Master associations $ Sub associations

Started by NancyM2 • 12 replies • 4159 views

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NancyM2 (California)
Posts: 249

Posted:

Our HOA has only one association, with only one Mgmt co., BOD, etc. Several communities in our area have a Master, and a Sub association. They pay seperate dues for each association ~ Can you explain why this is necessary. It would seem much simplier to have only one HOA. How would the two agree on anything ~ Wouldn't they be in "conflict" with each other.

NancyM2

BonnieE (Illinois)
Posts: 338

Posted:

Hi Nancy,

I can provide one example. My subdivision consists of single family homes, and two sets of townhome-style condos, separated by open space. We have a Master Association (single family homes and both condo groups). Plus we have the two condo HOAs. My guess as to why the condo HOAs are included is because the storm water for the whole subdivision is collected by a single system and managed in several detention and retention basins. I am guessing this was more cost and space effective. The Village may have required this set up, too.

Each HOA has their own set of CCRs; the condo HOAs have separate monthly dues, and the Master has an annual dues required from all HOs. The Master HOA is fairly flexible as they have not developed Rules/regs, but the condo HOAs have have the usual Rules/regs. The condo HOAs also provide snow removal. Each HOA has separate contracts for the PM Co. and landscaping services.

The condos have different/additional common elements than the single family homes. The condo owners own from the paint in, basically, so the HOA is responsible for the building exteriors and property. Single family owners own their houses and property outright. There is common land owned by the Master. Each condo HOA owns separate common land.

We have had many condo owners complain over the years about belonging to/paying the Master dues without any (perceived) benefit.

Bonnie

BonnieE (Illinois)
Posts: 338

Posted:

P.S. We do not have conflict between HOAs because of the separate governing docs and separate BODs. The only issue is condo owners not liking mandatory membership in the Master HOA.

Also, the Master BOD has representation of the condo owners by inclusion of their condo presidents as members. The only aspect I have not liked is that we condo owners are represented by our pres and do not provide individual input to proposed budgets (we do not even receive the proposed Master budget nor end of year financial report). Also, the condo presidents do not vote at annual Master HOA elections. Condo owners are welcome to attend Master BOD meetings.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Nancy,
Developers create sub sections within one developement just to drive the sub Boards crazy. Usually all sub sections are governed by ONE set of master covenants but may have different common area or amenity cash responsibilities and Bylaws. Therefore, the sub section will have seperate budgets and sets of rules.

Confusion and discord happens when they each have their own enforcement powers. I am not a fan of sub sections who are not completely governed by the Master Board because of a different sense of how enforcement is handled. Been therem done that.

NancyM2 (California)
Posts: 249

Posted:

Bonnie, Sounds complicated ~ I would assume it's best to have only one association. I thought the reason they have Master's and Sub's would be that another developer came in and bought up part of the "Master" land, and developed their own sub-division ~ therefore have their own aminities etc.

I can understand why you would need another set of rules/cost's if some were single family homes, and another section were Condo's

NancyM2

P.S. I don't understand why all parties would not recieve any "Master budget's or financial reports" as they are all involved.

KirkW1 (Texas)
Posts: 1,665

Posted:

A big reason to have a master and sub associations is to save on management fees. Management fees per unit drop to some extent with a larger association. And thus if you have several neighborhoods sharing in a single management contract you could save considerable money.

Most have a master covenant, though there could be some variations in what is rules.

Our covenants are written such that we could declare neighborhoods with their own sub associations. And there is at least some possibility that it could happen. Actually, I predict it will happen next year if a proposal to purchase a lot and turn it into a park doesn't get passed.

The reason is that we actually cover two different (non-congrous) neighborhoods. And one neighborhood has about $8,000 in expenses the other neighborhood doesn't.

RogerB (Colorado)
Posts: 5,067

Posted:

The Master associations with separate sub-associations with which I am familiar and involved in the management each have a separate Declaration of CC&Rs. The Master assocition and each sub-association is managed by a Board who hires their own MC, has their own assessment, maintains their common area, enforces restrictions, etc.

The need for the Master association is whn common areas are needed and/or used by all of the sub-associations. These may include recreational facilities, maintaing private roads necessary to access public roads, water services, sewer services, etc.

RogerB (Colorado)
Posts: 5,067

Posted:

I sent the previous post before explaining further. The situation with a Master association with common areas needed by all of the sub-associations I mentioned is when there is a development which is large and developed in sections. Those sections can consist of a combination of types of units, such as townhomes and single family units. There may be considerably different maintenance issues and costs, more than one Developer, and several builders. So from the standpoint of development there can be several logistical and financial reasons to justify a Master association with sub-associations. I know of no Master / Sub Associations that have annexed into just one association after the development has been completed. Do you?

DonnaS (Tennessee)
Posts: 5,671

Posted:

Roger,
I know of none who have annexed into one association. One sub association looked into the cost and feasability of becoming part of the Master. It was decided that it would be cost prohibitive to join and go thru all of the voting and lawyer fees to do so.

My Florida association had a road that led into a golf course property via a common road.The Master governed the entrance which was very elaborate and at least 50 feet long. The 10 foot area from the curb back into the landscaped area on both sides of the road was identical therefore, this was common areas and under the Master. After the 10 foot setbacks, it became each sub associations responsibility, even tho that area was identical to the other. Both of those areas cost the sub associations differently because each had seperate landscape contracts from the other. Therefore the assessments were different.

One sub would use red mulch and the other black. Difference in cost was the deal. There was a holy war one year from the Master because they wanted it to match but the Master covenants did not address who had the final say, just that the Master was to enforce the landscaping be done in a professional manner. No place did it state that it had to match. Eventually, when I got on the Board, we hired the same landscaper to do both sides--and it now matches.

KirkW1 (Texas)
Posts: 1,665

Posted:

I have wondered if it would be feasible for a master association in the area to share the cost of getting a club house. But in our current environment I know better then to bother with even exploring this idea.

ThelmaB (Tennessee)
Posts: 29

Posted:

Roger, what are your thoughts with the duties of the Master assoc. and the sub assoc.? The sub is quite involved with fees to the Master assoc. but we have no inkling of what their C.C&R Documents consist ok. All our Board has to go on, is to believe what our Manager tells us, and that is, nothing.(he is Manager of both Associations). also he doesn't file the sub assoc. annual report, only one and that is the Master Assoc. Thanks for any reply

DonnaS (Tennessee)
Posts: 5,671

Posted:

Thelma,

You should go to your new post where we are addressing the Master/ Sub association post from you.

KatieG (Florida)
Posts: 1

Posted:

When a sub association has a meeting and there are minutes should they be somewhere so the people who were out of town during that meeting could see what was discussed. If a complaint was discussed at a meeting and the managment company acted on the complaint and wrote a letter but would not tell the people who complained is that playing fair with all of the residents since the people at the meeting knew who the people were that the complaint was about. I can understand having a complaint, but a sub association does not have the power to make a decision on a matter based on a someone's complaint without looking into the situation. Or am I incorrect?

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