Get 2 months of free community web site hosting from Community123.com!
Sunday, April 22, 2018
Get 2 months of free community web site hosting from Community123.com!


SBCA: Free education for HOAs and condos on satellite placement issues.
(National Trade Organization)
Helping HOAs, condos and property managers with satellite placement issues since 1986.
Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.
Subject: whether current boads have the right to overthrow the management fee of previous bod decision
Prev Next
Please login to post a reply (click Member Login on the menu).
Author Messages
SteveH15
(California)

Posts:28


04/14/2018 10:57 AM  

Though we have one HOA for a mix use condo in LA, the developers had prepared two
separate DRE budgets - one for residential and one for commercial from the
beginning and approved by DRE. This is documented in CC&R, with specific formula to compute the expense responsibility and require separate accounting book.

Our previous BOD were controlled by developers. They continued to own ⅓ of
residential units and ½ of commercial units. The previous board did not use
two budgets to run our HOA. They made decisions to have all residential units
to pay one set of fee and to have commercial units to pay a set of fee that
was 40% less than residential fee. There are 90 residential units and 8 commercial units, therefore all the accounting detail was hid under the radar screen. - pretty smart and tricky to be the least.

After the developers were voted out of the board in 2015. The new BOD did a financial audit according to the predefined procedure in CC&R and found the commercial units HOA fee could not cover the actual operating cost and the residential units have been subsidizing the commercial units’ expenses for over 60K in the past. This means the commercial units had been assessed insufficient HOA fees for years.

Our CC&R states the board has the responsibility to collect enough fees to
cover the cost plus the need to set aside reasonable reserve fund. After the residential units found out they have subsidized the commercial units over 60k in the past, they requested the board to assess the commercial units to pay back the past insufficient fee.

Since the developers still own commercial units. They challenged the new BOD by claiming the new board has no right to overthrow previous board's decision on HOA fees. Per CC&R, the board have to seek ADR first to collect this fee first.

I was not able to find specific clause in our CC&R or Dave sterling act
regarding past insufficient fee collection. However from BOD's fiduciary duty point of view, since the previous BOD did not use proper budget procedure to determine the HOA fees and caused insufficient HOA fee collected, furthermore, the residential owners were burdened to subsidize their cost for years, the new board shall have the rights to fix this situations by recovering the insufficient assessment money from the commercial owners via special assessments.

Since we are invoking the ADR process, we believe we can submit this to the mediators and let the neutral third party to make the judgement. We do not need to spend attorney fee from HOA to ask HOA attorney to give us the legal opinions which I believe they do not know and need go through a lot of research. even then, the other side will never listen anyway.

Question: does the new board has right to overthrow or reverse the previous board decision on fee that violate the CC&R documents?

I need your input on this matter.

thanks


MikeK22
(California)

Posts:16


04/14/2018 12:11 PM  
Hi Steve,

You really have an uphill battle ahead of you. It would be very hard assess a fee to specific units for due to the failure of the BOD. However, given that the developers were on the BOD then you should try to argue that they failed their fiduciary obligation. In any event, you have quite a bit of legal work ahead of you.

The one option might be for the BOD to pose a special assessment for the commercial properties.
KerryL1
(California)

Posts:5090


04/14/2018 12:35 PM  
Not an attorney but we're also a mixed use condo HOA where the developer owns the 3.61% commercial units of the project. Not as lucky as you, the formula for dues splits isn't in our CC&Rs, but they refer us to the original DRE (now BRE) budget. In it, it states 3.61% of dues except for electricity & water, which they pay less given they may not use the pool. Other items they contribute to are itemized in the DRE budget, but not everything is listed so they didn't pay for many years for things they obviously use, e.g., janitorial; gas, etc.
(We actually have a third entity that gets billed differently than the two others and we can only calculate that from the DRE budget)

I discovered this and we instructed the MC to began billing them and they didn't object. BUT the residential owners also paid about $60,000 too much over time. Since it was our MC that made the billing error, we tried to get them to reimburse the res. owners for their error. They refused. So, our next step is to approach the Commercial owner to see if they will. If they won't, we'll have to seek legal advice, which will lead to, I imagine ADR.

First, Steve, any board may overturn previous board's decisions so long as the new decision doesn't conflict with your governing docs.

But, I don't know if the board can make a special assessment of the commercial owners; I really feel you must work with your HOA attorney on that. With Mike, it seems you have a cue because the comm. owner was the j majority of the board.

