marcus-condo-law-guy

A Judicial Win for Earned Interest on Deposits in CA?

Tue, 08 Sep 2026 12:32:07 GMT

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BREAKING NEWS:

Condominium and HOA management companies who get -or are thinking of getting- earnings on association deposits should pay close attention to a recent decision in a Federal District Court in California

-See Order Riva v. Management Trust Federal District Court California Eastern District Court .

Stephen Marcus, of Marcus Condo Law

“I am told some in California are viewing this as a big win for Management Trust on earned interest on deposit,” he said. “The Order denied the motion to certify the class largely based upon failure to show "concrete injury" by failing to show a loss to the associations and failure to show "informational injury" by failing to disclose.”

He noted the court permitted Riva to amend it’s complaint, but did not permit it to add new claims.

“I think some are not convinced this is a loss for Riva,” he said. "Despite the Court not finding informational injury by failure to disclose, I would suggest disclosure that there is a fee. However, I would not have any obligation to report say each month or year what the dollar amount is since the association knows there is a fee from the management agreement. I have another suggestion as well but you have to call me (no charge) at 781-413-5226 to hear that idea. Are other management companies in or outside of California also charging a fee? I don’t know.”

“Others will disagree but if there is disclosure and the manager doesn't just increase the management fee to make up for lost amounts, I think the Order made sense but I am sure the litigation will go on for a long time with twists and turns so who knows how it will turn out so stay tuned here for updates.”

Changes in Fannie Mae rules will require most condo boards and HOAs to raise their monthly fees

Effective January 1, 2027 Fannie Mae will require condominium boards and HOAs to maintain 15% of their annual budget in reserves in order for their individual units to be eligible for Fannie Mae loans. The current requirement is 10%. This will necessitate an increase in monthly fees for most associations.

“Boards should be preparing budgets now if they operate on a calendar year, said Stephen Marcus of 2027 in Braintree. “It will very likely result in increases in condominium fees in addition to any other increases in the budget. That is, unless a reserve study performed within the last 3 years calculated based on highest level of funding indicates that they can budget lower than 15%. Boards and managers may want to communicate this change to owners now so unit owners are prepared and don’t get surprised or upset when they see the increase when the budget is published.”

Also, effective August 3, 2026, Fannie Mae and Freddie Mac have ended Limited and Streamlined Reviews, except for small condo projects of between 2 and 10 units (with some exceptions). All other projects will require a full review to be eligible for the government-backed loans. This could result in delayed transactions or even denials.

The National Association of Realtors (NAR) said associations greater than 10 units “will face higher reserve and documentation expectations, which could increase HOA fees or result in special assessments.”

Robert Smith, a regional president at FirstService Residential told The Real Deal , “Communities that consistently invest in reserves, keep financial records current and plan will generally be in a stronger position when lenders evaluate the property.”

We are fortunate to have so many great management companies in Greater Boston such as Barkan, Brigs, Associates/The Dartmouth Group and so many others. Of course the managers simply suggest to the volunteer boards what to do. The boards make the decisions.

Mortgage Bankers Association president and CEO Bob Broeksmit had an completely favorable view of the changes.

“Importantly, the condo insurance requirements will reduce costs for existing homeowners and will make tens of thousands of additional units eligible for lower cost GSE financing,” he said. “Expanding the number of properties that can access conventional financing is a direct benefit to prospective buyers and an important step in the ongoing effort to improve housing affordability.”

Stephen Marcus is very interested in how these changes will impact management companies since we expect more lender questionnaires and more focus on insurance, reserves, critical repairs, etc.

“The expectation is that more condominiums will end up on the ineligible to loan lists (aka the "Blacklist") but we won't know since that list is not public,” he said. “Management companies and boards should consider reviewing their charges to lenders and sellers lender questionnaires since more work will be expected such as providing condition and reserve studies, information on litigation other than collection actions etc.”

We can likely expect more delays in individual transactions as well as more transactions falling apart due to increased friction resulting from the changes, he added.

These changes could increase costs for management companies and associations due to the increased need for legal review or lenders requests for information.

