Q & A
Each month we answer legal related questions submitted from our readers.
Q: Some residents in our building smoke cigarettes on their balconies. As a result, smoke drifts into our windows. Can the association adopt a rule prohibiting smoking on balconies?
A: Some association’s documents specifically address smoking, but most older documents do not. In a condominium community, the balcony is typically a limited common element and the association has rule-making authority over such areas. Therefore, the association may have the ability to adopt a rule which restricts smoking on common elements. In a townhome community, however, balconies and patios are typically part of the lot, and the association may or may not have rule-making authority which extends to lots. If the association has authority to adopt a rule, it should make sure that the rule is reasonable and that it is right for the particular community. As always, check with the association’s attorney to make sure you have the authority to adopt a particular rule.
Q: Even though energy costs have increased significantly, condo conversions have boiler systems getting old, etc. Board members are reluctant to increase monthly dues. This causes reserve accounts to become depleted. Therefore, money is not being set aside for large future expenses, i.e., roof replacement, paving, concrete, etc. Board members play down the need for developing a healthy reserve account. Are reserve funds necessary?
A: Developing a reasonable reserve account is important for the ongoing success of associations. Without adequate reserves, associations are often unable to fund future repairs and replacements which, although not urgent today, are necessary tomorrow. While some boards do not want to fund the reserve by raising assessments for fear of upsetting homeowners, complaints typically start rolling in once the roof leaks, the pipes burst, and the board has to levy a hefty special assessment to fund the repairs. Failure to adequately fund the reserve could potentially lead to liability for the association and board. Maintaining an adequate reserve not only meets the board's fiduciary responsibility, but it increases board credibility, reduces special assessments and improves resale value. While there is no statutory requirement for a reserve in Colorado and associations may choose to special assess rather than establish a reserve (unless the governing documents require otherwise), establishing a reserve is the recommended approach. Reserve expenses are inevitable; therefore, plan accordingly. For further information click here to read, “Best Practices Report #1: Reserve Studies/Management", published by CAI.
* Please email or fax your questions with your name and contact information to: QAcolumnist@ortenhindman.com or 303.432.0999. Due to the volume of questions received, we cannot guarantee an answer.
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