You do have the right to bill the commercial owners the correct fees now.



SteveH15
(California)

Posts:28


04/14/2018 1:06 PM  
first, thank you for your input and share some of your experience. I want to clarify the folowings:
1. the current BOD has no commercial owners, nor no developer. it is 100% represent the residential owners.
2. Our CC&R, does have very detailing of the splits formula, in addtional, the commercial side have their own utility meter (electric and city water/sewers,) so it is very easy to figure out the actual expenses. Therefore our audited number are very convenience.
3. We do start to assess different HOA fee for commercial since we discovered. and we decide NOT to sue the developer for their "mistake or error". we just want to collect the money shortage and return to residential. Therefore, I get one opinion from attorney that we are not in the 4 years SLT we can collect since we have the proper accounting records.
4. we are 100% sure the new decision made by the BOD is not conflict from the CC&R, but it may be wise to contact our HOA attorney to make sure we are on the solid ground in front of the mediator in the near future.

again thank you. I will see if they are others have additional input. I do want to share our experience with the HOA talk communities so everyone can learn.

KerryL1
(California)

Posts:5090


04/14/2018 1:50 PM  
You may, Steve, get a reply or two, but I've asked about our situation a couple of times and it seems no one here has such a messy budget, or, I should say, budgets. Our HOA attorney says our CC&Rs are among the 10most complex or the 100 or so he's reviewed (we're starting to amend them).

It's great they have separate meters for utilities, Steve. Right, I understood you that no commercial owners are on your board at present. But when they were on the Board they didn't adhere to fiduciary principals.
KerryL1
(California)

Posts:5090


04/14/2018 1:57 PM  
Say, Steve, the commercial owners have their own reserve study and account, right? There might be some reserve components they share with the res, owners, so must contribute a portion to them. But they also might have some reserve components that only they use. That should be their separate reserves account to which residential owners do not contribute.

For example, our commercial suites have a couple of heat pumps and a major pressure relief valve that services only them.
DouglasK1
(Florida)

Posts:1055


04/14/2018 5:21 PM  
Posted By KerryL1 on 04/14/2018 12:35 PM

First, Steve, any board may overturn previous board's decisions so long as the new decision doesn't conflict with your governing docs.


This is my understanding too. Most things passed by a motion of the board can be undone by a later motion of the board. I would avoid referring to "previous" boards, it is still the same BOD, just with different members.
SteveH15
(California)

Posts:28


04/14/2018 8:34 PM  
1. The commercial units does NOT have any reserve fund, as their monthly due is not enough to cover the expenses for last 9 years. There is NO reserve study on commercial building. this was all under the management of previous BOD (developer controlled).
2. Once we know and understand the BOD can turn over the decision made by previous board as long as we are not conflict with the govern documents. I believe the rest issues are easy to control. The owner does have the "contractual obligation" to pay enough HOA fee that can cover the expenses and reserve fund. we will go after the full amount based on expense calculation that we have.
3. We actually offer those commercial owner to pay back only 50% their own for historical years if they decide not to go through the process of Mediations in ADR format. if some of the owner still want to fight, then we will have no choose but ask for the non-discount amount.

again, thank you very much for the input. These is very useful.

SteveH15
(California)

Posts:28


04/15/2018 6:58 AM  
just pop up one thoughts would like to share and get your feedback:
1. we do offer the 6 owers 50% discount to pay back the shortage of those years if they agree not go through the ADR process - which will cost money for both side. Only winner is the attorney.
2. Now we have 2 owners decide to take our offer, the developer owner still want to fight and he lobby the other 3 to ban together to fight.
3. we are thinking to ask for full non-discount amount of the HOA shortage fee each ownerd, because we really can not negotiate the HOA fee (technically). if they do not agree, then mediation failed. The HOA now has the rights to invoke the CC&R collection policy to collect the due include lien the unit etc and all the expense (include attorney fee) and late fee will apply.

is this make sense?

SueW6
(Michigan)

Posts:255


04/15/2018 10:38 AM  
Steve,

Can I just say that this mess is all water over the dam.

You don't want to lose your current commercial lessees. Retroactive reimbursement is not likely to stand up in any court just because the board or the MC messed up.

Set new commercial rates and see what happens.





MarkM31
(Washington)

Posts:332


04/15/2018 10:54 AM  
Posted By SueW6 on 04/15/2018 10:38 AM
Steve,

Can I just say that this mess is all water over the dam.

