Special Assessments

Started by BillT2 • 12 replies • 1605 views

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BillT2 (Montana)
Posts: 8

Posted:

We have a small 47 lot HOA here in Montana. When it was determined that we needed to replace a bridge crossing the creek running through the development we didn't have enought money so the board elected to use the special assessment provision allowed in our By-Laws. The By-Laws say, "In any year the special assessment may not exceed 100% of the annual assessment". The cost of the bridge exceeded this allowed amount by ten fold. So, the board sent out a ballot asking for approval of a one-time exception to the 100% amount allowed by the by-laws. Since the by-laws do not allow for a "one time exception" we are currently getting letters from members lawyers saying the special assessment was illegal and their clients are not required to pay. Of course, the threat of legal action is mentioned. I always heard that if the CC & R's or by-laws don't say it - you can't do it. Was this exception to the special assessment legal?

As an added twist, we received two votes for the same lot. It was in the process of being sold so the origional owner voted as did the buyer. Both ballots were received within the ballot response period. Which do you count or do you throw them both out? This is a critical issue since the measure passed by only one vote. Thanks for any imput you might have, BillT

DonnaS (Tennessee)
Posts: 5,671

Posted:

Bill,
This should be a no brainer. Whoever had their name on the deed at the time of the voting is the legal owner and only that ballot is valid. I would not throw them both out. Do you think that they did it in a fraudulant manner or was it just a miscommunication from whoever sent out the ballots? I would say that probably the latter was the case.

If you have received several letters from legal people, I would hope that they know enough to confirm that this one time, by passing of your bylaws, was indeed illegal.

HaroldS (Arizona)
Posts: 906

Posted:

"I always heard that if the CC & R's or by-laws don't say it - you can't do it. Was this exception to the special assessment legal?" I don't know how it could be - your documents definitely and clearly limit any special assessment to the amount of the yearly dues. You would need to change your CC&Rs to eliminate that requirement. This "one time" vote does not do that.
You state it passed by one vote? What percent was used to effect that? If anything, it should be the same percent required to change your CC&Rs, since it is overriding that.
I'm confused, how did both the seller and new owner each get a ballot in the first place? If it passed by one vote based on counting both ballots, then one has to be discounted, and the approval is moot anyway.
More importantly, why did your board(s) not have reserve funds for such an expected and expensive project? Harold

GeraldT4
Posts: 1,022

Posted:

BillT2 - Regarding the counting of the two votes for the same lot, think of it this way. If you count only the vote of the previous owner you are obligating the new owner to their standard. Since the polls are still open how do you restrict the new owner from having a say in the community he/she just bought into? Though some may see it as a no brainer, it's a bit of an ethical conundrum if you ask me. Unless there's some law that requires you to do otherwise, I'd count the vote of the new owner regardless as to their vote or the vote outcome.

Is that all the By-laws state, "In any year the special assessment may not exceed 100% of the annual assessment"? Are you sure there isn't a follow up that states "...unless a vote of 2/3r'ds of the owners is cast to implement a special assessment that exceeds 100% of the annual assessment"?

Is the bridge necessary at this particular time? Can it be budgeted in such a way that you get the financing in a manner that doesn't exceed 100% of the annual assessment?

SusanW1 (Michigan)
Posts: 5,202

Posted:

Is this a traffic bridge or a foot bridge?

A Traffic bridge is absolutley necessary; the corporation could have taken out a loan or established a special assessment.

A foot or trail bridge is more aesthetic. Alterntives should be entertained.

DonnaS (Tennessee)
Posts: 5,671

Posted:

I guess that the real question here would be who paid the assessment. Having just closed on a property myself, one of the items on the Title search is if there are any special assessments due to the HOA. They have to be paid before the sale can proceed.

I agree that because this soon to be buyer should have a say in if or not he wanted the bridge. But I can hear some of the long time owners complain if the buyer did not vote for the project. And this is why we all go nuts on decision making as there are always two sides to the coin.

