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MarkP2
(Florida)

Posts:14

11/30/2007 10:16 AM
In our CCR's the first line of the "Purpose of Assessments", reads: '...shall be used exclusively to promote the recreation, health, safety, security, and welfare of the residents... and for the improvements and maintenance of the Common Area....'. The paragraphs goes on to give specific examples of costs, for security, taxes, insurance and other direct or indirect costs associated with running the HOA's business. This years budget included a new budget line describe as 'community services', which was explained as a cost associated with the HOA's desire to have community picnics, gatherings and other social events. The previous couple years the HOA has organized these activities and sponsored the costs out of a 'miscellaneous' account. It is my belief that the use of assessments cannot be used for such functions and the BOD is interpreting the first line as a 'catch all' to do whatever they want with the assessments. Also the is no place in the CCR's that suggest that the HOA is to use their time as an 'event coordinator' for social functions, such as organizing parties, picnics, etc... Does anyone know of legal rulings which prohibit HOA's from using assessments/dues unless the CCR's expressly indicates that it has a right to do so for social function or other activities?

SusanW1
(Michigan)

Posts:5202

11/30/2007 10:22 AM
Well, one could argue that promoting the "recreaton, health and welfare" of the community MIGHT include a bit of socializing. Usually, most costs are donated by residents for community picnics, but other groups do have a line item in their budget for Social and Community Events. Personally, these gatherings are of great benefit and a few dollars are well worth the cost in PR and community well-being. The Board has to approve the costs, anyway, so bring your concerns to them.

BradP
(Kansas)

Posts:2491

11/30/2007 10:25 AM
Mark: There has been extensive talk on here about whether dues can be used for those things. If I remember right there were several who said no, my opinion varied a little bit from their's. The bottom line is you have to do what is right for your assocition and what is legal in your area. I would research Florida law and would consult your attorney on this.

MarkP2
(Florida)

Posts:14

11/30/2007 11:49 AM
Thanks Susan - I'm not auguring the benefits of community 'get togethers' and the PR it creates for the community well-being. My issue is having assessment monies used to sponsor the activity, when the CCR's do not expressly say so. The language used as 'recreation, health, and welfare' is very vague and could mean a lot of different meanings to anyone. If the BOD decides to have a community adult video and lingerie party and all the BOD were into that, - they would have the power to vote and sponsor such an activity in promoting PR within the community. I know this is rather extreme, but it does open the door to use assessment money under the pre-tense of being a 'benefit' for the social and welfare of the community. Same could be said about a Christmas party or Easter egg hunts for the kids. Great for Christians in the community, but what about the Jews, Hindus, Muslims, Atheists, etc... Keeping in mind, - you 'must' pay your assessments, no matter what one believes. Your thoughts?

DonnaS
(Tennessee)

Posts:5671

11/30/2007 11:58 AM
Mark, To answer your question for "Does anyone know of any legal rulings which prohibit HOA's from using assessments/dues for social function or other activities?" There is no place in the Statutes 720 reguarding this issue. Your very own documents will be the only place where this is addressed. If it is in your budget and not enough people complain about funds being used for social purposes, then I would say NO, there are no rules against it. If you are not happy about this use of dues, then you will need to address this with the entire Board, as they are the ones responsible for passing your budget. Do you have Budget Workshops each year before the budget goes before the Board for passing? This would be where to address this. Are there many people who are not happy with this? Get them all involved. So much depends on your community and how involved the members are. Is there lots of interaction with each other and how big are the turnouts for these functions. I would not want to be paying for parties and functions if I never attended but this is strictly based on how much of a turnout you are getting as to whether this is acceptable to most all members. .

MarkP2
(Florida)

Posts:14

11/30/2007 12:03 PM
Thanks Brad - Any thoughts on where I could research Florida law on the web? The bottom line is the 'right thing' to do for the HOA is to do what is legal. If using assessment money for social get together’s and the CCR's do not expressly support this, --- then is it right? If it is not right, then it is illegal and puts the HOA in jeopardy for a law suit.

BradP
(Kansas)

Posts:2491

11/30/2007 12:19 PM
Mark: Not sure where it would be or if it is even in there. It shouldn't be up to your board though, if it is done it should be approved by the membership.