None of this is to say that Fannie and Freddie's increased requirements are a bad thing, Marcus said. It may be a small price to pay for more diligent review by lenders and servicers for Fannie Mae and Freddie Mac. At this point, it just too early to say.

Please let me know your thoughts and what you're seeing.

And please feel free to forward this email to anyone you think may be interested, especially other property managers and condominium board members.

If someone forwarded this to you, you can subscribe for free at www.marcuscondolaw.com

Marcus Condo Law offers free presentations to management company managers on these changes and other legal issues property managers in an iterative format.

Are Property Manager Report Cards The Next Big Thing?

Tue, 25 Aug 2026 13:50:54 GMT

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Relatively recently, companies have sprung up which claim to fairly rate condominium and HOA associations and their management company with “report cards” of different formats.

Some, such as those focusing on climate change ( homevitals.ai ) seems to have promise and there is a company which has unveiled its product in Florida and expects to also expand to Chicago and perhaps New York City which sound promising.

I’ve had two Zoom calls with a company called the HOA Doctor and have purchased their Kindle edition of their book “HOA’s Unmasked” and they seem like nice people. I have some doubts as to their report card which they call “Community Trust Index” I believe.

The reports are from the owners who remain anonymous but who are confirmed. I respect the idea of buyers having a rating scale when buying their units but question whether these reports on the management company and board will be accurate.

One concern is that a group of disgruntled owners might give bad marks to good associations and management companies where there are special assessments to address deferred maintenance. It would seem we would want proactive management and board raising the amount of funds that are necessary to maintain the property and preserve and protect the value of unit.

One other comment I believe I heard is that real estate agents could sponsor for a fee an association. My concern is that the agents would easily be able to convince many owners to submit favorable reports in order to give their condominium or HOA high marks.

But the concern I have for managers is that my understanding, and I hope I am wrong, is that a major premise of the project seem to be taking shots at managers for alleged kickbacks or undisclosed fees or fees that they seem to think might be improper whether disclosed or not.

I think the condominium management company leaders and owners have to come back with cogent retorts to these claims or to decide to stay quiet and assume the hyperbole blows over quickly. It seems to me that management companies for decades often ran on razor-thin margins. If there are areas where a service can be provided that does not cost the association more money isn’t that better than the management companies simply raising their management fees.

The issue is bothering me so I am interested in your thoughts. My cell is 781-413-5226 and my email is smarcus@marcuscondolaw.com

Maybe I am wrong about this?

How Board Members Can Protect Their Development's Assets

Tue, 25 Aug 2026 13:43:09 GMT

Protect your building from fraud

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Condominium boards are generally made up of unpaid volunteers with little or no training in property management, accounting or law. Many boards rely on property management companies for advice on those topics. While property management fraud is fairly rare, it can and does happen. In June, a large, Boston-based property management, Premier Properties was accused of stealing more than $800,000.

Attorney William R. Moorman, Jr. is an attorney with Murphy & King, in Boston. He said several condo associations who are managed by Premier Properties have come forward to him alleging missing funds totaling more than $500,000. And he said the firm manages around 200 associations. He said it’s important for condo board members to act quickly as soon as they suspect there in money missing.

“Once you know that there's a problem and the money might be missing, the important thing is to at least do something about it,’ he said. “Don't just put your head in the sand,. Try to get the accounting, try to figure out the problem, put your insurers on notice and of course contact your attorney.”

The civil complaint filed in Suffolk Superior Court accuses Premier Properties of stealing at least $800,000 from the 30 Washington Square Condominium Trust. Court documents imply that board members did not have access to their bank account statements and instead relied on Premier Properties representations of their account balances, which were incorrect.

“Going forward, this should be a lesson for associations to not trust a manager if they're not willing to give your own statements,” he said. “Board members should insist on seeing their associations monthly bank statements, no matter what.”

Stephen Marcus, of Marcus Condo Law in Braintree agreed and added more tips to protect condominium associations from this kind of theft.

Condominium associations must have fidelity/crime coverage for the maximum funds that are in the custody of the condominium association at any time. The policy must be in the name of the association and name the management company as an employee and designated agent. The policy must cover all volunteers with access to the funds such as the Board of Directors of the condominium association.

