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| Wednesday, December 03, 2008
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| Author |
Messages |
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MaryH6
(California)
Posts:7
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| 07/24/2008 8:39 AM |
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We have just discovered that there are a significant number of foreclosures in our HOA. Our Board is considering a 20% increase in HOA dues AND a special assessment! (Given when our community opened, most people bought at the height of the "bubble" when they could get huge loans they may not have been really qualified for, and apparently some are now caught in the crisis.)
Does anybody know if any of the legislation being considered at the federal level or in CA to help homeowners through this crisis would benefit HOAs who are being seriously impacted by foreclosures in their community?
I am not on the Board, but am a concerned homeowner. I and other homeowners have already been proposing areas to reduce expenses, but it sounds like this may be beyond what we can cut to meet the budget.
Thanks for any suggestions. |
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BradP
(Kansas)
Posts:1742
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| 07/24/2008 9:24 AM |
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Mary:
I don't know that there is any legislation that will help with this.
However, your post does bring to light the need for a healthy operating reserve to help your HOA through these times. Raising assessments may be inevitable, but I think your Board should take a serious look at slashing all unnecessary expenses and putting off unnecessary projects before they raise them.
I don't know if there is a rule of thumb but this is my personal belief, your budget should equal 90% of your potential assessments. That will take into account possible foreclosures and delinquents. I think every HOA should have an operating reserve equal to about 1/3 to 1/2 of their annual operating budget. But those are just my opinions. |
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MaryH6
(California)
Posts:7
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| 07/24/2008 9:47 AM |
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| Thank you. These are really good suggestions. We are such a new HOA, we haven't had the chance to build any reserves to speak of, but these are good guidelines to help us get there, once we get through this time. |
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HaroldS
(Arizona)
Posts:904
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| 07/24/2008 1:03 PM |
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| A 20% dues increase AND a special assessment, could probably drive more owners to become delinquent and really tick off your dues paying members. You need to first eliminate all possible expenses, including the management company if necessary. |
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KirkW1
(Texas)
Posts:1145
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| 07/24/2008 2:38 PM |
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| I would go so far as to ask if owners would be willing to mow the common areas to avoid a 20% hike. If need be, then allow the ones willing to mow to get some credit on the increase for doing so. |
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