10 HOA Questions That

Could Save Time, Money and Frustration

10 HOA Questions That Could Save Time, Money and Frustration



In the last 2 decades, we've been summarizing a listing of the very frequently asked homeowner association questions, and felt that these questions best represent the concerns of members. This is a snap shot that might help you understand the dynamics of association management.Homeowners Association Management


1) WHY ARE MY HOMEOWNER DUES GOING UP?


Your homeowner's dues are based off the operating budget for your subdivision. Budgets are generally prepared on a "break-even" basis; that's, income should equal expenses. What goes on when this does not occur and expenses exceed the projected income? You can find then only two methods to balance the budget; increase income or decrease expenses. The budget process is an important event in the financial life of an association. At budget review time, there is the opportunity to re-evaluate the obligations, needs and expectations of the association in relationship to its membership. It can be a time to look at cost reducing techniques and determine which are right for the association. In the long run, the Homeowner Association's Board determines if the dues should go up or stay exactly the same based off with this budgeting process.


2) WHY DO I HAVE TO PAY MORE DUES WHEN THERE ARE PEOPLE WHO DON'T PAY THEIR DUES AT ALL?


The association has case law and statutes on its side, making the collection process success extremely likely. However, despite the likelihood of success, a bankruptcy can stop a lawsuit or collection dead in its tracks, evoking the association serious financial hardship, which, is offered to the other homeowners in the shape of higher budgets and increased assessments. Bankruptcy is allowed to be a debtor's last ditch remedy. It prevents an individual from becoming destitute upon the filing of a petition with the bankruptcy court by automatically stopping all collection procedures. The petition triggers a computerized stay which prevents attorneys from proceeding with the lawsuit or acquiring the debtors assets. Thus giving the debtor some breathing room and allows the debtor to get back on his/her feet. Despite popular belief, it generally does not always show that the association cannot collect the delinquent assessments. We realize that collecting delinquent assessments is a difficult job. All things considered, these delinquent owners will also be your neighbors. That you do not desire to confront people at the mailbox or at the pool to pay for their assessments. But managers and board members can't ignore the problem. Bankruptcy costs everyone, like the HOA and it members by lowering the quantity of dues collected. The only method to pay for lower collections consequently of bankruptcies or foreclosures is always to divide this up among the rest of the members of the HOA.


3) WHAT DO THE DUES PAY FOR?


The association's income consists mostly of fees in the form of homeowner dues. The entire budget is derived off the dues collected. The budget is made to anticipate the dues and anticipated expenses the HOA Board needs to pay for throughout every season, such as for instance landscaping maintenance, insurance, electricity, management, postage, irrigation, taxes, and repairs to sprinkler lines and/or pumps.


4) WHY WASN'T I TOLD SOONER THAT THE DUES WOULD BE GOING UP THIS MUCH?


Most association's governing documents suggest that the HOA dues will soon be established 30 days in advance of the assessment period. Because most HOA's fiscal year runs from January 1 to December 31, the HOA dues are set by December 1st of each year and notification is mailed on January 1st. The assessment isn't typically applied until January 31 which leaves about 30 days to pay or make arrangements.


5) WILL THE DUES GO UP EVERY YEAR?


Fall is enough time when most homeowner associations feel the ritual of counting last year's income and expenses, and then crunching next year's numbers. If the expenses to supply basic maintenance service increases, it is probable the dues will go up. Listed here are a number of the ways to really make the cash flow more freely. Often next year's budget is dependant on last year's; therefore, execute a side by side comparison of the last three year's budgets. You might see large and unnoticed utility cost variances, or increases in landscaping services. The Board, 36 months ago, may have been entirely different and indifferent to the budget. You might catch a price savings that got passed through un-scrutinized.


** Irrigation Water Costs: Does one's body have a rain override that kills the sprinkling cycle when appropriate? Or even, budget for and have it installed before the following irrigation season.


** Control Pool Temperature: A solar blanket can purchase itself very quickly. A 3-5 degree lowering of pool temperature heating can lead to significant savings.


** Lighting Conservation: If you haven't already, swap all common area exterior incandescent lighting for compact fluorescent or other higher lumen/lower wattage alternatives.


6) DOES A HOMEOWNER HAVE A SAY IN THE AMOUNT OF THE DUES INCREASE?


The amount of the annual assessment is initiated every year by the association's board of directors, based on the board's adoption of the annual budget. Typical governing documents may include language allowing the board to boost the dues by way of a specific percentage (%) without owner approval. The dues are established by taking the full total expected cost, and divided that amount by the number of homeowners in the subdivision. i.e. expected budget of the HOA is $10,000.00, and you will find 50 homeowners, therefore, the dues could be ($10,000/50= $200.00) $200.00 per year.


7) CAN I "OPT-OUT¨ OF THE HOMEOWNER'S ASSOCIATION?


You can't "Opt-Out¨ of the association, as every property in the HOA is subject to the restrictions recorded against them when the deed was recorded. Those restrictions follow the property every time it is sold, just like a power easement.


8) ARE THE VACANT LOTS BOUND BY THE CC&RS?


If they're owned by the developer/grantor they're not subject to the covenants, conditions and restrictions (CC&Rs); however, just because the lot is vacant does not mean that it is owned by the developer. Upon the very first sell of the property out from the hands of the developer, the property becomes subject to the CC&Rs. (sometimes a builder will build on the developer's lot without purchasing the lot. This property is not at the mercy of the CC&Rs before property and the home can be bought together for the first time.)


9) HOW ARE THE BOARD MEMBERS ELECTED?


Every year at the annual meeting, elections are held. Some subdivisions are put up, so your term is only for year so that each and every position is open each years. Others will specify a 3 year rotating term, so that all term is for 3 years, but they're on a staggered schedule. Meaning, only one position will be up for election each year. If you're enthusiastic about serving on the board or want to see the outcome from a recent vote, we strongly encourage you to attend the annual meeting. Notices are mailed out ahead of the meeting.


10) WHAT DOES IT MEAN WHEN OUR HOA IS DEVELOPER CONTROLLED?


Community associations are conceived by the developer who typically forms a non-profit corporation your can purchase the land and amenities, and in case of condominiums, certain parts of the building exterior. Initially, the developer owns most of the lots or units in the association and has all the votes; therefore, the developer controls the association. A table of directors typically consisting of the developer and other individuals professionally linked to the developer is made to manage the affairs of the association including not just the physical attributes, but in addition the financial and administrative issues such as collecting owner assessments, holding the annual meeting, and enforcing the deed restrictions.