Rent Real EstateAsk the HOA Expert
Question: Recently, an owner proposed this bylaw amendment:
"Starting with calendar year 2005 and for succeeding years, the Board of Directors may fix the annual assessment subject to these two restrictions:
(1) The annual per unit assessment may not exceed $1,150 as adjusted annually by the CPI-Consumer Price Index published by the U.S. Department of Labor since January 1, 2002; and
(2) The annual assessment may not increase by more than ten percent over the prior year."
Is this amendment advisable?
Answer: This amendment is ill advised. The intent is to keep pace with inflation while limiting the Board"s ability to enact increases. However, it may lock the current assessment at a level that is already too low and perpetuate a serious budgetary shortfall. The Board is elected to make decisions based on the association"s need. The sense of this amendment is that the Board is not to be trusted. Boards are rarely guilty of spending too much because each director has to pay the increase as well. If anything, most Boards are too conservative and the budget inadequate to accomplish the level of services the association needs.
Question: I suspect our President of embezzlement. She is also acting as the secretary and treasurer and claims she has over half the owners" proxies so no one can stop her. Help!
Answer: You have legitimate concerns and have the right to reasonable answers to those concerns. Make a written request for access to financial information (checking accounts, financial reports, etc.). If you are ignored or don"t receive reasonable answers, you have the right to call a special owners meeting, usually with a small percentage of owners, to discuss your concerns. Also, convince the other owners to vote for you in the next election and ask them to give you their proxy if they aren"t attending the annual meeting. Ask other concerned owners to run as well. Only if you displace this individual will you have chance for change. (For more on this subject, see www.regenesis.net)
Question: Can an HOA offer its members the option to pay higher fees in lieu of participating in association self-management and self-maintenance activities? We have always tried to keep our fees low by sharing many of those tasks. And is there a way to ensure that prospective buyers understand that our HOA involves a commitment to make regular contributions of time and effort?
Answer: An underlying principle of owning property in an HOA is that owners get discounts through group buying power. But there is no obligation by any owner to do the work themselves. So, owners cannot be surcharged for lack of participation. While it"s nice that there are those that want to cut costs by doing the work, getting sustained cooperation and consistent results from owners is next to impossible. But you can encourage volunteers by asking each owner to complete a small but meaningful task rather than volunteering for long term commitment. By year end, many small projects can be completed and, when combined, represent an impressive accomplishment. Recognize those that participate in the newsletter and board and annual meetings. Give awards and certificates. This will encourage others to step forward.
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For more information on this subject, see www.Regenesis.net.