You don't want to lose your current commercial lessees. Retroactive reimbursement is not likely to stand up in any court just because the board or the MC messed up.

Set new commercial rates and see what happens.









I would agree with this. Your commercial leasors made a good faith effort to pay their rent. Now you are going to tell them they owe more because of previous actions by the board.
SueW6
(Michigan)

Posts:255


04/15/2018 11:06 AM  
They would be laughed out of court. I doubt if a lien could be applied to any business that kept its contract, but is now being assessed additional charges, retroactively.

Carry on . . . lesson learned.

KerryL1
(California)

Posts:5090


04/15/2018 11:49 AM  
As Steve makes clear: there are 6 Owners of the commercial suites. They do not pay "rent." Please reread Steve's OP. They are not lessees, they are owners.

I don't know how many "lots' there are total. Among them is the developer. The developer controlled the board during the period the commercial owners underpaid & the res. Owners overpaid. Is this right, Steve?

This error was allowed by that board to persist even thought the CC&Rs clearly showed how much in maintenance fees the comm. owners should have paid.

I agree that it'll be difficult if not impossible to get the comm. owners to reimburse the residential aspect of this HOA.

IMO, the main thing is to make sure each comm owner pays the correct amount going forward. I added that it's important to see if the commercial lots should have their OWN separate reserves account. They may have components that the residential owners do not use. This means you need to get a complete reserves study done, Steve, by a certified analyst who has the skill set to read your CC&Rs and DRE budget.
MarkM31
(Washington)

Posts:332


04/15/2018 12:31 PM  
Posted By KerryL1 on 04/15/2018 11:49 AM
As Steve makes clear: there are 6 Owners of the commercial suites. They do not pay "rent." Please reread Steve's OP. They are not lessees, they are owners.

I don't know how many "lots' there are total.




As Steve makes clear: there are 90 residential units and 8 commercial units.

Of course the commercial spaces are owned, it's just that most commercial and retail space is rented by the end user, not owned by the end user. And it is fair to assume that if rented, these end users will have a lease with fixed rates for the term of their lease.
KerryL1
(California)

Posts:5090


04/15/2018 1:20 PM  
Oh, I see your point, Mark. Our 6 comm. suits comprise 2 "lots," both owned by our developer, who occupies 2 suites. He has 4 lessees (suites vary in size). We have no idea how he handled the raise in dues viz. his lessees once he started being billed correctly. It was not something that we directors thought about. Our main concern, confirm by our our GC was that the billing be fair to all Owners. Our develop has very deep pockets, so I'm guessing he easily dealt with the loss of some income when his expenses went up.

In Steve's case, the comm. owners themselves, when they controlled the Board, failed to follow the CC&Rs and overbilled the res. owners.
JohnC46
(South Carolina)

Posts:7420


04/15/2018 3:28 PM  
So let me consider this scenario. I own a business. I sign a contract to rent/lease a business. A year or so later my landlord comes along and says my accountant made a mistake. You owe us more then we told you.

Hmmmm....what would I do......Hmmmm
KerryL1
(California)

Posts:5090


04/15/2018 4:29 PM  
The Residential Owners of Steve's HOA have no relationship whatsoever with the comm. owners' lessees, John. The Comm. Owners are on their own to deal with their tenants.
MarkM31
(Washington)

Posts:332


04/15/2018 5:29 PM  
Even then, the issue could be viewed as one where the commercial owners paid their assessments in good faith and now the association wants to retroactively change the rules. It would be analogous to a homeowner receiving permission to paint their house a defined color. Then after all is said and done the HOA wants the color changed and the house repainted no w that they can see the finished product. The he association can’t seek additional past funds without a financial finding of fraud on the part that f the commercial owners.
KerryL1
(California)

Posts:5090


04/15/2018 6:55 PM  
Kerry: "In Steve's case, the comm. owners themselves, when they controlled the Board, failed to follow the CC&Rs and overbilled the res. owners." Now maybe I misunderstood Steve, but it seems the comm owners when they controlled the Board purposely ignored the dues splits specified in the CC&Rs, penalizing the res. owners $60,000 over time because the latter were billed too much.

