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Subject: HOA Dues and Reserve Account

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JS5
(Georgia)

Posts:4

08/31/2010 2:53 AM
I am not a HOA Board memeber, and have currently received a notice regarding an HOA due increase. The reason for it was some homes have not paid the dues, and we need to paint the exterior walls. I live in a very small community (20 unit)twnhomes, we do not have a pool, no play ground, and are not gated. The board has been spending money on cosmetic repairs, and has not saved much money for the reserve account for an emergency. I personally don't think increasing dues is the way to go, especially in this current economy. I believe that the Board did not do a good job of lowering the costs. If there is not enough money saved up, why even spend on the cosmetic repairs? What happens if more homes are not paying the dues, which is very possible! On top of this, many of the Good standing residents are keeping a low profile about this coming increase. Even though I have delivered a letter to many homes to join me and call for a meeting, but only a few responded. What are my options?

SusanW1
(Michigan)

Posts:5035

08/31/2010 5:13 AM
Apparently your neighbors feel that how your HOA looks is important. How much was the increase? Is there a Teserve Fund?

GeraldT4

Posts:1022

08/31/2010 5:36 AM
JS5 - Not maintaining the HOA elements is not a responsible solution,certainly not one that will increase property values. Increasing dues is a responsible way to go rather than impose a special assessment which is not attractive to prospective buyers and their attorneys.

SteveM9
(Massachusetts)

Posts:1442

08/31/2010 6:29 AM
1. Dont raise dues, dont paint the exterior walls, suffer loss of property value 2. Dont raise dues, issue special assessment to paint exterior walls 3. Do raise dues, paint the exterior walls Either pay now, or pay later. Either way you will pay.

JS5
(Georgia)

Posts:4

08/31/2010 7:00 AM
Currently we are paying $170 a month, and it will be $200 at the end of the year. This is a five years old town home community, and the Board has not yet saved much for reserve according to the book. I do care about the value of the community, but my concern is if spending money on whatever it comes alone, and no reserve has been saved, later on when it needs the contractual repairs, what's going to happen? Isn’t the right approach should be save up enough reserve fund while the house is still in good condition, and then spend money on the maintenance costs based on the priority? In addition, before increasing the dues, should the Board reduce costs firs? I know for fact, they have not yet cut costs. Otherwise, I would not be here to search for solutions.

MaryA1

Posts:0

08/31/2010 7:10 AM
JS5, Perhaps there are no costs that can be cut. And perhaps all that frivilous spending was really scheduled maint. Although I do agree monies should be put into the reserve account to pay for future maint projects; however sometimes there just isn't enough money left over to properly fund the reserve account. As others have said, this dues increase is really much better than a special assessment and may even allow for a little more to be put into the reserve account. It's always easy to second-guess the board's actions but those second-guesses are rarely accurate. Perhaps you should seek a position on the board then you would know first-hand what the true picture really is.

JS5
(Georgia)

Posts:4

08/31/2010 7:56 AM
Long story short, I was the Treasure till the end of 2008. My approach has always been cut costs, and it worked, we started to see the reserve increased. However, the President disagreed with my approach. So I decided not to serve on the Board. Then there were maintenance going on in our community. For example, press washes the Gazebo. Now there is a need for increasing the dues to cover the exterior paint!

DanielH1
(California)

Posts:481

08/31/2010 2:13 PM
Your options are: * Get elected to the Board again and run it how you'd like * Learn to live with the current Board and their policies * Spend a lot of time and effort trying to get other people to follow your policies without you being on the Board * Some combination of the previous three

SteveM9
(Massachusetts)

Posts:1442

08/31/2010 6:35 PM
Then there were maintenance going on in our community. For example, press washes the Gazebo. Now there is a need for increasing the dues to cover the exterior paint! Pressure wash is a quick and inexpensive way to make something look new again without spending the time or money to paint it. Maintenance costs money. I'm sure some people in your HOA feel things should be kept looking new, while others would rather defer those costs and wait until it needs replacement or major renovation. The key is to find a middle ground with both sides. Good luck.

GlenL
(Ohio)

Posts:3526

08/31/2010 9:44 PM
Another thing you need to watch for are Board members trying to keep the assessments artificially low and not building reserves in the hope that when the bill come due; they will be long gone leaving others to pay. With only 20 homes to spread the assessments out over, your costs per unit will need to be higher than a community of 100+. Factor in some homes not paying and everyone else needs to pony up some more.

Too bad the only people who know how to run the country are busy driving cabs and cutting hair. - George Burns

GlenL
(Ohio)

Posts:3526

08/31/2010 9:44 PM
Another thing you need to watch for are Board members trying to keep the assessments artificially low and not building reserves in the hope that when the bill come due; they will be long gone leaving others to pay. With only 20 homes to spread the assessments out over, your costs per unit will need to be higher than a community of 100+. Factor in some homes not paying and everyone else needs to pony up some more.

Too bad the only people who know how to run the country are busy driving cabs and cutting hair. - George Burns

JS5
(Georgia)

Posts:4

09/01/2010 11:12 AM
Thank you very much guys. I appreciate all the suggestions.

JoanneW2

Posts:0

09/01/2010 8:52 PM
Increasing the dues is not bad thing especially at your current level. With that said, it is imperative that you educate your Board on the need for a Reserve account. Even if you are only 5 years old, you must plan for a new roof, pavement etc. I suggest you research obtaining a reserve study and present it to the Board and community at the next meeting. Irregardless, at least 10% of your budget should go towards reserves. I live in a 9 unit complex and 10 years ago everybody applauded keeping dues low. We needed to be resided, need I say anymore. We have a reserve study and the dues are $100 more a month.

GeraldT4

Posts:1022

09/02/2010 7:42 AM
A reserve study should be an undertaking of the Board, and not started or spearheaded by a non-Board member.

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