MarkP2
(Florida)

Posts:14

11/30/2007 12:27 PM
Thanks Donna - As I said, our CCR's first sentence as to the purpose (or use) of assessments, is as I had stated before, - and it is rather vague. I know the FLa statutes do not address these issues, but I was hoping there might be a legal ruling as to what assessments are to be specifically used by HOA's. Unfortunately there are not enough interested people which come to meetings to voice any opposition. Those that do not come to meetings, and have attended the 'gatherings', - feel they are getting something 'free', - so the attendance is about 50-60% of the community. The past couple of years the distribution of funds for these 'gatherings' have not been budgeted. However this year the BOD did put in a line item to budget for this. We do not have 'budget workshops' and even if we did, - it would be a majority of folks who would want to have 'parties'. So much for the minority voice. When I have voiced my descent, - it is not received well by the BOD and others in attendance.

SusanW1
(Michigan)

Posts:5202

11/30/2007 12:29 PM
Our HOA has a Social Committee AND a line item budget (very small) for community get-togethers.

DonnaS
(Tennessee)

Posts:5671

11/30/2007 12:51 PM
Mark, I have been researching case law on this subject since your post came in. I am finding nothing that you can use but I will continue this evening. Usually when a situation like this appears, members of the association can band together and force a change but it sounds like you and the other non party people are in the minority. Yes, I agree with you that this is a potential opening for abuse of the funds in the event that someone gets a "stupid" idea for a party. Hang in there, I am sure that someone might come up with a brainstorm.

CharlesW1
(Georgia)

Posts:826

11/30/2007 1:17 PM
Posted By MarkP2 on 11/30/2007 10:16 AM In our CCR's the first line of the "Purpose of Assessments", reads: '...shall be used exclusively to promote the recreation, health, safety, security, and welfare of the residents... and for the improvements and maintenance of the Common Area....'. The paragraphs goes on to give specific examples of costs, for security, taxes, insurance and other direct or indirect costs associated with running the HOA's business. This years budget included a new budget line describe as 'community services', which was explained as a cost associated with the HOA's desire to have community picnics, gatherings and other social events. The previous couple years the HOA has organized these activities and sponsored the costs out of a 'miscellaneous' account. It is my belief that the use of assessments cannot be used for such functions and the BOD is interpreting the first line as a 'catch all' to do whatever they want with the assessments. Also the is no place in the CCR's that suggest that the HOA is to use their time as an 'event coordinator' for social functions, such as organizing parties, picnics, etc... Does anyone know of legal rulings which prohibit HOA's from using assessments/dues unless the CCR's expressly indicates that it has a right to do so for social function or other activities? MarkP2 I see Donna is going to continue doing research concerning your particular predicament. Although, I believe your answers can be found in your governing documents. The budget must be mailed within a certain time frame and be disapproved by a certain percentage of the lot owners or else be approved because no one disagreed with it. I understand that, it would take a tremendous amount of work to organize those who appose the budget, based on your findings however “IF” that is what needs to be done they that’s what you will have to do. With all do respect. I understand your covenants may not specifically state using their time as event coordinators although, who would you have volunteering to “coordinate” such functions? YOU SAID... “Also the(re) is no place in the CCR's that suggest that the HOA is to use their time as an 'event coordinator' for social functions, such as organizing parties, picnics, etc...” From what you’ve written. I would think that the added line item would certainly be more legit then any miscellaneous line (not questioned) in previous years!IMO Best of luck Chuck W.

Charles E. Wafer Jr.

SusanW1
(Michigan)

Posts:5202

11/30/2007 1:44 PM
Yes Virginia, there is a Scrooge . . . .

MarkP2
(Florida)

Posts:14

11/30/2007 6:47 PM
Susan - And your point is what? Does your CCR's support using assessments/dues for this purpose? If they do great and good for everyone else, - if not and there is a member opposed to using their money for this, I think your organization would be ripe to get sued. I'm trying to avoid future action against our community, as we already have a pending litigation which has been going on for 4+ years. Our BOD has not seemed to learn the lessons of past BOD and to stick with what the CCR's specifically say they can use assessment and not for frivolous expenses. Additionally we have massive repair / improvement expenses that are just being ignored.

MarkP2
(Florida)

Posts:14

11/30/2007 6:50 PM
Typical touchy feely response. Stick with the issue, if you forgot what they were re-read the initial issue. I'm trying to get help here, not some smart ass comments.

MarkP2
(Florida)

Posts:14

11/30/2007 7:03 PM
Chuck - That's the problem, when I look in the governing documents (CCR's) there is nothing specifically that allows the BOD to use assessments for parties, picnics, or any other social event. And the monies used would consist of paying for food, drinks, renting stuff for kids to play on,- etc. It's not that I'm opposed to having the community do things together, it's just there is nothing in our CCR's that says the assessment monies are to be used for those purposes. If neighbors in the community want to do things like this, then they can independently organize the activities and either ask for donations to cover costs or just flat our charge people on a per head basis. The BOD does not need to get involved, - it's really none of their business. By adding the 'community service' line to the budget, does appear to make this more legit, - but the question is, does the BOD have the authority to use assessments for these activities, when the CCR's does not expressly say it can?