I do agree, and have agreed, getting the Comm owners to reimburse the res, owners would be very difficult. I also advised Steve to get a good reserves analyst to make sure Comm owners are paying what they should into reserves. Steve's HOA may need an attorney for this whole mess. Or a budget specialist.
SteveH15
(California)

Posts:28


04/15/2018 7:46 PM  
in our cc&R define each owners obligation (as binded contract) to pay sufficient FEE that covers all the expenses and put 7% into reserve fund.

through the actual expense auditing we found the commercial owners do not have enough to pay for the cost, nor reserve fund. For example: total collecting 630 per month (all 8 unit), their elevator cost (320), water and sewage 380, that already exceed 630.

therefore, those owner even they pays as told to pay, there is NO fault on them. we just want them to pay the difference back to residential owners who actually pays the difference for last 7 years. counts about 700 per residential owners. this request meet their contractal duties per CC&R.

we have evidences shows the previous develper BOD abuse the power, benefit himself, with the expenses of all residential owners - by the way, those residential owners many are 65 and older senior. already fits into elderly financil abuse criterion in CA. (we will not want to use it, but will be in our pocket weapon if needed)

HOA is now help all residential owners to get those money back. We are in the phase of collections. We have offer them a final proposal of settlement before invoke the ADR process.

hope this help to clarify.

MarkM31
(Washington)

Posts:332


04/16/2018 5:00 AM  
Posted By SteveH15 on 04/15/2018 7:46 PM


therefore, those owner even they pays as told to pay, there is NO fault on them. we just want them to pay the difference back to residential owners who actually pays the difference for last 7 years.




Probably going to have a statute of limitations issue there

Posted By SteveH15 on 04/15/2018 7:46 PM
in- by the way, those residential owners many are 65 and older senior. already fits into elderly financil abuse criterion in CA. (we will not want to use it, but will be in our pocket weapon if needed)







I suggest that you keep it in your vest pocket. The idea seems ludicrous to me.

http://canhr.org/factsheets/abuse_fs/PDFs/FS_FinanElderAbuse.pdf
https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=15610.70.&lawCode=WIC

Are you just looking for affirmation of your ideas here. You seem to ask no questions
MarkM31
(Washington)

Posts:332


04/16/2018 5:17 AM  
Here is the form you have to fill out to report elder financial abuse. Does any of this seem applicable?
http://www.cdss.ca.gov/cdssweb/entres/forms/English/SOC341.pdf

If elder abuse is occuring, you have a moral obligation to report it, if not a legal obligation. It is not to be used as a bargaining tool in negotiations, and the implication that you are withholding knowledge of elder abuse in your "vest pocket" as a tool to get another group to accede to your financial demands could be viewed as extortion, a felony that could land you in the big house.
SteveH15
(California)

Posts:28


04/16/2018 6:25 AM  
Mark, there is NO SLT problems, as this is qualify as 'insufficient assessment', and we are NOT to file law suit on them. we just treat as 'collection'. Normally, SLT is 10 years. we are short.

as far as senior financial abuse possibility, we know how hard to qualify, we have run another big time legal case against the same developer few years ago on the scam he run to sell the condo to us. actually judge grant us the apps. that scare the developer a lot.

I have 6 years experience leads that cases. at this time, we just want them pay back the fee that residential member pays for them. Make it fair to everyone and move on.

SueW6
(Michigan)

Posts:255


04/16/2018 6:38 AM  
"we just want them pay back the fee that residential member pays for them. Make it fair to everyone and move on."

Who is the "them"?

The lessees signed a contract with the owner of the commercial buildings. The owner set the terms of the lease.

If the owner is not in compliance with CCR rates, then the Board needs to deal with him/her. Leave the leasees alone. They are the innocent victims in this.

PS The lease rate for the commercial spots are not the business of the Board. The owner can give them away, if he/she wants. Only the relationship between the owner and the CCR rates are relevant here. It has been a Board oversite that the rates were not enforced years ago.

SteveH15
(California)

Posts:28


04/16/2018 6:55 AM  
Sue, you miss read the whole situations. we are only dealing with the owner, 8 commercial owners. we are not deal with the leaser.. that is NOT the scope.

hope this clear.
SueW6
(Michigan)

Posts:255


04/16/2018 7:52 AM  
(Yes, I understand.)

You said about the original assessment "split" WHEN THE DEVELOPER WAS IN CONTROL: "This is documented in CC&R, with specific formula to compute the expense responsibility and require separate accounting book."

Odd that the specific "rate" would be in the CCRs, since anyone would know this would have to be adjusted over the years to come.

The current Board has no jurisdiction over the finances when the Developer was in charge. So efforts to collect anything from those years is futile.

