10 HOA Questions That Could Save Time, Money and Frustration
In the last 2 full decades, we have been summarizing a list of the very most frequently asked homeowner association questions, and felt that these questions best represent the concerns of members. This can be a snap shot that might help you realize the dynamics of association management.San Bernardino HOA management
1) WHY ARE MY HOMEOWNER DUES GOING UP?
Your homeowner's dues are based off the operating budget for the subdivision. Budgets are usually prepared on a "break-even" basis; that's, income should equal expenses. What are the results when this does not occur and expenses exceed the projected income? You will find then only two ways 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 look at cost reducing techniques and decide which are right for the association. In the end, the Homeowner Association's Board determines if the dues should go up or stay the exact 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, inducing the association serious financial hardship, which, is offered to another homeowners in the proper execution of higher budgets and increased assessments. Bankruptcy is supposed to be a debtor's last ditch remedy. 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 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 obtain 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. After all, these delinquent owners are also your neighbors. You do not want to confront people at the mailbox or at the pool to pay for their assessments. But managers and board members can't disregard the problem. Bankruptcy costs everyone, like 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 remaining 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 set up to anticipate the dues and anticipated expenses the HOA Board needs to pay for 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 state that the HOA dues will undoubtedly 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 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 or make arrangements.
5) WILL THE DUES GO UP EVERY YEAR?
Fall is the 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 provide basic maintenance service increases, it is probable the dues should go up. Listed here are some of the ways to help make the cash flow more freely. Often next year's budget is dependant on last year's; therefore, do a alongside comparison of the final three year's budgets. You may see large and unnoticed utility cost variances, or increases in landscaping services. The Board, four years ago, could 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 your system 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 pay for itself very quickly. A 3-5 degree decrease in 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 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 increase 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 how many homeowners in the subdivision. i.e. expected budget of the HOA is $10,000.00, and you will find 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 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 initially recorded. Those restrictions follow the property each time it is sold, similar to an energy 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, because the lot is vacant doesn't 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 susceptible to the CC&Rs. (sometimes a builder will build on the developer's lot without purchasing the lot. This property isn't at the mercy of the CC&Rs before property and the home are sold together for the first time.)
9) HOW ARE THE BOARD MEMBERS ELECTED?
Each year at the annual meeting, elections are held. Some subdivisions are setup, so that the term is only for year so that all position is open each years. Others will specify a 3 year rotating term, so that every term is for 3 years, but they're on a staggered schedule. Meaning, just one position will soon be up for election each year. If you are enthusiastic about serving on the board or would like to see the outcomes from a current vote, we strongly encourage you to attend the annual meeting. Notices are mailed out before 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 case of condominiums, certain elements 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 related to the developer is initiated to manage the affairs of the association including not only the physical attributes, but additionally the financial and administrative issues such as for instance collecting owner assessments, holding the annual meeting, and enforcing the deed restrictions.