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Seattle Times business reporter Elizabeth Rhodes posts the answers to your real estate questions as they pop up during the week. Join this ongoing discussion, which also features reader reaction to real-estate articles appearing throughout The Times.

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July 2, 2008 1:00 PM

What happens when a condo has no board of directors?

Posted by Elizabeth Rhodes

Q: Our condo complex is having difficulty getting volunteers. What happens if no one takes on board responsibilities? Do we have a property management company take over, and if so what are the ramifications?

A: To not have a board of directors will lead your condominium association down a dark road it doesn't want to travel says attorney Josh Rosenstein, with the Bellevue firm Hanson Baker Ludlow Drumheller.

For starters, forget hiring a manager in lieu of having a board. Without a board no one has the power to sign a management contract or even pay a manager.

Nor does anyone have the authority to decide what needs to be maintained, collect dues and pay for it. That's a recipe for declining property values and angry owners.

One of them could force the issue by filing a lawsuit asking a judge to name an individual to act as a receiver.

"The receiver would be endowed by the court with the authority of the association," Rosenstein says. "But in the long run it would be more expensive because owners would have to pay for maintenance and the costs of the lawsuit and the receiver. So they'd end up paying extra to have someone not of their own choosing do the work for them."

Rosenstein says he's heard your question voiced several times by condo owners living among apathetic neighbors. But he's never seen an association so apathetic that it actually got to the receivership stage.

"The threat of that is so ominous that people eventually step up," he says, and realize that in buying a condo they also "bought into the responsibility to cooperatively care for their community."

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Posted by Keely Jared

1:56 PM, Jul 02, 2008

Great question. The last condo I sold was run by a property management company rather than by a HOA (although there was one in place it was inactive) and the complex could not have been more 'mis-managed'.

The dues in 4 yrs went from 184 to 340 on a 200k valued unit and much of the maintenance and upkeep had been deferred to the point that it was bringing the condo values down.

I'm sure it's not easy to be on an HOA (who has the time) but it's in an owner's best interest to participate in any capacity they can to stave off misappropriation of funds, ensure reserve funds and maintenance objectives are met, etc.

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