There was a turnover to the HOA in 2015. Right? At that time, there was an audit to show that the commercial assessments were underfunded. Now, in 2018, you want to retroactively bill the commercial units because the Board did not adjust the rates? That's not going to happen, IMHO.

To answer your question: Of course the CCRs can be changed. Instructions should be in the CCRs themselves. The Membership has this power, not the Board. Put a motion before the residents at the next duly-called Annual Meeting.

MarkM31
(Washington)

Posts:332


04/16/2018 8:42 AM  
You are aware of case law? SEABROOK ISLAND PROPERTY OWNERS ASSN v. PELZER
KerryL1
(California)

Posts:5090


04/16/2018 8:44 AM  
The CC&Rs is exactly where the maintenance fees' splits should be. Wish it were in ours, and it will be in our restated CC&Rs. There should have been all along a

The splits are or should be represented as percentages.

The developer did and still does own one or more Comm. units. They controlled the HOA till '15 and they overbilled the res. owners.

Steve doesn't ask how to change the CC&Rs. He asked if the previous board decisions to under bill Comm, which conflicted with the CC&Rs can be overturned to comply with said CC&Rs. The answer is yes.

Also per the CC&Rs, there need to be two budgets one for Comm & one for the residential owners.
MarkM31
(Washington)

Posts:332


04/16/2018 8:50 AM  
Posted By KerryL1 on 04/16/2018 8:44 AM


Steve doesn't ask how to change the CC&Rs. He asked if the previous board decisions to under bill Comm, which conflicted with the CC&Rs can be overturned to comply with said CC&Rs. The answer is yes.



I don’t think anybody told that they couldn’t. He also asked if they could go back in time and recoup this money. He seems set on the answer being yes, even though the SOL and case law indicates otherwise.
JohnC46
(South Carolina)

Posts:7420


04/16/2018 8:57 AM  
Posted By MarkM31 on 04/16/2018 8:50 AM
Posted By KerryL1 on 04/16/2018 8:44 AM


Steve doesn't ask how to change the CC&Rs. He asked if the previous board decisions to under bill Comm, which conflicted with the CC&Rs can be overturned to comply with said CC&Rs. The answer is yes.



I don’t think anybody told that they couldn’t. He also asked if they could go back in time and recoup this money. He seems set on the answer being yes, even though the SOL and case law indicates otherwise.



I agree.
KerryL1
(California)

Posts:5090


04/16/2018 1:19 PM  
I have agreed at least twice that trying to get reimbursement from the Comm owners for the developer-controlled billing errors or scam would be very difficult. But an HOA attorney's advice is needed.
SteveH15
(California)

Posts:28


04/16/2018 8:10 PM  
I think you guy really complicated things. very important cc&R said about the owner oblication is pay the monthly assessment enough to cover all the cost. Therefore, owners need to pay the insufficient assessment for those years. this is contractual issues. Of course we will have to have our HOA attorney take a final looks.

The other way, we can simply add more due each month to each owner moving forward, treat as pay back to the residential owners until all are paid off.

I am interesting to read the case law someone quoted here. is any link you can send over? thanks

SteveH15
(California)

Posts:28


04/16/2018 8:31 PM  
MarkM31, that particular case law does not apply to our situations.
MarkM31
(Washington)

Posts:332


04/16/2018 8:47 PM  
Posted By SteveH15 on 04/16/2018 8:31 PM
MarkM31, that particular case law does not apply to our situations.




Why?
CjC
(Maryland)

Posts:93


04/17/2018 5:46 AM  
Trying to collect an increased amount and calling it back assessments is sticky. What is a unit was sold, do you only assess the current owner? You could either increase future assessments or do a special assessment if this is permitted in your governing docs. Sometimes special assessments are not allowed to increase your reserves. I would suspect that an increased assessment going forward is your best bet.
SteveH15
(California)

Posts:28


04/17/2018 7:17 AM  
well I just re-read the CC&R. Here I believe I have a good approach now:

1. The facts is that residential owners subsidize about 60K to commercial owners, "loan" is created over the years.
2. From accounting point of view, R(residential) book have a shortage of 60K, that need to balance from C(commerical) side of the book. This should qualify the issues of "administration property" manner. Our CC&R specific said this kind of assessment may be levied by Association.
3. therefore, Association can divided this amount by SQ Feet of each Commercial owners - treat as special assessment.
4. The payment received will apply to Residential side of the book. (Balance the accounting book)
5. Moving forward, association can adjust the future monthly assessment based on performance of each accounting books. (include maintaining sufficient reserve fund etc)

I believe this approach is fair and simple and in compliance of the CC&R

The key questions is: where this can be consider as maintaining of "administration property" for the associations.

