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September 25, 2008
Any advice on Setting up a new condo homeowners association?
I have moved into a new condo. The entire condo is new, just eight units but we all are the first residents. We need to set up a homeowners' association in order to collect common charges and pay bills.
Does anyone have experience in how this process goes or who one can contact to have this set up?
Any advice or contacts would be greatly appreciated for this condo newbie!
Comments
Try contacting the Real Estate Board of NY, or check out the advertisements at www.cooperator.com. I'm surprised (even though I shouldn't be) that the sponsor didn't organize something. You need to get on to this very quickly.
Posted by: bohuma at September 25, 2008 4:15 PM
The sponsor definitely should have handled this, as you need to be set up as an association within NY State.
Once that's done, though, it's basically a small business, and you just need a small business banking account .
Given your size, I suggest you self-manage. You'll need to appoint at lease president and treasurer. Treasurer will collect common charges each month and make the deposit, as well as pay any ongoing costs (maintenance, electric/gas for common areas, etc).
Posted by: curiositykilledthecat at September 25, 2008 5:02 PM
Depending on your maintenance, I think it is wise to hire a management company to take care of your finances. Self managing is like a second job, you always have to keep on top of everyone else to make sure everyone is doing their part. You will have a management company charge you monthly fee, but at the same time you have a peace on mind knowing that you can just live there without feeling like you come home to a second job. They will give you a monthly Statement of your account that will allow you to follow your income and expenses with detailed accuracy. They also have an In house Maintenance team that handles common area cleaning & repairs.
Your choice, but I know from my own experiences that sometimes self managing causes personal problems within the building, sometimes people have power trips & ego issues, I've seen it time & time again.
You can try a management company that I know personally on a business level. Info as per below.
Give it a try, you never know, it might be the better choice for peace on mind.
Anthony Musto
Crosstown Management
29-27 41st Avenue
Long Island City, NY 11101
Cell(917) 405-8100
Office(718) 937-8100
Posted by: alrosariojr at September 25, 2008 5:19 PM
Speak to the other Unit Owners, as a collective you should request to hold an annual meeting, within the meeting you can nominate a Board of Managers consisting of President, VP, Treasurer, Secretary, and I'm sure the Sponsor will hold a seat. From there you can conduct business.
Posted by: cinnybuns at September 25, 2008 5:30 PM
Here are some websites that I found useful when setting up a condo association in my building (we are also just 8 units).
Good luck!
http://realtytimes.com/rtpages/20060220_community.htm
http://www.condoassociation.com/blog/tabid/19257/bid/3727/How-To-Start-A-Condo-Association.aspx
http://www.associationtimes.com/articles2003/devtrans1103.html
http://www.condolawyers.com/primer.htm
Posted by: berlinesque at September 25, 2008 6:08 PM
Check out www.cnyc.org - Council of NY coops and condos. You just missed a class on responsibilities of condo boards but they are worth joining for the advice and info they provide.
Posted by: the_why at September 25, 2008 6:32 PM
Hi,
Since your condo is only eight units, and if you agree on self management, you can probably save yourself a lot of money. I did this years ago when I lived in a condo. I am a CPA, so I had experience with doing the accounting. If everyone is willing, and you have the skills needed, it is doable. You will need a tax id. That is easy enough to get from the IRS. You will need to read your prospectus to see what if any rules were already set up about the board. (The sponsor, may or may not still hold some control). You will have to elect a board, set up by-laws, open a bank account, draw up a budget estimating your income, and expenses for common areas. The board will have the power to hire contractors, etc. Each year, the condo files a federal tax return 1120H, and a State and City Tax return (state franchise tax, MTA surcharge, and the City's general corporation tax). You will probably need to hire an accountant, unless you have one in your building who is willing to do the work.
You will save money going the self-managed way, but be prepared to get involved and do some work. If people are not willing, then it may be better to go with a management company.
Posted by: Bklyn born at September 25, 2008 7:28 PM
Thank you all so much for the comments!
This gives us a good place to start, and I appreciate all the leads.
Our main concern at the moment is forming the corporation and getting the tax number. We first were told to form an LLC, but the insurance company told us it should be an 'association' and not an LLC, for liability reasons.
It's all new to us, but we are willing to roll up our sleeves, so we hope to be okay.
Thanks again!
Posted by: BedStuyCarrot at September 25, 2008 8:08 PM
Good Luck...
Posted by: alrosariojr at September 25, 2008 11:41 PM
Another word on self-management. Our 6-unit, new construction condo has self managed since we all moved in 6 years ago. It is NOT a lot of work, and we don't even have the help of all the owners.
We have 6 reasonably intelligent people who trade off on the jobs (pres, secretary, treasurer). We also have a great MAINTENANCE company (NOT management), who cleans the common areas once a month, etc, and is on call for all significant repairs.
The two best aspects of this arrangement are:
1. Our common charges are still only $200 per month, which has even been enough to build up a nice reserve.
2. We all take the work seriously because we are, obviously, the owners.
Good luck~
Posted by: curiositykilledthecat at September 26, 2008 7:14 AM
curiositykilledthecat -
If you do not mind me asking, what did you set your condo up as? We originally set it up as an LLC and were told that was wrong - and are in the middle of figuring out what to do. Just looking for a comparable. Did you set it up as a DBA or a not-for-profit? And did you have an accountant set this up or an attorney, or did you do it on your own?
Thanks,
Matt
Posted by: BedStuyCarrot at September 26, 2008 11:54 AM
Hi Matt,
We dealt with this same issue recently in our building (new construction, 8 units), and were told many different things by everyone -- corporation, not-for-profit, etc.
Ultimately I went by what the offering plan says, which is that we are NOT a corporation but rather an "un-incorporated association" -- and therefore not taxed as a corporation.
Did your sponsor give you a Tax number (EIN)?
Once we finally got this info from our sponsor and confirmed it with the IRS, everything else was fairly simple (at least with respect to the bank account).
All banks have different rules, but ours just asked that I bring them letter stating that we were a homeowner's association, not a corporation, and confirmation of our Tax ID number.
The sponsor does have a legal responsibility to perform the initial steps of this process, so if he is not you should speak to a lawyer.
Hope this helps!
Posted by: berlinesque at September 26, 2008 12:09 PM
Yes, you are considered an unincorporated homeowner's association. You normally don't have to pay federal taxes, but still have to file an 1120H return. Of course New York State and City still get a piece of you, and you will at least have to pay the minimum tax each year under Article 9 NYS franchise tax (about $100), MTA surcharge (17% of your franchise tax-yes the MTA gets a piece too) and NYC Corp Tax ($300).
Posted by: Bklyn born at September 26, 2008 8:22 PM
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