The fidelity/crime policy above should include total operating funds, total reserves, total association loan proceeds in the accounts of the association, total insurance loss proceeds in the accounts of the association and any other funds.

All monies must be in separate bank accounts in the name of the condominium association and not commingled with funds of the management company.

Separate bank accounts must be maintained for the working account and the reserve account, each with appropriate access controls. The bank in which funds are deposited must send copies of the monthly bank statements directly to the HOA or co-op corporation.

The management company must maintain separate records and bank accounts for each condominium that it services. Also, the management company must not have the authority to draw checks on, or transfer funds from, the reserve account, association loan proceeds or insurance loss proceeds of the condominium.

Two members of the Board of Directors must sign any checks written on the reserve account, association loan proceeds account and insurance loss proceeds account.

All condominiums and management companies must have cybercrime insurance in adequate kinds and amounts.

The association shall be the first insured under the policy and shall be entitled to notice of cancellation and the notice of cancellation must be sent to the Board of Directors and not care of the management company.

Questions about how to safeguard your association’s funds from unscrupulous property managers?

Email Stephen .

Surfside...five years later

Wed, 29 Jul 2026 17:58:22 GMT

Is it time to update the statutes of limitations and repose for construction?

“People who say it cannot be done, should not interrupt those who are doing it.” Bernard Shaw

June 24, 2026 marked five years since the tragic Surfside condominium collapse t hat killed 98 people and resulted in a $1.02 billion class action settlement, and the effects continue to be felt by condominium associations across the country.

We’ve had our own versions of Surfside right here in Greater Boston. The Riverview-in-Cambridge Condominiums in Cambridge and the Water’s Edge apartments on Ocean Ave. In Revere. These didn’t collapse, but both buildings required extensive and expensive repairs from construction defects that weren’t evident for decades. Nationwide, there are condo building collapses reported nearly every week.

Rising insurance and construction costs have been making the headlines, but this whole thing has me thinking about something else.

The National Institute of Standards and Technology final report has been released and it seems clear that latent construction defects played a significant role in the Surfside collapse. Design or installation flaws installed 35-40 years earlier took decades to become apparent and ultimately deadly. Evidently, in the buildings’ early years, everything looked just fine.

You might even see this in your own homes. If the wooden part of a house isn’t properly fastened to the foundation, most people wouldn’t notice -until a hurricane comes along.

The statute of limitations and the statute of repose for construction defects in Massachusetts is just 6 years. That just doesn’t seem long enough to me. Obviously builders can’t be held responsible for their buildings in perpetuity, but in light of these failures does 6 years really seem adequate? Or fair to unit owners who are the most impacted by these failures?

I’ve given it some thought and I think the statute of limitation and statute of repose for developers, architects, engineers, contractors and subcontractors should be extended to 20 years after unit control has be turned over to the new owners. As a matter of fact, the more I think of it, the more unfair the current law is to consumers.

In fact, I’m considering drafting legislation (pro bono) to this effect for the Massachusetts legislature in the hope that it could be made into law and perhaps become a model for other states as well.

I anticipate vigorous objections from many of the impacted professionals, but that doesn’t bother me. I was told the super lien was impossible in 1992, but that didn’t stop me from taking a year off prior to MEEB being created and fought with lenders and other trade groups and advocated at the State House.

If there is interest in pursuing this legislation, I will contact CAI New England and REBA and IREM to see if they have an interest in both the drafting and pushing for the long-due legislative change.

What do you think? Is 20 years the right length of time? Too long? Too short? Please shoot me an email and share your thoughts.

Marcus Condo Law , PLLC

25 Braintree Hill Office Park, Suite 200

Braintree, MA 02184

(O) 781-848-5772

(M) 781-413-5226

smarcus@marcuscondolaw.com

marcus-condo-law-guy

A Judicial Win for Earned Interest on Deposits in CA?

This is a subtitle for your new post

Are Property Manager Report Cards The Next Big Thing?

This is a subtitle for your new post

How Board Members Can Protect Their Development's Assets

Protect your building from fraud

New Title

Surfside...five years later

Is it time to update the statutes of limitations and repose for construction? ﻿

Is it time to update the statutes of limitations and repose for construction?