Let me know your thoughts. thanks



MarkM31
(Washington)

Posts:332


04/17/2018 7:26 AM  
Posted By SteveH15 on 04/17/2018 7:17 AM

2. From accounting point of view, R(residential) book have a shortage of 60K, that need to balance from C(commerical) side of the book. This should qualify the issues of "administration property" manner. Our CC&R specific said this kind of assessment may be levied by Association.




Could you quote the CC&R section that allows the creation after-the-fact of a loan from R to C? That actually sounds unlikely.

And why is the case law I cited not applicable either? It seems like almost a mirror image of your situation.


https://www.davis-stirling.com/HOME/Case-Law/Seabrook-v-Pelzer
SteveH15
(California)

Posts:28


04/17/2018 7:43 AM  
I do not think any CC&R said exact word as you are asking. However, as results of BOD duties and auditing efforts, the fact is established, therefore there is a fund subsidized by R to C. Technically, the "loan" is taken forcefully by previous BOD. This need to be 'balanced'. The actions to do so is "administrations of the property". actually I am asking the HOA attorney to verify this today.


about your case law, that need attorney to explains. I have see 2 side attorney argue frequently on each case law brought up in front of judge. However, I do appreciate you bring that up. You would not like to know our side real story.... its too complicated manner that runs through special court in LA almost 6 years... (it involve 50 % of the owners, city and developer) it is settled.. 2 years ago.

KerryL1
(California)

Posts:5090


04/17/2018 9:06 AM  
Steven wrote: "The actions to do so is "administrations of the property..."' That phrase is new to me too. Is it defined in th front section of your CC&Rs where usually there are many definitions?
MarkM31
(Washington)

Posts:332


04/17/2018 9:13 AM  
What is your purpose asking these questions? If in fact you've asked a question in this entire thread. You say that the CC&Rs allow something, then they don't. You say that case law doesn't apply, then you say that a lawyer would have to explain. You ask a question on an anonymous forum, and then tell us that you have lawyers on the case. Then why ask a question if you have legal representation? Let them do their job.
SteveH15
(California)

Posts:28


04/17/2018 9:39 AM  
"administration property" is said in 7.01 a of the article in our cc&R. let me copy by retype it
for your reference:

7.01 Assessments:
(a) Assessments may be levied by the Association for improvement and maintenance of
the common area(s), Adminstration of the property, and to promote the recreation,
safety, and welfare for the common good of all the Owners.

Balance the HOA account book(s) is within the scope of "Administration of the property"
so the BOD have the obligation to balance it by special assessment for the exact amounts to
Commercial side owner to balance the book.

There are 2 questions/issues need to answer in the resolution of this whole issues:
1. whether current bod can over through the previous bod decision on HOA fees. - we have the answer now.
2. 5 of the commercial owners says that they have pay their monthly HOA fee regularly on the best faith. why all the sudden because of this changes, they have to repay back the difference? it is not their fault, but the developer's error that make him only pay 1 unit's fee with 50% discount, for his own benefits. we can understand this.

But the administration of the association book has to be done. BOD really can not write off this entire 60K because 90 residential owners will not agree. Commercial owner has ask us to provide the legal ground to do so. I think now we have it. - what is your thoughts on this?

KerryL1
(California)

Posts:5090


04/17/2018 9:47 AM  
Steven wrote: "The actions to do so is "administrations of the property..."' That phrase is new to me too. Is it defined in the front section of your CC&Rs where usually there are many definitions? More later.
MarkM31
(Washington)

Posts:332


04/17/2018 10:04 AM  
Your books are balanced, and no body is writing anything off. Your language is incorrect and misleading
SteveH15
(California)

Posts:28


04/17/2018 10:14 AM  
if this 60K discovery is not managed or take actions, the book will NOT balanced
one commercial owner ask me to write it off, or foget it. I can not do this without
the permission of vote on by all home owners...
MarkM31
(Washington)

Posts:332


04/17/2018 11:50 AM  
What is your roll here? The President? Or something else?
SteveH15
(California)

Posts:28


04/17/2018 12:01 PM  
President of HOA
MarkM31
(Washington)

Posts:332


04/17/2018 12:21 PM  
Has a CPA told you you're books don't balance?

