When home won't sell on open market, innovate
DEAR BENNY: Our condominium board of directors (BOD) recently sent out proposed new parking rules to the community. Presently, the parking lot is a common element. At the hearing, approximately 60 people showed up for the meeting along with other people who e-mailed the BOD.
Ninety-five percent of the unit owners who responded to the proposal told the BOD they did not like the proposed parking rules and that the BOD should enforce the existing policy. As a result, the BOD wanted to do a survey of the community to see if the community believed there was a parking problem. The BOD received approximately 102 surveys (out of 404) of which 20 people voted that there was a parking problem -- the other people said no.
The BOD passed the parking the policy. One BOD member stated, "It does not matter what the majority of homeowners want."
The policy requires owners to register their cars in our state with our condominium address. It also limits the number of parking passes per unit to two. There are always available parking spaces on the property -- just not in front of an owner's condo.
The community does not want a tow truck policing the community. We do not have a 24-hour desk for someone to obtain a parking pass in case they need a pass. What should we do? --Julie
DEAR JULIE: Is this a runaway board or do they have the authority to enact the rule despite overwhelming opposition? Too many times I have heard board members say, "We are the board, and we can do what we want."
I suggest that you organize a "protest group," have people contribute to a legal defense fund and retain a lawyer familiar with community association law. The lawyer should provide a legal opinion as to whether the board has the authority to enact such a rule.
If the board is unauthorized to enact the rule, then your group could consider filing a lawsuit to enjoin the enforcement of that rule. If there is an administrative body that handles community association complaints -- such as the Commission on Common Ownership Communities (CCOC) in Montgomery County, Md. -- then take your complaint there.
Obviously, before taking any legal or administrative actions, present your case to the board and ask them to respond within a short period of time (two to three weeks). I always believe in giving the other side an opportunity to react before any action is taken.
If, on the other hand, your attorney opines that the board has the legal authority to pass that parking rule, then you really have only three alternatives: (1) mount a campaign to "throw the rascals out of office" -- your bylaws will spell out how this works; (2) accept the fact that you live in a democracy, and that your elected board has the right to make decisions that you may not like; or (3) move out.
DEAR BENNY: I live in Chicago and read with interest one of your recent columns in which an individual wanted to purchase a house for his aunt and avoid a huge tax bite. You asked for suggestions as to how this might be accomplished, and I believe I have a method that might work.
The method I suggest requires a little planning. The writer should create a Nevada corporation, of which he is the sole officer and shareholder. He should also create a limited partnership, of which the new corporation is the general partner (with a 2 percent interest), and of which he is the limited partner.
When the nephew buys the house, he should put the property into the limited partnership. Every year thereafter, the nephew should give his aunt a "gift" of a percentage of his limited partnership interest that equals the gift limit the (Internal Revenue Service) will allow without a tax consequence (currently $13,000).
Every year, the aunt receives a tax-free gift equal to a percentage of the value of the house, and does so without paying any taxes. The house is protected from creditors of both the nephew and the aunt, and after eight years the aunt owns the home. --David
DEAR DAVID: I have never heard of a Nevada corporation, so I did a Web search. Apparently, Nevada is a popular state -- like Delaware -- for creating corporations. However, many of the websites also urged caution, because if you do not do it right, there will be tax consequences.
I don't see why one has to set up a corporation. The nephew could just buy the house, and gift a percentage of the house each year to his aunt. So long as the percentage does not exceed $13,000 -- which is the maximum one can gift to anyone without any tax consequences -- ultimately, the aunt will own the entire house.
Don't do any of this before consulting with your tax and legal advisers.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to email@example.com.
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