What can we do? the association fee increased to build up reserves

CC&R's have very specific guidelines about how much should be in the reserves, and generally it is a lot more than just enough to cover expenses. It is probable that your board had a reserve study done and it was recommended to them that they increase the reserves on hand.

CC&R's also allow for increases to association fees, but at the same time, they are restricted to how much the increase can be.

There is no substitution for being very familiar with your CC&R's and for being very direct in your questions to the board. I think you should ask them why they think the reserves are too low. It is very likely they are looking at a large expense in the future and are trying to provide for that. What happened in our community is that we had a reserve study done and were told that everything was fine. The problem was that the reserve study didn't take into account that our streets are private, and therefore HOA maintained. When the HOA got hit with a $56,000 bill for having to slurry the streets, it was very painful, and we are still in recovery mode.

I don’t know the legalities of an HOA. I would suggest looking at the budget and have the board explain their costs to you. Perhaps even have a public meeting to explain the expenses projected for the upcoming year. Have the BOD explain to all the members (that attend) why the increase in dues and how this effects the entire neighborhood. This won’t make things any better by any means but, I think it can be more easily justified, not “just because”

You have raised a very good question. I appreciate that you have turned to this discussion board.

Sorry to hear of your troubles
Chuck W.

My guess is that a reserve study was conducted and with construction costs rising steadily along with gas prices, it may have been discovered that the reserves were inadequate.

Our community has itself caught with deferred maintenance, inadequate reserves and rising gas prices all hitting at the same time. We were advised to avoid having a special assessments unless absolutely necessary. It is a red flag to potential buyers and lenders. We have raised our fee to pump money into reserves in an attempt to avoid special assessments for the roofing project we now have underway. The homeowners know this. However, they too do not understand that once the roofs are replaced, we must continue to pump money into reserves to accumulate for the other components for which the HOA is responsible. We've got to work better on communicating that.

Is there a major replacement in the works in your community? That should have been brought out at the time of the discussion regarding the fee increase.

You are entitled to see the financial reports of your community. Request a copy of both the current and the end of the year report. Look them over carefully and determine if the budget was adequate to begin with. You may be surprised.

The financial operations of a community seem to be a deep mystery to some homeowners. I find it odd that homeowners invest in a home and then do not know that it is being adequately cared for or protected through appropriate budgeting and reserve funding. It is important for you to know.