And do the commercial properties have the exact same rights as do the residential users? Do they need and use the elevator? Are they supplied parking? Are they supplied security? Who pays for their HVAC and HVAC maintainence? How is their water and sewer paid?

SteveH15
(California)

Posts:28


04/17/2018 1:16 PM  
when we reported this amount, it will be "off balance", we have to report. we can not hide this.

commercial have every items listed in DRE's budget just like residential. some of them is shared (split by sq. feet -> %), if is exclsive used, the each pay its own (such as water sewers, elevator). This is why it very easy to allocated to seperated account book. This is required by CC&R.
SteveH15
(California)

Posts:28


04/18/2018 6:46 AM  
Kerry, did you get chance to think more about 'administration of property' by an assessment for all commercial owners and use the money collected to pay back to the residential side of the accounting book.

Further, since there is NO reserve fund in commercial side. For compilance, we should also add another assessment to have reasonable amount of reserve fund for them.

what are your thoughts on this? thanks
MarkM31
(Washington)

Posts:332


04/18/2018 8:03 AM  
An assessment going forward to increase the reserve fund following a reserve study or ather documents is one thing, and is correctly allowed. Increasing the dues on a portion of the units because you think "the former BOD gave them incorrect dues", even thought the rate of dues was properly decided by the BOD is quite another.

The former is OK, while the latter is probably against case law and likely has a SOL issue, even though you claim it does not.
KerryL1
(California)

Posts:5090


04/18/2018 8:11 AM  
I've tried to think about your issue, Steve, but I'm having trouble understanding it. I'm not familiar with words like "off balance and administrate of property." I'm probably overthinking.

Is this what you want to do? Bill C for the amount they underpaid for years? This would either be (1) a special assessment or (2) an increase in their dues till they catch up. Please clear this up for me.

IF they have some building component that serves only them and not R, C should have a reserves study with those components (items) listed on it, their estimated remaining useful life, and cost to replace them. So if ONLY C uses an elevator, they should contribute 100% to every aspect of it. Reserves: cost for future major repairs or replacement; cost to rehab the cab. Operating budget: cost of elevator maintenance agreement.

IF janitors clean this elevator and other aspects of R, C should be paying their proportion for the operating budget.

I'll try to think more later, but I still say, you need a reserves analyst to do a proper study.

I may be in for bad news today: Our PM has our Audit for '17 and apparently, Comm was underbilled by $5,000 for '17, which the residential owners paid!! I have to see this with my own eyes to learn what happened. Our Board meets next Tues., which'll include the Audit.

SteveH15
(California)

Posts:28


04/18/2018 8:11 AM  
Mark, you may be correct on the later cases as you pointed out. I get some feed back from "ask attorney" web service, the respond to this questinos is that if you are filing the claim, the collect of debt is 4 year in CA, other place, like MN is 3 year. But if you treat as collect "insufficient assessment", then it is you can go back to the year you have the correct "accounting record". We are doing additional verification on this through another channel at this point.

KerryL1
(California)

Posts:5090


04/18/2018 8:16 AM  
PS, Steve. Our monthly financials show line items for our operations budget. The first presentation is "consolidated," which shows the % in dollars that the Residential base pays for, say janitorial, the % Comm. pays, and the % our 3rd entity, the Towers, pays.

Then we can look at each entity, say Comm, to see only what they contribute to the Base operating budget. They have no operating expenses that aren't shared. They do, as I wrote, have their own reserves account for a few components that only they use.
MarkM31
(Washington)

Posts:332


04/18/2018 8:33 AM  
Posted By SteveH15 on 04/18/2018 8:11 AM
Mark, you may be correct on the later cases as you pointed out. I get some feed back from "ask attorney" web service, the respond to this questinos is that......




Wait, you're talking about $60K and the HOA doesn't have an attorney? Theit (the BOD and your) decisions are being based on what you hear on this site, expertlaw and avvo? Holly muckie-eye, you're in a world of hurt. If you insist in going forward you need real live legal representation, not forums. I've seen how you ask questions and respond with answers, there is a definite bias towards what you want to hear, and a vocabulary so mediocre that half the people have no idea what is being said.

Get a real life lawyer and quit playing games.

Posted By SteveH15 on 04/18/2018 8:11 AM
But if you treat as collect "insufficient assessment", then it is you can go back to the year you have the correct "accounting record".





