10 HOA Questions That Could Save Time, Money and Frustration

In the last 2 decades, we've been summarizing an inventory of the very frequently asked homeowner association questions, and felt these questions best represent the concerns of members. This is a snap shot which may help you recognize the dynamics of 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 often prepared on a "break-even" basis; that's, income should equal expenses. What happens when this does not occur and expenses exceed the projected income? You will find 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's the opportunity to re-evaluate the obligations, needs and expectations of the association in relationship to its membership. It can also be an occasion to check out cost reducing techniques and determine which are right for the association. In the end, the Homeowner Association's Board determines if the dues will go up or stay 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, regardless of the likelihood of success, a bankruptcy can stop a lawsuit or collection dead in its tracks, evoking the association serious financial hardship, which often, is handed down to the other homeowners in the proper execution 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 an automatic stay which prevents attorneys from proceeding with the lawsuit or getting the debtors assets. Thus giving the debtor some breathing room and allows the debtor to have back on his/her feet. Despite popular belief, it doesn't always signify the association cannot collect the delinquent assessments. We know that collecting delinquent assessments is a hard job. After all, these delinquent owners will also be your neighbors. You never wish to confront people at the mailbox or at the pool to pay 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 path to pay for lower collections as a result of bankruptcies or foreclosures would be 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 whole 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 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 claim that the HOA dues will be established 30 days prior to 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 is not 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 go through 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. Here are a few of the ways to make the cash flow more freely. Often next year's budget is dependant on last year's; therefore, perform a alongside comparison of the last three year's budgets. You could see large and unnoticed utility cost variances, or increases in landscaping services. The Board, four years 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 the body have a rain override that kills the sprinkling cycle when appropriate? If not, budget for and have it installed before another irrigation season.
• Control Pool Temperature: A solar blanket can purchase itself very quickly. A 3-5 degree reduction in pool temperature heating can lead to significant savings.
• Lighting Conservation: In the event that you haven't already, swap all common area exterior incandescent lighting for compact fluorescent and other higher lumen/lower wattage alternatives.

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

The total amount of the annual assessment is initiated 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 with a specific percentage (%) without owner approval. The dues are established by taking the total expected cost, and divided that amount by the amount 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 will 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 at the mercy of the restrictions recorded against them once the deed was first recorded. Those restrictions follow the property every time it comes, similar to a power easement.

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

If they're owned by the developer/grantor they are not at the mercy of the covenants, conditions and restrictions (CC&Rs); however, just because the lot is vacant doesn't mean that it's owned by the developer. Upon the very first sell of the property out of 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 subject to the CC&Rs before property and the home are sold together for the very first time.)

9. HOW ARE THE BOARD MEMBERS ELECTED?

Annually at the annual meeting, elections are held. Some subdivisions are create, so that the term is just for year so that each position is open each years. Others will specify a 3 year rotating term, so that every 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're thinking about serving on the board or would like to see the results 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 the event of condominiums, certain parts of the building exterior. Initially, the developer owns all the lots or units in the association and has every one of the votes; therefore, the developer controls the association. A board of directors typically consisting of the developer and other individuals professionally related to the developer is initiated to control the affairs of the association including not merely the physical attributes, but also the financial and administrative issues such as for instance collecting owner assessments, holding the annual meeting, and enforcing the deed restrictions.

10 Hoa Questions That Could Save Time, Money and Frustration Long Beach Association management