety of property owners; or
Result from a court order to address issues the board could not reasonably have anticipated in preparing the association’s budget.
In New Hampshire, as in most other states, boards have the authority to enforce a properly approved assessment. But assessments create political as well as legal issues. Lingering anger over an assessment can undermine owner confidence in the board, create dissension among owners and fray the sense of community boards want to encourage. We always recommend avoiding a fight if possible.
There is one foolproof way for boards to avoid owners’ objections to assessments, and that is to avoid, or at least reduce the need for them, which boards can do by:
Adopting and following a proactive maintenance schedule
Periodically updating the association’s reserve study and using it to plan for major expenditures
Funding association reserves to match the reserve study’s estimates for the timing and cost of essential repairs, replacements and renovations.
Adopting realistic budgets based on actual operating costs, not on a desire to avoid fee increases that might antagonize owners. Costs increase annually and association fees should, as well. Owners can swallow bite-sized annual increases that force them to tweak their budgets more easily than huge adjustments that may upend their financial plans.
Things can happen in any community and even the best managed associations may encounter emergencies for which they can’t plan and for which an assessment may be required. But a well-structured budget that includes adequate reserve funding will make assessments the rarity they should be rather than the undesirable alternative boards might have avoided.
If your association has questions regarding assessments please contact Gary Daddario at gdaddario@meeb.com.