MarkP2
(Florida)

Posts:14

11/30/2007 7:05 PM
Thanks Donna - I appreciate any help you can throw my way.

PaulM
(Pennsylvania)

Posts:1347

12/01/2007 5:37 AM
MarkP2: Would you/community feel better it the funds were reverted back to Miscellaneous as you did prior, and use some of the funds for social, as you have already done? It seems there were no complaints then....no difference, just may sound better.

CharlesW1
(Georgia)

Posts:826

12/01/2007 6:59 AM
MarkP2 I completely understand what you are thinking and to be quite honest I truly feel that your BOD is performing their fiduciary duties in allocating the money as they see fit and that IMO is fitting for YOUR community. I believe YOU’VE LOOKING INTO THIS WAY TO MUCH. I’ll be the first to admit; that many governing document, CC&R, By-laws and R/R are written very vaguely therefore, “they” are left to be interpreted in a way that isn’t beneficial to the community. However, I feel that with the definition you have provided that your BOD have budgeted the money properly. You said “"Purpose of Assessments", reads: ...shall be used exclusively to promote the recreation, health, safety, security, and welfare of the residents... and for the improvements and maintenance of the Common Area." With all the prior knowledge, I have. I would feel confident to say that the money was “exclusively, being assessed, to promote RECREATION if nothing else! Look at it, this way, it a far cry from the previous miscellaneous line you once had, which I give “props” to whoever prompted that change, good for them! I DON’T SEE ANYTHING DECEPTIVE ABOUT HAVING A LINE ITEM READ COMMUNITY SERVICES. Do you have another preferred description?! I’m not really sure how else this statement could be interpreted, without cause the community to “rob Peter to pay Paul” throughout the year, now that to me, would be deceptive. Perhaps you could question how many of these “social events” the BOD anticipates having, which would help to justify the amount they’ve budgeted. If, there is any “Fat to trim”, suggest putting that money into your reserves account, at least! I “tip my hat off to you” for even reading/reviewing the budget, thus being concerned,it sounds as though you would receive the best clarification from your BOD. Best of luck Chuck W.

Charles E. Wafer Jr.

GloriaM
(North Carolina)

Posts:829

12/01/2007 9:21 AM
Mark: On the budget those types of events should be reflected under Social Committee or events. They should not go under a miscelleanous catergory.

DonnaS
(Tennessee)

Posts:5671

12/01/2007 9:32 AM
Mark, I spent quite some time trying to find any instances of spending association funds for recreational items and partys etc. There is no cases that I came across. Lots of misuse of funds but nothing that will pertain to what you are looking into. Sorry. But if you want to see a site where there are hundreds of unhappy members who have gripes against their HOA, just post a yes, otherwise I won't post it.

MarkP2
(Florida)

Posts:14

12/02/2007 4:54 AM
MarkP2: Would you/community feel better it the funds were reverted back to Miscellaneous as you did prior, and use some of the funds for social, as you have already done? It seems there were no complaints then....no difference, just may sound better. No Paula and thanks for your interest. The problem with the previous expenditures was the BOD took the money from the misc. account in a stealthy type manner. The disbursement of the money was always done after the activity and it was never on a BOD meeting as an agenda item to be discussed and voted on, and the expense was never budgetized. So basically, no one in the community had an opportunity to object/complain. Keep in mind, it's not a matter of money being used for these functions, - it's a matter of legality, - if the CCR's do not indicate a use of assessments for social activities, - such a picnics, parties, etc, - can or should the HOA use money to pay for this?

MarkP2
(Florida)

