Hellmuth & Johnson’s Phaedra Howard discussed where Minnesota stands with the rules and regulations in place to help prevent a tragedy like the recent collapse of the Surfside condo in Florida.
“One issue not fully answered in Minnesota law is the definition of adequate reserves,” she said. “The better way, rather than addressing reserves, would be to require a professional reserve study. Because that is not required now,” Howard said, though most associations do conduct professional reserve studies and condo management companies strongly encourage them.
Howard disagreed that the 2017 law change was needed to address lawsuit concerns and to spur construction of condos and townhomes. “It was more them trying to get away from being responsible for doing crappy work,” she said. The result, however, has been an increased focus on preventive maintenance to extend the life of buildings. The previous law, which took effect in 2012, spoke to creating reserves to pay for replacement costs.
In an article, Howard wrote that “the vast majority of the associations that I have dealt with over my career are not adequately funded to pay for the maintenance, repair and replacement of all portions of the property for which they are responsible,” citing both developers who fail to provide for reserve needs before turning the building over to a homeowners association and associations who either don’t know of building needs or succumb to homeowners’ desires for lower dues. Both boards and owners are responsible, she said. “Sometimes it’s the owners who vote down everything the board is trying to do, and they get stuck and can’t do what they need to do,” Howard said. “Or the board members don’t want to do what they need to do.”