February 26, 2018
The Honorable Kevin G. Honan, House Chair
The Honorable House Members of
The Joint Committee on Housing
State House, Room 38
Boston, MA 02133
The Honorable Joseph A. Boncore, Senate Chair
The Honorable Senate Members of
The Joint Committee on Housing
State House, Room 410
Boston, MA 02133
Condominium Owners’ petition Against Massachusetts Bill H.4167
Dear Chairman Honan, Chairman Boncore & Esteemed Members of the Joint Committee on Housing,
We the undersigned Massachusetts condominium owners and advocates are concerned about the “late file” Bill H.4167 that arrived at the Joint Committee on Housing on 2/2/2018, more than a year after the 1/20/2017 filing deadline.
Bill H.4167: An Act relative to adequate condominium reserve funds contains language which is inadequate and inconsistent with the law’s purpose to protect the interests of condominium owners. This, together with such unusual expedited legislative processing of the bill, raises concerns that the proposed legislation is an “industry” sponsored bill with the ulterior motive to enhance the financial interests of members of condominium and homeowner association service industry, directly against the interests of Massachusetts condominium owners.
Excerpts of Bill H.4167:
As used in this section, the term “adequate replacement reserve fund” shall mean a reserve fund requirement as defined by the periodic accomplishment of a reserve fund study by a certified engineering firm.
The organization of unit owners shall develop appropriate funding plans to meet the needs outlined in such study.
Specifically, the terminology “certified engineering firm” lacks specificity as to the certifying entity, and leaves open the possibility that a non-governmental entity would be able to provide certification.
Furthermore, the term “shall develop appropriate funding plans to meet the needs outlined in such study”, takes away the control of association’s fiscal and operational plans from the organization of unit owners and puts it in the hands of industry operatives who can abuse “such study” for financial gains.
Imposing on unit owners unknown and virtually unlimited assessments in the name of legally mandated reserve requirements conflicts with provisions stipulated in many association governing documents which often impose restrictions on the amount of special assessments (other than emergencies), and furthermore require majority beneficiary unit owner approval for significant repairs and improvements.
A recent inquiry to the Massachusetts Division of Professional Licensure (DPL), Board of Registration of Professional Engineers and Land Survey confirms that the Board or DPL do NOT certify, nor license, regulate, or enforce any standards for reserve study engineering firms.
Furthermore, it seems there are currently no independent reserve study engineering certifications in Massachusetts, or in any other state.
However, Reserve Study “designations” are available by the industry itself, including:
- Reserve Specialist (RS) designation by the Community Association Institute (a.k.a. CAI), with direct financial interests in Bill H.4167.
CAI is a political powerhouse, which has played a major role in lobbying for industry interests, including preventing the much-needed reform and modernization of Massachusetts condominium laws and the enactment of laws that can otherwise protect unit-owners against financial fraud and abuse.
2. The Professional Reserve Analyst (PRA) credential by the Association of Professional Reserve Analysts (APRA), which is the trade association for Professional Reserve Analysts (PRAs).
In the absence of independent licensing, certification and regulatory enforcement by the Massachusetts Division of Professional Licensure (DPL) and other appropriate DPL boards including the Board of Registration of Professional Engineers and Land Survey, the term “ certified engineering firm” requirement in Bill H.4167 is meaningless.
Many CAI RS firms who advertise their service on the CAI website are also construction companies, or design companies. This raises concerns to conflicting activities, where the same company may write the “work order” and conduct or supervise the “work”.
Conducting periodic Reserve Studies are of advantage to Massachusetts condominium owners, if and only if:
- The term “certified engineering firm” is supported by the Massachusetts Division of Professional Licensure and other appropriate government agencies that can impose, oversee and enforce rigorous engineering and financial accountability standards for diligence and competency.
- They will not take away fiscal and operational control from the organization of unit owners and unwittingly put the control in the hands of industry operatives. For example, by legislating funding plans determined by external entities, or by enabling condominium lawyers and debt collectors, with vested financial interests, to use the funding plan to churn legal fees, impose liens and foreclose on condominium owners.
- They shall not in any way be construed to be compulsory, mandatory, or obligatory upon the organization of unit owners, and respectively the unit owners who comprise the organization of unit owners.
- They avoid conflicting activities by and between the reserve engineering firms, condominium law firms, condominium debt collectors, management companies, construction and design companies, as well as the association boards.
In the absence of above mentioned requirements, Bill H. 4167, in its current form, will be harmful and burdensome to Massachusetts condominium owners.