- Jurisdiction
- California
We own a 1/3 share of a condo in California with 2 other partners. Partner #2 bought a 2nd share with his daughter, so they now own 2/3. We operate under a Tenancy-in-Common agreement (since 2014). As part of the TIC, we make quarterly contributions to cover our share of expenses and to fund a "Reserve" account to handle unexpected expenses and capital improvements. Spending from the Reserve account requires unanimous agreement, but in October 2014, all partners (including our current partner) agreed to spend $500 per year from the Reserve on small improvements, with the remainder saved for large capital expenditures or emergencies. In addition to the Reserve account, we have a $500 per year budget to cover repairs & maintenance.
Per the TIC, we are the "Unit Manager" responsible for maintaining the unit (furnishings, fixtures, etc.). The agreement clearly states we are responsible for the look & feel (color, fabric, etc.) of all things in the condo (major capital improvements require unanimous agreement). The other partner is the "Financial Manager" responsible for the bank account and paying the bills. Since January when the other partner purchased their additional interest, they have been trying to minimize our role and they refuse to reimburse us for purchases made to replace broken furniture, and for small improvement items spent pursuant to our 2014 Reserve account spending agreement. The other partner now requires we only purchase exactly what they specify and insists on unanimous agreement for any item purchased. They've also suggested each partner should be able to buy whatever items they want up to an agreed-upon dollar limit.
There is no provision in our TIC specifically addressing a situation where the Financial Manager does not reimburse another partner for costs incurred. Our TIC does require arbitration to resolve disputes. Should we:
1. Deduct amounts we spent to replace broken items and small upgrade purchases from our quarterly expense contribution since the Financial Manager refuses to reimburse us? At that point we would wait for them to file for Arbitration. Or,
2. Advise the Financial Manager he is in default on our agreement and file for arbitration?
My concern with deducting amounts spent from the quarterly contribution is that the Financial Manager could claim we are in violation of the TIC by not making our full quarterly contribution payment. There are payment default provisions in the TIC which allow the Financial Manager to foreclose on the defaulting owner's share (after some time & notification requirements).
Attached is our TIC Agreement. Exhibit D lists the Unit Manager duties.
Per the TIC, we are the "Unit Manager" responsible for maintaining the unit (furnishings, fixtures, etc.). The agreement clearly states we are responsible for the look & feel (color, fabric, etc.) of all things in the condo (major capital improvements require unanimous agreement). The other partner is the "Financial Manager" responsible for the bank account and paying the bills. Since January when the other partner purchased their additional interest, they have been trying to minimize our role and they refuse to reimburse us for purchases made to replace broken furniture, and for small improvement items spent pursuant to our 2014 Reserve account spending agreement. The other partner now requires we only purchase exactly what they specify and insists on unanimous agreement for any item purchased. They've also suggested each partner should be able to buy whatever items they want up to an agreed-upon dollar limit.
There is no provision in our TIC specifically addressing a situation where the Financial Manager does not reimburse another partner for costs incurred. Our TIC does require arbitration to resolve disputes. Should we:
1. Deduct amounts we spent to replace broken items and small upgrade purchases from our quarterly expense contribution since the Financial Manager refuses to reimburse us? At that point we would wait for them to file for Arbitration. Or,
2. Advise the Financial Manager he is in default on our agreement and file for arbitration?
My concern with deducting amounts spent from the quarterly contribution is that the Financial Manager could claim we are in violation of the TIC by not making our full quarterly contribution payment. There are payment default provisions in the TIC which allow the Financial Manager to foreclose on the defaulting owner's share (after some time & notification requirements).
Attached is our TIC Agreement. Exhibit D lists the Unit Manager duties.