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Subject: HOA Dues In Relation to Size of Condo Building
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BonnieB5
(Kansas)

Posts:9


07/13/2019 6:20 AM  
Our HOA is transitioning away from a Declarant ran HOA Board and the question came up in our committee meeting about the Declarant /Developer establishing the dues amount for the new triplex buildings he built based on Square Footage.

His dues rate for the new buildings ia much lower rate than that older triplexes built by a previous bankrupt developer.

All the new Triplexes were sold to various investors with the developer becoming the lease manager for the new buildings.

The older triplexes are home owner occupied.

Our Older units have basements which equates to more square footage while the new triplex buildings are on slabs.

Is this a standard practice for HOAs to have Dues based on building sizes?

There is nothing in our by-laws that makes this distinction.

We have 3 different design styles for each of the 9 older buildings each with different configurations while all 17 of the new triplex buildings are the same.

Appreciate any insight anyone has on this subject.

Thanks
MelissaP1
(Alabama)

Posts:8415


07/13/2019 6:32 AM  
It isn't only square footage but age as well. Your going to have more expenses related to an older facility than a new one. Maintenance is typically more.

There are HOA's that do base their dues on square footage or bath/bed configuration. If it is, then it's in the CC&R's on how that is done. If it isn't, then most base their dues on what it costs to run the place a year.

Former HOA President
AugustinD


Posts:1886


07/13/2019 7:14 AM  
Bonnie, to re-cap, your HOA has 26 buildings. Nine are older and have basements, seventeen are newer and are on slabs.

-- Does the HOA own a clubhouse, swimming pool, park or similar, that may be used by the owners and tenants of all 26 buildings?

-- How many managers are there, and how are they organized for each building?

-- Older HOAs often will have higher dues compared to when young. This is due to poor reserve fund planning; the fact that unexpected infrastructure repairs are more common when the HOA is old; and inflation.

-- It would not surprise me to see that the covenants (or Declaration) allows different dues for each building, particularly when one building varies in size, design et cetera a lot from another building.

-- If you care to post or link your HOA's declaration, this would be helpful.
KerryL1
(California)

Posts:6541


07/13/2019 10:41 AM  
As with Augustine, I'd expect dues variations to be be in your CC&Rs as they are in ours as an Addendum or Exhibit. I believe the developer would need to have an addendum to the CC&Rs with his new does schedule. I think this is a job for an HOA attorney.

Are all units single story? Are you saying that in each older tripped budding, one owner owners all three of the units in the triplex?

We have a square foot variance for our high rise condos based on unit size with larger units paying more than smaller units. This variance is for only three operating budget items: Building insurance, water, and gas. The developer assumed there'd be more occupants in the larger units using those utilities.

Is there anything about the basements that is or will be an HOA expense?

Is the HOA responsible for replacing the roofs? If so, I can see where the two sections could have different reserves schedules for roofs because their remaining lives would vary between the two sections.

I also could see each separate unit paying a different amount into reserves for the roofs as they are three different sizes in the old section.

Is your HOA considered condos?

This seems pretty complicated. I think you might want to hire a reserves analyst to help you sort it out. Meantime, you must comply with your governing documents. If not everything is in them, you might have to read whatever the developer submitted to the state or county to get final approvals for these two projects.
SteveM9
(Massachusetts)

Posts:3303


07/14/2019 5:23 AM  
Although the declarant can set the dues at whatever he wants, its so much easier to have everyone on the same dues program. Makes life so much easier when special assessments come up, or even a simple raising the dues.

Yes, many HOA's have dues based on square footage. But its rare to have a mix of set dues and square footage dues in the same HOA.

PS. Even on taxes they dont count basements as living space. People are taxed at a much, much lower rate for that space if you break it down.
BonnieB5
(Kansas)

Posts:9


07/14/2019 6:33 AM  
Thanks to everyone who posted a comment - your thoughts have been very helpful

Answers and clarification to some of your questions about our the condo development make up & declarations/by-laws.

1. Development does do not have a pool or club house --just a small playground area.

2. The 17 new triplex buildings on slab foundations are each owned by mostly out of town investors (now 4 yrs old on exteriors )

3. The older 7 triplexes and 2 duplexes with basements mostly owner/occuipied and there is nothing about basements in HOA articles. (now 10 yrs old on exteriors)

4. Roofs and exterior painting is included in HOA by-laws ( Master insurance policy for all buildings paid by HOA dues)

5. All 24 triplexes and 2 duplex buildings are stand alone buildings with green space between them - lots of common ground in front back and run off water catch basins.

6. Dues much to low to have a solvent HOA

7. Developer now ready to sign over the control of the HOA to Home owners and investors owners with no HOA reserves and the total property in seriously poor condition.

BonnieB5
(Kansas)

Posts:9


07/14/2019 6:33 AM  
Thanks to everyone who posted a comment - your thoughts have been very helpful

Answers and clarification to some of your questions about our the condo development make up & declarations/by-laws.

1. Development does do not have a pool or club house --just a small playground area.

2. The 17 new triplex buildings on slab foundations are each owned by mostly out of town investors (now 4 yrs old on exteriors )

3. The older 7 triplexes and 2 duplexes with basements mostly owner/occuipied and there is nothing about basements in HOA articles. (now 10 yrs old on exteriors)

4. Roofs and exterior painting is included in HOA by-laws ( Master insurance policy for all buildings paid by HOA dues)

5. All 24 triplexes and 2 duplex buildings are stand alone buildings with green space between them - lots of common ground in front back and run off water catch basins.

6. Dues much to low to have a solvent HOA

7. Developer now ready to sign over the control of the HOA to Home owners and investors owners with no HOA reserves and the total property in seriously poor condition.

BonnieB5
(Kansas)

Posts:9


07/14/2019 6:36 AM  
Sorry must have double clicked
KerryL1
(California)

Posts:6541


07/14/2019 8:43 AM  
Given you have no reserves, you need to hire a certified reserves analyst ASAP. Let her/him try to disentangle the reserve aspects of your HOA and advise you.

You also need to hire an attorney that specializes in HOAs to help your new board understand your governing documents. I'm puzzled, for instance, that the care of roofs & paining of the exterior is in your bylaws instead of your CC&Rs.

Because of the new buildings, you need advice about a dues schedule. There might need to be dues variances because of the different ages (in particular) of your two HOA sections. It's possible, for instance, that the older section may need a special assessment to to built its reserves or reserves for the entire project.

You also need to know from this attorney if there's anything in KS law that gives your HOA recourse against your developer? Is it legal, for instance, that he put nothing in reserves???

I know these expenses aren't something you want to hear.
AugustinD


Posts:1886


07/14/2019 10:33 AM  
Ditto what Kerry said.

I too think that maintenance responsibilities and dues should be covered in the Covenants, Conditions and Restrictions (a.k.a. "CC&Rs" or "Declaration of CC&Rs") and not the Bylaws. For nearly all HOAs and condominiums, there is a huge difference between the two documents. Do you have a copy of the CC&Rs? If not, ask the manager for one. If the manager drags her or his feet, check with your County Clerk. A HOA's or condo's CC&Rs are usually on file with the County, as a matter of "legal notice."
BonnieB5
(Kansas)

Posts:9


07/21/2019 5:58 AM  
Thanks Kerry and Augustine - I need to do more homework on declarations and by-laws - agree that we need legal advice going forward always appreciate the insight we have gotten from all on HOAtalk website.
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