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Subject: Assessment increased > 20% Violates Bylaws
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KathyF6
(Arizona)

Posts:7


01/07/2020 2:06 PM  
My HOA increased our assessment by 20.96% this year. CC&Rs show a max 10% assessment increase per year or a CPI calc, which I believe is 11.5%. Does the HOA face penalties? We have a list of board members' names, but no phone numbers or email addresses. What's the best way to deal with this? Or wait for the next board meeting?

LetA
(Nevada)

Posts:855


01/07/2020 2:26 PM  
Check to see if Arizona has an ombudsman that you can talk to, otherwise, you need to hire an attorney which could get costly put of pocket. Why didn't you attend the budget ratification meeting and present your objection then?
PaulJ6
(New York)

Posts:508


01/07/2020 3:37 PM  
Posted By KathyF6 on 01/07/2020 2:06 PM
My HOA increased our assessment by 20.96% this year. CC&Rs show a max 10% assessment increase per year or a CPI calc, which I believe is 11.5%. Does the HOA face penalties? We have a list of board members' names, but no phone numbers or email addresses. What's the best way to deal with this? Or wait for the next board meeting?





Then the assessment is unlawful, and anyone who wants to sue could sue the HOA for breach of contract.

But then the HOA would just go back and try to get the increase passed with approval of the owners (or another way).

So before doing anything: do owners generally support the increase? If so, then it may not be worth the time to fight it. If they don't support the increase, then I would think that pointing this issue out to the board would be a first step. I wouldn't bring in a lawyer (yet).
JohnT38
(South Carolina)

Posts:170


01/07/2020 3:52 PM  
If you know their names can't you find their address? If you use a property manager have you called them? Have you read your docs to see how a special meeting can be called? Something is missing here.
TimB4
(Virginia)

Posts:16624


01/07/2020 4:12 PM  
Posted By PaulJ6 on 01/07/2020 3:37 PM


Then the assessment is unlawful, and anyone who wants to sue could sue the HOA for breach of contract.




And that is the key point.

If it is in violation of the Bylaws, someone would need to challenge the issue in court to have the increase reversed.

Typically, ombudsman, if AZ has one, only deal with alleged violations of applicable statutes (and that may be only one or two). A violation of Bylaws is an internal issue and must be resolved by:

1) pointing out the facts and hope the vioating party chooses to comply
2) Reaching a compromise between the parties
3) legal action through the courts

The other option is to live with it and, perhaps, use it as a rally cry to other members to vote the bums out.
AugustinD


Posts:2335


01/07/2020 6:04 PM  
Posted By TimB4 on 01/07/2020 4:12 PM

Typically, ombudsman, if AZ has one, only deal with alleged violations of applicable statutes (and that may be only one or two). A violation of Bylaws is an internal issue and must be resolved by: [snip]


? Both Florida and Arizona have ombudsman-like departments. I believe both will hear disputes over whether the governing documents are being followed.

The OP should start by reading about the dispute resolution process in Arizona (long before court) here: https://www.azre.gov/HOA/HOA.aspx
SteveM9
(Massachusetts)

Posts:3508


01/07/2020 6:17 PM  
What's the best way to deal with this? Or wait for the next board meeting?





First? Find out why? You legally share all bills with your neighbors, that is what an HOA is.

Its not some no face corporation trying to extract money from you. The HOA has bills and when those bills go up, so does your share of those bills. That is what you bought into.

If your dues cannot go up, the HOA will simply issue a special assessment due immediately. It will be your job to figure out how to pay for it.
HansE
(California)

Posts:9


01/08/2020 12:16 PM  
If you are self managed I would not much without court action, BUT if you have a mgmt. company talk to a lawyer if the mgmt. company can be held liable for not stopping the implementation of a violation of the rules they could (and again arm chair lawyer her not legal advise) be held liable under ordinary negligence.

THAT SAID

Is the increase legitimate and why the huge increase? These should be the primary two questions that you should look into. Fighting a proper increase does nothing but delay the pain as the increase will come eventually and potentially be more down the road then getting hit all with it now.

You should
get on the board
get your financial docs and review them
review your MGMT company they are likely asleep at the wheel and the board is not monitoring them.
KathyF6
(Arizona)

Posts:7


01/08/2020 2:09 PM  
Thanks for the responses. I will run for the board this year. I have no idea why the assessment would increase so much. I haven't seen or heard anything that would justify violating the CC&Rs. The only reason I found it was because the HOA changed the Property Services company and they somehow, wrongly, started me off with a balance forward of $200+, even though I showed proof of my payments. Searching thru CC&Rs and other docs is how I noticed the violation. They aren't responsive and haven't fixed my balance yet.

