Increasing dues vs. every other year assessments

Started by ShayM • 5 replies • 1849 views

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ShayM (North Carolina)
Posts: 1

Posted:

Our HOA has a philosophy of keeping dues low $177/month which does not provide us the funds for our budget. Every other year there is an assessment of $1000 from each homeowner. If we raised the dues to eliminate these annual assessments every other year, our dues would go to $400+/month. Are there HOAs that have raised monthly dues to eliminate these $1000 annual assessments? Pay now or pay later is the real issue. Advise?

BruceF1 (Connecticut)
Posts: 2,535

Posted:

Quote:

Posted By ShayM on 01/16/2012 10:13 AM
Our HOA has a philosophy of keeping dues low $177/month which does not provide us the funds for our budget. Every other year there is an assessment of $1000 from each homeowner. If we raised the dues to eliminate these annual assessments every other year, our dues would go to $400+/month. Are there HOAs that have raised monthly dues to eliminate these $1000 annual assessments? Pay now or pay later is the real issue. Advise?

Shay, something doesn't seem to be adding up here. A $1000 assessment per homeowner every other year comes out to be 1000/24 or about $41.67 per homeowner per month. Added to the present monthly assessment of $177 that would be $218.67 per homeowner per month. Where does the $400 per homeowner per month come from? Also, if you are not collecting enough throughout the year, how are you paying your bills? You should be having cash flow problems.

HeleneN (Connecticut)
Posts: 84

Posted:

$177 per mo. looks good for resales! However, not very realistic. Do the homewoners approve the budget, do they approve the assessments? What reason is given for the assessment? As a homeowner I would prefer to spread that $1000 out over the 24 mo. and that added to my $177 doesn't come to $400 per month. More like $218!

KellyM3 (North Carolina)
Posts: 2,239

Posted:

If your HOA is special assessing its members every 24 months, then its board of directors are 100% negligent and acting in a fraudulent manner. I do not say illegal but the board defrauds itself and its dues payers. This may be the worst budgeting method I've read about.

But, your inquiry shows that you're giving it thought.

After all, it's amazing all your property owners have $1,000 lying around to fork over by HOA board vote.

TimB4 (Tennessee)
Posts: 21,047

Posted:

Shay,

What the members need to realize is that the new housing laws are having lenders look at the financial health of the Association. If the lender doesn't like what they see, they might not approve the loan or they might make the interest rate so high that the potential buyer can't afford the payments. Either way, sales will drop or take longer to happen. If your development doesn't have a lot of resales anyway, it might not be an issue. If they do, it can be a point to use in having the membership agree to the increase.

Tim

FredB4 (Ohio)
Posts: 375

Posted:

My understanding is ...the FHA, Fannie Mae and Freddie Mac now back 90% of "loan originations" in the US. This comes from the trade publication "Inside Mortgage Finance".
Also, they will not back loans unless the association is in good finiancial health, including enough in the reserves to avoid special assesments.
I suggest your board check the FHA and other government wedsites and go to your local bank for a chat with the loan officer to get the latest information on how this might affect potential sales in your association.
Much has changed since 2008.

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