Within the last two decades, we've been summarizing a listing of the most frequently asked homeowner association questions, and felt these questions best represent the concerns of members. This can be a snap shot that might help you understand 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 usually prepared on a "break-even" basis; that is, income should equal expenses. What are the results when this doesn't occur and expenses exceed the projected income? You will find then only two methods to balance the budget; increase income or decrease expenses. The budget process is a significant event in the financial life of an association. At budget review time, there's the chance to re-evaluate the obligations, needs and expectations of the association in relationship to its membership. It can also be a time to check out cost reducing techniques and decide which are right for your association. In the end, the Homeowner Association's Board determines if the dues will 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, inspite of the likelihood of success, a bankruptcy can stop a lawsuit or collection dead in its tracks, causing the association serious financial hardship, which often, is handed down to the other homeowners in the shape of higher budgets and increased assessments. Bankruptcy is allowed to be a debtor's last ditch remedy regarding Long Beach Association management. It prevents a person 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 obtaining 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 does not always imply that the association cannot collect the delinquent assessments. We realize that collecting delinquent assessments is an arduous job. All things considered, these delinquent owners may also be your neighbors. You do not wish to confront people at the mailbox or at the pool to cover their assessments. But managers and board members can't ignore the problem. Bankruptcy costs everyone, including the HOA and it members by lowering the quantity of dues collected. The only way to compensate for lower collections consequently of bankruptcies or foreclosures is 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 whole budget is derived off the dues collected. The budget is set up to anticipate the dues and anticipated expenses the HOA Board needs to pay for throughout every season, such as for example 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 is going to 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 is not 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 enough 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 should go up. Listed below 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, perform a alongside comparison of the past three year's budgets. You could see large and unnoticed utility cost variances, or increases in landscaping services. The Board, 36 months ago, might have been entirely different and indifferent to the budget. You may catch a cost 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 obtain it installed before another irrigation season.
** Control Pool Temperature: A solar blanket can buy itself very quickly. A 3-5 degree lowering of pool temperature heating can result in 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 annually by the association's board of directors, in relation to the board's adoption of the annual budget. Typical governing documents may include language allowing the board to increase the dues by way of a specific percentage (%) without owner approval. The dues are established by taking the sum total expected cost, and divided that amount by how many homeowners in the subdivision. i.e. expected budget of the HOA is $10,000.00, and there are 50 homeowners, therefore, the dues would 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 at the mercy of the restrictions recorded against them once the deed was first recorded. Those restrictions follow the property every time it is sold, much like a utility easement.
8) ARE THE VACANT LOTS BOUND BY THE CC&RS?
If they're owned by the developer/grantor they're not at the mercy of the covenants, conditions and restrictions (CC&Rs); however, simply because the lot is vacant does not 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 susceptible to the CC&Rs. (sometimes a creator will build on the developer's lot without purchasing the lot. This property is not subject to the CC&Rs before the property and the home can be bought together for the initial time.)
9) HOW ARE THE BOARD MEMBERS ELECTED?
Every year at the annual meeting, elections are held. Some subdivisions are set up, so that the term is limited to year so that each position is open each years. Others will specify a 3 year rotating term, so that each term is for 3 years, but they're on a staggered schedule. Meaning, only 1 position will be up for election each year. If you are interested in serving on the board or want to see the results from a recent vote, we strongly encourage you 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 possess the land and amenities, and in case of condominiums, certain areas 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 related to the developer is established to manage the affairs of the association including not just 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.
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