Posts:14

12/02/2007 5:49 AM
Thanks Chuck – My replies are after the asterisks… I completely understand what you are thinking and to be quite honest I truly feel that your BOD is performing their fiduciary duties in allocating the money as they see fit and that IMO is fitting for YOUR community. **** Coupled with BOD fiduciary duties, - I, as a member, am entitled be the benefactor from the execution of these duties. The CCR’s are to protect me and to provide the stated use of my assessments. The use of these assessments are one, give me an ‘ongoing benefit’ of the use of the ‘common areas/facilities’ in addition to the two, the repair/maintenance/improvements of the common areas/facilities. If the BOD wants to throw a party, have a picnic, etc. and 10%, 25%, 50% of the community is out of town, on vacation or just do not have an interest, - how is this activity a ‘benefit’ in an ‘on going’ nature? We have tennis courts in our community, - I do not play tennis, -- but our CCR’s indicates that tennis courts are part of the common areas and we all pay our assessments for the repair/maintenance of this amenity. If I ever wanted to play tennis, then I can do so at any time. However, I cannot at any anytime, go to a planned picnic, party, etc. Furthermore, to give the BOD an allocation of money ‘as they see fit’, opens up a huge can of worms. They can only allocate money according to the CCR’s and it is my belief, the use of allocation needs to be specific, not up for how anyone board member or the entire group, wants to interpret generic language. No where in our CCR's, is it implied the BOD has a 'blank check'!!* I believe YOU’VE LOOKING INTO THIS WAY TO MUCH. I’ll be the first to admit; that many governing document, CC&R, By-laws and R/R are written very vaguely therefore, “they” are left to be interpreted in a way that isn’t beneficial to the community. However, I feel that with the definition you have provided that your BOD have budgeted the money properly. * Your may be correct, - I could be very anal, - I’m just trying to keep our community out of the court system, again.** You said “"Purpose of Assessments", reads: ...shall be used exclusively to promote the recreation, health, safety, security, and welfare of the residents... and for the improvements and maintenance of the Common Area." With all the prior knowledge, I have. I would feel confident to say that the money was “exclusively, being assessed, to promote RECREATION if nothing else! Look at it, this way, it a far cry from the previous miscellaneous line you once had, which I give “props” to whoever prompted that change, good for them! I DON’T SEE ANYTHING DECEPTIVE ABOUT HAVING A LINE ITEM READ COMMUNITY SERVICES. Do you have another preferred description?! * Recreation could mean a lot of different things – people feel that sitting home watching a football game, eating chips and dips is a recreational activity. Supplying a tennis court, baseball field and soccer field is carrying out the fiduciary responsibilities, so that – the members can use and recreate, socialize and for the promotion of an overall neighborly community. The CCR’s doesn’t say they have to organized this and pay for the organization of it. ‘THIS IS MY POINT’. I am happy the BOD itemized this in the budget, because in the past they have not, and paid for these functions in a stealthy manner. The reason why they did this, this time, is because I objected to a committee request to pay for water and snacks so they could ‘entice’ members to come to a ‘clean up day’. I told the president the CCR’s did not allow this, it was not in the budget, and the expenditure request was not on the meeting agenda for the BOD to consider prior to the meeting. This is what prompted the BOD to budget this new line item.** I’m not really sure how else this statement could be interpreted, without cause the community to “rob Peter to pay Paul” throughout the year, now that to me, would be deceptive. Perhaps you could question how many of these “social events” the BOD anticipates having, which would help to justify the amount they’ve budgeted. If, there is any “Fat to trim”, suggest putting that money into your reserves account, at least! *There is no ‘Fat to Trim’ – we have massive repairs/maintenance cost starring at us everyday. It seems to me the BOD is more concerned about being ‘Mr. nice guy’ than taking care of their fiduciary responsibilities.*** I “tip my hat off to you” for even reading/reviewing the budget, thus being concerned, it sounds as though you would receive the best clarification from your BOD. * Thank you for your comments, - it has helped. ***

MarkP2
(Florida)

Posts:14

12/02/2007 5:52 AM
Posted By DonnaS on 12/01/2007 9:32 AM Mark, I spent quite some time trying to find any instances of spending association funds for recreational items and partys etc. There is no cases that I came across. Lots of misuse of funds but nothing that will pertain to what you are looking into. Sorry. But if you want to see a site where there are hundreds of unhappy members who have gripes against their HOA, just post a yes, otherwise I won't post it. Yes - Donna, I appreciate your efforts, Mark

DonnaS
(Tennessee)

Posts:5671

12/02/2007 6:06 AM
Mark, It is Cyber Citizens for Justice. CCFJ.net. Lots of issues that they handle BUT it is slanted to be against Boards and Associations.

SusanW1
(Michigan)

Posts:5202

12/02/2007 6:41 AM
You said - "The reason why they did this, this time, is because I objected to a committee request to pay for water and snacks so they could ‘entice’ members to come to a ‘clean up day’." My point exactly - you are a Scrooge!! Water and a snack is the LEAST thing an association can do for volunteers. Don't you have ANOTHER crisis to solve . . . .????

