Splitting the Difference

Who owes what? There are two types of owners in condominiums: residential and commercial. Each is assessed common charges based on their percentage of interest; however, commercial unit-owners can be asked to pay for expenses unrelated to their unit. For example, an assessment may be made to pay for repairs or upgrades to an elevator that services only the residential units.

Objection! The commercial unit-owner may object, saying it doesn’t use that elevator. In that case, the board needs to check the declaration and the bylaws to determine what the commercial owner’s rights are. Some older governing documents are silent on allocation. Newer condo bylaws address it and say that a commercial unit-owner isn’t responsible for any costs or assessments related to amenities that are strictly for residential use. 

On the flip side, if a commercial unit-owner incurs a cost that’s unrelated to the residential unit-owners, you may find that the building comes back and says, “There’s been an increase in costs because of your activity; that shouldn’t be borne by the residential unit owners, it should be borne by you.” This situation could also require an evaluation as to what’s in the governing documents.

Change afoot. In most bylaws, there’s a clause that says they cannot be amended without a two-thirds vote by the owners of the building. Some bylaws also say that you can’t change any bylaw that affects the commercial unit-owner without the consent of the commercial unit owner.

Most of the time everyone acts in a neighborly manner and reaches an agreement. Unfortunately, you do have situations where people stand their ground and won’t give in. At that point, boards will tell a commercial unit-owner: “You’re obligated to pay this, and if you don’t pay it, we’re going to file a common charge lien against your unit. And if you don’t satisfy the common charge lien, we’ll foreclose against your unit.” And then you’re stuck in litigation that’s going to incur costs on both sides. Most of the time people find a resolution by that point.