JohnC46
(South Carolina)

Posts:9041


01/08/2020 2:32 PM  
Posted By TimB4 on 01/07/2020 4:12 PM
Posted By PaulJ6 on 01/07/2020 3:37 PM


Then the assessment is unlawful, and anyone who wants to sue could sue the HOA for breach of contract.




And that is the key point.

If it is in violation of the Bylaws, someone would need to challenge the issue in court to have the increase reversed.

Typically, ombudsman, if AZ has one, only deal with alleged violations of applicable statutes (and that may be only one or two). A violation of Bylaws is an internal issue and must be resolved by:

1) pointing out the facts and hope the vioating party chooses to comply
2) Reaching a compromise between the parties
3) legal action through the courts

The other option is to live with it and, perhaps, use it as a rally cry to other members to vote the bums out.



Sound advice......
HansE
(California)

Posts:9


01/08/2020 4:50 PM  
THAT tells me a lot, if they recently changed; it means the other company was behind the ball and the assessment is likely due to BOTH the board and the MGMT company not doing what needed to be done.

I feel for you best of luck as the assessment sounds legitimate, even if it's not technically legal.
GeorgeS21
(Florida)

Posts:1829


01/08/2020 5:01 PM  
Kathy,

Can you excerpt the portion of your CCRs that deals with this?
KathyF6
(Arizona)

Posts:7


01/08/2020 6:30 PM  
Other than special assessments, etc:

... the Board, without a vote of the Members, may increase the maximum annual assessments during each fiscal year of the Association by an amount ("Permitted Percentage Increase") equal to the greater of: (i) ten percent (10%); or (ii) a percentage calculated by dividing the Consumer Price Index in the most recent October (identified by an "A" in the formula) by the Consumer Price Index for the October one (l) year prior (identified by a "B" in the formula), minus one (l) (i.e., CPI percentage= A/B - l).
MichelleG7
(Connecticut)

Posts:5


01/12/2020 9:59 PM  
Ask to see the finances and see if the increase with the assessment is needed. See where the money from the past with the assessment went. The numbers will lead the way. Sometimes increases happen. see what it is all about.
CathyA3
(Ohio)

Posts:655


01/13/2020 6:36 AM  
Posted By KathyF6 on 01/08/2020 6:30 PM
Other than special assessments, etc:

... the Board, without a vote of the Members, may increase the maximum annual assessments during each fiscal year of the Association by an amount ("Permitted Percentage Increase") equal to the greater of: (i) ten percent (10%); or (ii) a percentage calculated by dividing the Consumer Price Index in the most recent October (identified by an "A" in the formula) by the Consumer Price Index for the October one (l) year prior (identified by a "B" in the formula), minus one (l) (i.e., CPI percentage= A/B - l).




It's odd that the bylaws would tie the board's hands this way. Prices rise as they rise - they don't care about limits in bylaws. (By the by, the CPI is not a very good benchmark to measure HOA expenses. The PPI - Producer Price Index - is better because it measures the cost of raw materials instead of things like food, clothing and medical care.)

There are a number of things that could result in much higher expenses for an HOA:

* Large increase in insurance premiums because of 1. excessive small claims; 2. had to settle a lawsuit; 3. HOA was previously under-insured.

* Years of deferred maintenance have just caught up with the HOA, or there has been unusual damaged due to severe weather.

* Previous boards haven't wanted to be "the bad guys" and have kept the budgets artificially low, so homeowners have an unrealistic view of how much money is actually needed.

* The HOA finally did a reserve study, which showed them to be severely underfunded - and the governing docs and/or state law require HOAs to fund their reserves in accordance with the most recent study.

I agree with others that you should study your association's financials before you come to any conclusion about this increase. If the money is needed, the board will have only two options: raise the needed funds, or neglect something.



GeorgeS21
(Florida)

Posts:1829


01/13/2020 6:56 AM  
What Cathy said.

No Reserve Study which leads to no reserves to fix, repair, replace, which leads to either increases in annual assessments, usually front loaded because of the immediacy, or, to special assessments.

Circumstances usually drive costs, not Board members - are there exceptions, sure.

While all this seems very logical, many folks are not.
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