3B Limo

Archive for January, 2010

The condo’s bylaws are its constitution. They establish the ground rules according to which this quasi-democracy is governed. The bylaws set up the structure of the condominium’s board of directors, specifying (among other things) the number of directors and the length of their term in office, and they detail the board’s responsibilities and its powers. Those powers typically include the right to collect the maintenance fee, the right to impose penalties if the fee is late, and the right to levy a lien on units whose owners fail to pay their fees. In some condos, the unit owners collectively have the right to veto any decisions made by the board. In others, the only way to overturn a decision you don’t like is to vote the offending directors out of office.
One thing to look for as you read the bylaws is any evidence of undue control by the developer. As a general rule, the sooner the developer is out of the picture and the unit owners are in control, the better. In a new condominium, the developer typically retains a fair amount of control until all or at least most of the units have been sold. But some state laws set a time limit beyond which the developer has no choice but to turn over control of the condo association to the unit owners, even if a large number of units remain unsold at that time. I think that’s a good idea. It’s language I’d want to see in the bylaws of any newly constructed or newly renovated condo I was considering buying.
Watch out also for situations in which the developer retains the right to select the management company that handles the maintenance and general day-to-day operations of the condo. Not all condos have management companies, but many of them do, and probably more of them should. It’s entirely possible that the developer or his brother-in-law can do a great job of managing the complex, but it’s equally possible that some other company can do the job better and cheaper. I’m not saying you should walk away from a condo in which the developer has taken on the management role, but you should look carefully at the terms of the management contract. Do the costs seem to be in line with the management costs at other comparable developments? What about the term? A one- or two-year contract is one thing; but if the developer has written himself a ten-year contract with a no-severance clause, you’d be wise to start looking for something else.