ANNUAL MEETINGS ARE A GREAT TIME FOR PROTECTIVE AMENDMENTS

Published on: November 14, 2018

It’s that time of the year when condo boards are preparing their annual budgets ahead of the upcoming annual meeting. Since an owner vote is required to amend your governing documents, having a large amount of the electorate in one place for the annual meeting is the perfect opportunity to pass an amendment.

In NH, if your condo’s docs do not provide for the ability to collect rent from delinquent owners’ tenants or for the ability to terminate common privileges and services, these collection remedies can be adopted by owner vote. Only a majority vote with a quorum present is required.

Under Section 46-a of the Condominium Statute, if an owner is owner fails to pay an assessment within 60 days of its due date, rent payments can be demanded from the tenant. First demand for payment of the delinquent dues must be made upon the owner (and at times the mortgagee). If the owner fails to pay within 30 days, demand can then be made to the tenant for payment of rent direct to the association until such time as the owner’s account is fully current.

The best possible collection remedy is the ability to terminate common privileges and services. Again, if your docs do not afford the board with this remedy, it must be adopted by vote of the owners. I cannot more strongly recommend doing so as termination of services is the best leverage an association can have over a delinquent owner. As with rent collection, prior notice is required to the owner (and mortgagee) and the owner gets 30 days to resolve the issue. After 30 days, privileges and services can be terminated.

Most commonly, termination takes the form of blocking the owner’s access to his limited common area driveway or towing the owner’s car from any common parking area. However, it can also mean prohibiting access to amenities such as a pool or tennis courts. In some cases, clients have shut off water supply to the unit if water is paid for by the association.

As you can imagine, a barrier in one’s driveway is going to get them to the table to negotiate a repayment plan or to come up with money from Aunt Edna to resolve the debt much sooner than later. Leverage is the name of the game when it comes to collections, and the termination of services is the best bet in New Hampshire where the priority lien law is far weaker than in Massachusetts.

If you would like to amend your documents to adopt one or both of these collection remedies, please contact Dean Lennon at any time at dlennon@meeb.com or 781-843-5000.