10 HOA Questions That

Could Save Time, Money and Frustration

10 HOA Questions That Could Save Time, Money and Frustration



In the last 2 full decades, we've been summarizing a list of the most frequently asked homeowner association questions, and felt these questions best represent the concerns of members. This is a snap shot which can help you realize the dynamics of association management. Long Beach Association management


1) WHY ARE MY HOMEOWNER DUES GOING UP?


Your homeowner's dues are based off the operating budget for your subdivision. Budgets usually are prepared on a "break-even" basis; that is, income should equal expenses. What are the results when this does not occur and expenses exceed the projected income? There are then only two approaches 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 is also an occasion to consider cost reducing techniques and decide which are right for the association. Ultimately, the Homeowner Association's Board determines if the dues should go up or stay the same based off of the 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, regardless of the likelihood of success, a bankruptcy can stop case or collection dead in its tracks, inducing the association serious financial hardship, which often, is offered to another homeowners in the form of higher budgets and increased assessments. Bankruptcy is said 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 an automatic stay which prevents attorneys from proceeding with the lawsuit or getting the debtors assets. This provides the debtor some breathing room and allows the debtor to get back on his/her feet. Despite popular belief, it does not always signify the association cannot collect the delinquent assessments. We all know that collecting delinquent assessments is a difficult job. All things considered, these delinquent owners will also be your neighbors. You never want 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 total amount of dues collected. The only path to compensate for lower collections as a result 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 shape of homeowner dues. The entire budget is derived off the dues collected. The budget is established to anticipate the dues and anticipated expenses the HOA Board needs to pay throughout every season, such as 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 declare that the HOA dues is going to be established 30 days before 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 every year and notification is mailed on January 1st. The assessment isn't typically applied until January 31 which leaves about 30 days to pay for or make arrangements.


5) WILL THE DUES GO UP EVERY YEAR?


Fall is the time when most homeowner associations have the ritual of counting last year's income and expenses, and then crunching next year's numbers. If the expenses to offer basic maintenance service increases, it is likely the dues will go up. Listed below are a few of the ways to help make the cash flow more freely. Often next year's budget is based on last year's; therefore, execute a alongside comparison of the past three year's budgets. You might see large and unnoticed utility cost variances, or increases in landscaping services. The Board, three years ago, may have been entirely different and indifferent to the budget. You might catch a cost savings that got passed through un-scrutinized.


** Irrigation Water Costs: Does your system have a rain override that kills the sprinkling cycle when appropriate? Or even, budget for and get it installed before another irrigation season.


** Control Pool Temperature: A solar blanket can pay for itself very quickly. A 3-5 degree decrease in 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 set up every year by the association's board of directors, based upon the board's adoption of the annual budget. Typical governing documents may include language allowing the board to boost the dues by a specific percentage (%) without owner approval. The dues are established by taking the sum 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 can 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 cannot "Opt-Out¨ of the association, as every property in the HOA is susceptible to the restrictions recorded against them once the deed was recorded. Those restrictions follow the property each 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 are not subject to the covenants, conditions and restrictions (CC&Rs); however, just because the lot is vacant does not mean that it's owned by the developer. Upon the very first sell of the property from the hands of the developer, the property becomes at the mercy of the CC&Rs. (sometimes a builder will build on the developer's lot without purchasing the lot. This property isn't susceptible to the CC&Rs before property and the house can be purchased together for the very first time.)


9) HOW ARE THE BOARD MEMBERS ELECTED?


Every year at the annual meeting, elections are held. Some subdivisions are setup, so the term is only for year so that all position is open each years. Others will specify a 3 year rotating term, so that all term is for 3 years, but they are on a staggered schedule. Meaning, only one position will be up for election each year. If you should be interested in serving on the board or want to see the outcomes from a recent vote, we strongly encourage one to attend the annual meeting. Notices are mailed out prior to 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 to own the land and amenities, and in the event of condominiums, certain parts of the building exterior. Initially, the developer owns all of the lots or units in the association and has all the votes; therefore, the developer controls the association. A board of directors typically consisting of the developer and other individuals professionally linked to the developer is initiated to handle the affairs of the association including not only the physical attributes, but in addition the financial and administrative issues such as for instance collecting owner assessments, holding the annual meeting, and enforcing the deed restrictions.