So, if the assessments were insufficient going back to 1999, 1989, 1969 or 1919, and you suddenly have the "correct accounting record" you could go back to that year? There is no SOL? Dream on. You are just getting crazy answers from all acros the web from anonymous sources and further spraying them here and to your old fogey HOA members, who are anxious to eat up this drama, just like you said that you could use "financial elder abuse" statutes against the developer.
SteveH15
(California)

Posts:28


04/18/2018 8:39 AM  
similar monthly financial statement from our management company. we have 2 accounts (one for R and one for C). all the expenses items are the same, with added column shows the % that each book represent. then we have an roll up summary report. reserve fund is also one of the items for each book. very clean

do you have additional comments on "adminstration of property" definitions and where we can apply to the cases where we need to resolve the R have subsidized C via special assessment and apply the money recieve as special entry added to the book?
SteveH15
(California)

Posts:28


04/18/2018 8:39 AM  
similar monthly financial statement from our management company. we have 2 accounts (one for R and one for C). all the expenses items are the same, with added column shows the % that each book represent. then we have an roll up summary report. reserve fund is also one of the items for each book. very clean

do you have additional comments on "adminstration of property" definitions and where we can apply to the cases where we need to resolve the R have subsidized C via special assessment and apply the money recieve as special entry added to the book?
MarkM31
(Washington)

Posts:332


04/18/2018 8:42 AM  
Do you have professional that you can ask, you are you just peppering us and other boards with these question?
KerryL1
(California)

Posts:5090


04/18/2018 11:04 AM  
Your question, Steve, really should be handled by an HOA attorney (not some other kind).

You may need an accountant too to make sure your books are OK

Can't your MC help you with some of your questions?

As already advised, I think you need a certified reserves analyst too.

Mark may be right; maybe you're just shopping everywhere hoping to get free advice. Your HOA is too complicated for that. You need professionals and will have to pay for them.

I'm just a long-time director on an HOA board that has 3-ways budget & reserves splits.
MarkM31
(Washington)

Posts:332


04/18/2018 11:07 AM  
Posted By KerryL1 on 04/18/2018 11:04 AM

Mark may be right; maybe you're just shopping everywhere hoping to get free advice that confims to your previously made up mind




Corrections made


Please login to post a reply (click Member Login on the menu).
Forums > Homeowner Association > HOA Discussions > whether current boads have the right to overthrow the management fee of previous bod decision



Get 2 months of free community web site hosting from Community123.com!



News Articles Provided by: Community Associations Network
News, articles and blogs about condos/HOA's

Only members have access to all features.
Click here to join HOATalk for Free! Members click here to login and access all features.







General Legal Notice:  The content of forum messages are from the posting member and have not been reviewed nor endorsed by HOATalk.com.  Messages posted by HOATalk or other members are for informational purposes only, are not legal or professional advice and do not constitute an attorney-client relationship.  Readers should not act upon this information without seeking professional counsel.  HOATalk is not a licensed attorney, CPA, tax advisor, financial advisor or any other licensed professional.  HOATalk accepts ads from sponsors but does not verify sponsor qualifications nor endorse/guarantee any sponsor's product or service.
HindmanSanchez Legal Notice:  (For messages posted by HindmanSanchez) This message has been prepared by HindmanSanchez for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Members of HOATalk.com should not act on this information without seeking professional counsel. Please do not send us confidential information unless you speak with one of our attorneys and get authorization to send that information to us. If you wish to initiate possible representation, please contact an attorney in our firm. Our attorneys are licensed to practice law in the state of Colorado only.

Legal Notice For Messages Posted by Sponsoring Attorneys: This message has been prepared by the sponsoring attorney for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute an attorney-client relationship. Readers of HOATalk.com should not act on this information without seeking professional counsel. Please do not send any sponsoring attorney confidential information unless you speak with the sponsoring attorney or an attorney from the sponsoring attorney’s firm and get authorization to send that information to them. If you wish to initiate possible representation, please contact an attorney in the firm of the sponsoring attorney. Sponsoring attorneys that post messages here are licensed to practice law in a specific state or states as indicated in their message signature or sponsor’s profile page. (NOTE: A ‘sponsoring attorney’ is an attorney that is a HOATalk.com official sponsor and is identified as such in the posted message or on our sponsor page.)

Copyright HOA Talk.com, A Service of Community123 LLC ( Homeowners Association Discussions )   Terms Of Use  Privacy Statement