GeraldT4
Posts: 1,022

Posted:

DonnaS - Good point on who paid the assessment. I wonder if the buyer paid a one-time working capital fee to join the association? I agree and empathize with you on the frustration part, but the fact that one owner, a small group of owners, or even a quorum of owners can obligate the rest of the owners to do something is part and parcel when buying into the whole HOA/COA property regime. Like it or not, to me it is buyer beware. : )

DonnaS (Tennessee)
Posts: 5,671

Posted:

And that is why all owners should be involved, so that they can have an opinion and a say-so. My first time that I ever heard of a HOA was 7 years ago when we moved to Florida, Land of the HOA's. We were so ignorant as to how and why things worked they way that they did. But being the kind that we were, we read and read some more into our Docs. Many things were a shock and everyday as we read some of the new posters, it seems that they also are shocked to find out that they now have to do things according to the "program"

So the real question is, How do HOA's get people to know what they are getting into?, especially the first time members of the HOA's. Ya can't force people to educate themselves into this concept of living.

GeraldT4
Posts: 1,022

Posted:

DonnaS - "How do HOA's get people to know what they are getting into?". Original owners in an HOA rely on the developer/builder to advise them of the governing documents, which favor the developer/builder so that avenue of communication is pretty much skewed, or limited to "owner there is the book of gov. docs., you have a right to review it before purchase". And that's if you're a lucky original owner.

Ultimately I don't see it as the job of an HOA Board/Management to proactively disclose in advance of purchase, or as you say to "get people to know what they are getting into?", for various reasons. After and during ownership is a different matter entirely.

BillT2 (Montana)
Posts: 8

Posted:

I did confirm that our secretary knew the tract had been sold and sent a second ballot for that tract to the buyer not knowing the original owner (seller) would also vote. We allowed a month for ballots to be received so actually the seller and buyer both owned the property during that month. Sounds like an honest mistake. Would you count the vote of the party that owned the parcel on the last date votes could be accepted or perhaps the owner on the date the ballots were mailed?

Not sure I explained this "special assessment" clearly. We did vote as members to allow the "exception to the special assessment". The vote passed by one. Our own association attorney replied to all of the letters from member's attorneys stating that "the one time exception to special assessment was legal". Ofcourse, the members who disagree with the exception have attorneys that say it was illegal. Not sure what to believe at this point. Until it goes to court, it appears to all be speculation.

BillT2 (Montana)
Posts: 8

Posted:

Harold, Approval requires "approval by a vote of the majority of the voting power of each member". I think that means a simple majority. We have 47 tracts so we figure 24 votes passes. Apparently the secretary mailed the ballots out and then learned the tract had been sold and mailed the new owner a ballot. Both buyer and seller returned their ballots. Honest mistake. We only counted one vote for that parcel. Point of that part of the question was what to do if you get two ballots from the same lot. I had read in an earlier post that if two ballots are received for the same tract that both should be tossed. If we threw out this tracts vote the assessment would fail.

Speaking of ballots - one we received had specific conditions attached. I vote yes IF these conditions are met and NO if they are not. I'm pretty sure that ballot gets tossed but would like your opnion? Another item with the conditional vote was that after it was received that owner sent in an e-mail saying to dis-regard his conditions and just make his ballot a yes vote. Can this be legal? Does an e-mail stapled to a written paper ballot supercede the origional ballot?

I am new to the board and can't say why the board didn't anticipate the bridge replacement. The old board that faciliated the special assessment resigned primarily due to the "illegal assessment" alligations. I am caught in the middle and trying my best to sort things out. Bill

DonnaS (Tennessee)
Posts: 5,671

Posted:

Gerald,
That is exactly right, how do you know what you are getting into. It is not anyone elses responsibility to inform or teach. It is the buyers job to research or just take what you have bought into. I think that is why there is so much apathy in associations with owners. They just don't want to get involved which is the opposite of what they should do. There is power in numbers as we know and if you don't like something and others agree, then get involved and make it work better.

GeraldT4
Posts: 1,022

Posted:

Quote:

Posted By DonnaS on 01/09/2008 5:19 AM

Gerald,
That is exactly right, how do you know what you are getting into. It is not anyone elses responsibility to inform or teach. It is the buyers job to research or just take what you have bought into. I think that is why there is so much apathy in associations with owners. They just don't want to get involved which is the opposite of what they should do. There is power in numbers as we know and if you don't like something and others agree, then get involved and make it work better.

DonnaS - Couldn't agree more.

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