The Meter is Running
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Boards can’t ignore shareholders in arrears just because they’re in arrears as well.
AUTHORBram G. Fierstein, Gramatan Management
PAGE #p. 38
Boards need to learn how to make tough decisions, even if they adversely affect themselves.
Members of a 63-unit condominium’s board of managers in Westchester were significantly behind in their common charges. Because of this, they didn’t feel comfortable starting legal cases against other unit-owners in arrears – probably a total of $60,000. The building was running out of funds and unable to meet its obligations. The board members were juggling bills.
At the annual meeting, the manager and accountant explained this untenable situation. The board members immediately resigned, and a new board was elected. The new board wrote all unit-owners explaining the situation and inviting them to attend a special meeting to discuss the potential solutions. A new attorney was hired and began legal action against all those in arrears. An 11 percent increase to common charges was imposed to make up for the shortfall caused by the non-payment of common charges. A bare-bones budget was instituted, and all non-essential spending was cut, which included closing the swimming pool. Regular meetings with unit-owners were scheduled to explain the progress that was being made as common charge collections improved, and spending cuts improved the overall financial condition of the association. It took roughly three years for them to turn the corner. The pool finally reopened on Memorial Day.
Unit-owners must hold their boards accountable, and boards must be willing to make hard decisions and communicate with their fellow owners. Raising common charges by 11 percent and closing the pool in a small community is pretty difficult. And they raised the common charges every year after that. But they got back to even.