California - Fair HOA Fee allocations

Started by MannyM • 3 replies • 1747 views

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MannyM (California)
Posts: 2

Posted:

I live in a california. we have a small association but pay very high fees. I'm doing some studies on how our costs are calculated according to our complex.

We use to be a 55+ community. Not sure what changed it but because most of our units are rentals we pay probably 75% more insurance to cover the HOA's part of any damamge that may occur by fire, etc. If we were more owner occupied we would benefit and have about 3500 less on insurance. It's not just insurance, there are many costs and other issues that come up because we have more rentals then we do owner ocupied units.

So my questions are:

Are we allowed to amend our cc&r's that allow us to give an hoa fee exemption (for a particular amount each month) to owner occupied units of our complex? I ask in this way because, If I had asked if we could charge more hoa fees for owners that rent their units out it would seem like a punishment. Although I believe rentals cost our HOA more money then owner occupied.

The HOA also pays for all water around and in the units. And some owners have taken it upon themselves to convert their units to include a second bathroom or a washer and dryer area without any prior approval or consent from the board. some have even failed to get permits for this work.
Can we charge HOA fees according to square footage and/or any changes that have been done that causes the HOA to incur more expenses?

Thank you for you time.

Any help will be greatly appreciated.

Manny

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I am thinking you may have a bit of the HOA concept off a bit...A HOA is made up of ALL the owner's in the HOA regardless if they rent their property or not. That also means that ALL the costs the HOA pays for has to be equally divided amongst ALL the owners. You being in California, the cost for insurance is tremendously higher regardless of the "rental" factor. I am not even sure the cost of insurance should change in regards to the amount of rental property in the HOA. That usually effects the type of loans/mortgages that can be offered to potential buyers. The HOA doesn't own rental property the owner's do.

If you think costs can be lowered, then do some research into that and present it to the board. Your a member and can suggest and help find cost effective savings if you choose. It's just up to the board to approve or deny the suggestion.

Our HOA used to pay for the water for our homes. However, we contacted the water department and had them install SEPARATE water meters for each home. This cost each owner a $350 special assessment to pay the city the $20K it cost to install the system. Plus we had to turn over the streets to the city. This had to be reflected in our CC&R's as well. Which took over 2 years and 2.5K to do. However, because of this change we were able to reduce our HOA dues as we no longer had that expense. Which reduced our HOA dues by about $25. Keep in mind that we had to pay for ALL the repairs to the water lines prior to the city taking over. Those costs can be thousands of dollars which could explain the higher cost of your dues.

A HOA is ONLY funded by it's members for it's members. There's no other income than that. So reducing your dues has to reflect the reduction in expenses your HOA has. You may want to review what those costs are and what to do about them.

Former HOA President

TimB4 (Tennessee)
Posts: 21,046

Posted:

Quote:

Posted By MannyM on 11/20/2011 12:35 PM

Are we allowed to amend our cc&r's that allow us to give an hoa fee exemption (for a particular amount each month) to owner occupied units of our complex?

You could. However, getting the number of votes required may prove impossible. Here is a link to Davis-Stirling.coms page on Assessments.

Assessments are typically based on adding together the following:

Operating Expenses (Insurance, utilities, admin costs, etc.)
Annual amount needed to fund the Reserves (based off of a Reserve Study)
Contingency Fund (rule of thumb is 1/12 the annual assessments but could be higher or lower)

Then divide it by the number of units/lots (since most Associations require uniform assessments)

Contingency funds are used for unexpected minor repairs, covering budget shortfalls, offset any delinquent accounts, and perhaps insurance deductibles).

MannyM (California)
Posts: 2

Posted:

I have already done my research on the insurance. That's how I learned that we are paying about 3500 more a year because of the percentage of rentals. If it was the other way, we could reduce our costs in that area.

But we might be interested in having the water switched to individual meters. I should check into that.

thank you
M

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