CharlesW1
(Georgia)

Posts:826

12/02/2007 7:17 AM
MarkP2, I hear were you are going with all of this. However, let’s “walk a mile in my shoes”, and those that make up the MAJORITY OF ASSOCIATIONS. Who,also, don’t use the amenities (NOT THEIR FORTE) although, who DO pay their assessments every year (on time), as well as maintaining their landscape and abide by the governing documents all without direct benefit to them personally. Those who also attempt to make an appearance at the scheduled social functions yet due to their time constants and/or lack of desires, cant attend. It’s always easier said than done, as you may know! I (as many) purchased a house within a HOA in the expectation to obtain a safe, healthy, and neighborly environment for ME and MY FAMILY. So I PERSONALLY feel that the money “budgeted” was appropriate as well as justifiably allocated as a line item within your budget. ________________________________________________________________________ On the other hand “IF” your association is in need of repair/maintenance/improvements. I would be the first to question that oppose to why the BOD has allocated money for social events (unity), even though YOU may not participate, as many don’t. What about those who are entitle to those very same issues YOU speak of yet because 10%, 25%, 50% of the residents are “out of town” or don’t wish to attend! WHY SHOULDN’T I RECEIVE SUCH BENEFITS, I’M ENTITLED TO THEM, AREN’T I? I would recommend that YOU and the members of your association SHOULD dedicate your time and energy into perusing the repair/maintenance/improvement issues instead of contesting whether the BOD is spending YOUR money accordingly. Chuck W.

Charles E. Wafer Jr.

BradP
(Kansas)

Posts:2491

12/02/2007 3:26 PM
I don't think I would call anyone scrooge for not wanting his dues spent on those items. Each association has to decide what is best for itself within the legalities of the state they live in. Perhaps there was a bad experience. My opinion has been shared before, but I do agree that there needs to be real close checks and balances on this. It can easily turn into buying booze for board meetings, etc, and we all know that is not right. I think it is ok to express our opinions but I would stop short of calling people names because they feel a certain way.

MarkP2
(Florida)

Posts:14

12/03/2007 6:56 AM
Posted By SusanW1 on 12/02/2007 6:41 AM You said - "The reason why they did this, this time, is because I objected to a committee request to pay for water and snacks so they could ‘entice’ members to come to a ‘clean up day’." My point exactly - you are a Scrooge!! Water and a snack is the LEAST thing an association can do for volunteers. Don't you have ANOTHER crisis to solve . . . .???? Susan - You are ignorant to our overall situation and to start name calling only shows how immature you are. We are facing litigation costs that could be up to $250K minimum, if the HOA loses. Our insurance company is to cover these potential losses, but some place down the road, the members will pay. We also have immediate needs for repairs in the tune of about $50-60K. The BOD has yet to install several amenities promised in the CCR's. Costs estimates are at least $75K. I cannot find in the CCR's where the BOD's have the right to use the community’s assessment to pay for social functions. I have no problem with the community coming together for social functions, but these should be self funded. If a committee wants to "entice" volunteer members for a social function, have them take up a collection, and supply their own baked cookies, brownies, etc. It's not my responsibility, through my assessments, to 'refresh' everyone, - and I would gladly volunteer for this activity, - but will bring my own water and brown bag lunch. My question is very simple - if an expenditure is NOT listed as an expense item listed in the CCR's, can the BOD use assessments monies for this purpose? Only a socialist frame of thinking, can come up the idea that if the money is available, then it can be used for whatever purpose it wants, - regardless of the responsibilities it has. In other words, as long as we use "other people's money" (OPM), we (BOD) can do whatever we want. Apparently you don't have a problem with that, ---- I do. It's called being responsible, - fiscally. Please cease posting if you cannot answer the question, herewithin.

BradP
(Kansas)

Posts:2491

12/03/2007 7:51 AM
Mark: To answer your question, im my opinion, if you are going to spend on social functions it should be in your approved budget and your homeowners should have approved the expense. Otherwise as you have said you are entering a gray area. I do think events such as National Night out are important and should use association funds, but only if the members approve it. If it isn't listed in the budget then their should be great reason and justification why it was done. Such as the water pump on the sprinkler system went out and we needed to replace it, or the light bulb on our entrance sign went out or we had a disease hurt our common area lawn and needed to resod a portion of it. We wanted to throw a party isn't enough justification for an unbudgeted expense.

SusanW1
(Michigan)

Posts:5202

12/03/2007 7:52 AM
I get a kick out of your outrage about water and snacks when your group has major problems. Like I said before - don't you have other crisis to deal with? Apparently you do, yet chose to perserverate on "water bottles and snacks."

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