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Subject: Different assessments for different categories
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Author Messages
ArtT5
(Illinois)

Posts:84


12/09/2019 9:14 PM  
Our homeowner association has townhomes and single-family homes. On average, the single-family homes are more valuable, and we have an assessment rule that requires them to pay more than townhomes toward common expenses. It's only a few percentage points more, but they still complain and say we should all pay exactly the same, even though their homes are more valuable.

It seems to me that assessing the more valuable category of homes somewhat higher is reasonable and perhaps even the norm, but I'm having a hard time finding examples outside our development. Anyone with thoughts on this?
MarkW18


Posts:1289


12/09/2019 9:37 PM  
Assessments should not be based on the value of the house, but on the upkeep of the common area involved. Typically, a detached single family home carries their own insurance, whereas a townhome will be covered under an association's master policy. Water usually will be separated in a SFH where a townhome may be a shared expensed.

So assessments should be higher for a townhouse than a SFH.
TimB4
(Virginia)

Posts:16847


12/09/2019 11:25 PM  
never heard of it.

Can you cite that section of your covenants (leaving out the name of the Association or it's location)?
JohnT38
(South Carolina)

Posts:350


12/10/2019 3:36 AM  
Posted By ArtT5 on 12/09/2019 9:14 PM
Our homeowner association has townhomes and single-family homes. On average, the single-family homes are more valuable, and we have an assessment rule that requires them to pay more than townhomes toward common expenses. It's only a few percentage points more, but they still complain and say we should all pay exactly the same, even though their homes are more valuable.

It seems to me that assessing the more valuable category of homes somewhat higher is reasonable and perhaps even the norm, but I'm having a hard time finding examples outside our development. Anyone with thoughts on this?





I'm not sure I understand the logic behind this. In our community we are a mix of condo's and patio homes. The patio homes are more valuable but everyone contributes equally for common area upkeep, the clubhouse, pool ,etc. The cost of these expenses is divided by 165 which is the total amount of condos and patio homes. For me personally this is how it should be . The assumption is everyone has EQUAL access to these areas regardless of the value of their home. It does not cost my HOA anymore money when a $200,000 homeowner uses a common area/amenity than it does when a $150,000 homeowner uses the same common area/amenity.
CathyA3
(Ohio)

Posts:1116


12/10/2019 5:11 AM  
In new communities like this that I'm familiar with (a mix of detached single family homes and attached townhomes) it is very common to have two different assessments: for example, all owners pay an annual assessment, and the townhomes pay an additional monthly assessment. This is because the townhomes are provided with additional services (grass cutting and snow removal) while the single family homes must take care of that themselves. The annual fee goes toward upkeep of the clubhouse and pool, which are used by all members, as well as the landscaping at the community entance.

** The reason this can happen is that the governing documents describe the two different classes of homes, along with their differing par value or percentage of ownership. ** They are legally two different things, even though they're part of the same community.

The OP should read through his community's governing docs, especially where it talks about percentage of ownership as well as any sections on assessments. This will tell him what they can and cannot do.

If the two sections are given different levels of services paid for by assessments, then it makes sense to assess more to those who receive more. For instance, does the HOA pay for grass cutting? Then it makes sense that single family owners pay more since they will have large yards and more landscaping than the townhome owners do.

So basically: you get more, you pay more. But the governing docs have to give the association the right to do this.
GeorgeS21
(Florida)

Posts:2890


12/10/2019 5:40 AM  
My neighborhood has four different sized houses - all single family.

The three larger sizes pay one rate (about 30% more): than the smallest sized.

The larger sizes are located nearer all amenities, and on larger parcels.
AugustinD


Posts:3647


12/10/2019 5:40 AM  
I think the only explanation the Board owes the complainants is as follows: If the HOA's Declaration specifies that the single-family homes pay more than the townhomes, then the only way to change this is by amending the Declaration. The Declaration will specify the procedures for amending. Else the Board's hands are legally tied on the subject.
TimM11


Posts:347


12/10/2019 6:20 AM  
I've certainly seen HOAs that have different assessment amounts, but it is typically based on size/common elements rather than home value per se.
ArtT5
(Illinois)

Posts:84


12/10/2019 6:57 AM  
Thanks for the responses. To clarify, the differential we're talking about here is after taking into account differences in services to the different types of homes; in other words, it is a difference in contribution toward maintaining the common areas. People here recognize that assessments are being done according to the formula in the Declaration, but some of the owners of single-family homes want to amend the Dec to shift some of their financial burden to the townhomes.

It's understood, as JohnT38 says, that all owners potentially make equal use of common areas, regardless of the value of their homes. Yet many common expenses are paid through property taxes rather than association assessments, and owners of more valuable property pay more. And in condominium associations, larger (or more valuable) condos pay more, at least here in Illinois. Differentiating contributions based on value, or a rough measure of value, seems to be fairly normal. I'm just curious to know how common it is among homeowner associations. I wouldn't expect any to assess on individual values of homes, but when there are distinct categories of homes and a disparity in value, a difference in contributions toward common expenses would seem to be in line with a more general norm.
GeorgeS21
(Florida)

Posts:2890


12/10/2019 7:08 AM  
Common expenses through property taxes?

Common as in common to the Association?

I’m not following, unless this relates to lighting or some other municipal bond loan collected via the property tax system.
SteveM9
(Massachusetts)

Posts:3599


12/10/2019 8:06 AM  
Posted By ArtT5 on 12/10/2019 6:57 AM
People here recognize that assessments are being done according to the formula in the Declaration, but some of the owners of single-family homes want to amend the Dec to shift some of their financial burden to the townhomes.


No matter how you feel about it, it's basically set in stone. A large change like this typically requires 100% of membership to pass. Something I doubt the townhome owners will vote for.
KerryL1
(California)

Posts:7390


12/10/2019 8:48 AM  
Art wrote: "...but when there are distinct categories of homes and a disparity in value, a difference in contributions toward common expenses would seem to be in line with a more general norm." I don't understand this reasoning at all. I also don't grasp how more valuable homes paying more would seem to be in line with a "more general norm." What norm is that?

In our high rise condo HOA we do have a variable dues rate where larger condos pay more than smaller condos... It's not huge, for instance, an 1,150 sf condo pays $5/mo more than my 1,100 sf condo. They are indeed more "valuable" because they're bigger. They also happen to be on floors 18-25 (top). Our CC&Rs say they pay extra for building insurance, gas & water. It was assumed they'd use more of the latter due to more sf.

I'd assumed they paid more for window washing since they obviously have far more windows, but....no.
MarkM19
(Texas)

Posts:619


12/10/2019 9:18 AM  
This is a slippery slop to me. What comes next is I never use the Pool or the Amenities. I want to only pay for what I use. Trust me I have had this come to my Boards in Ca.

The quick answer is you bought into the community knowing what Amenities you were going to be responsible to maintain. When you sell your home the next buyer may buy it solely because of those Amenities.
CathyA3
(Ohio)

Posts:1116


12/10/2019 10:03 AM  
We have no amenities at all, but we have 3 different assessment amounts because of the "par value" of the homes. Par value corresponds roughly to square footage of the home, but includes other things. The greater your par value, the greater the percentage of the common elements that you own - so a variable assessment rate makes sense.

As several have said, this information is laid out in the governing documents, and people bought their homes knowing it (or they should have known it). The time for deciding that this was a deal-breaker was prior to closing on the home, because the chances of passing an amendment to change it are basically zero.


CathyA3
(Ohio)

Posts:1116


12/10/2019 10:10 AM  
Posted By GeorgeS21 on 12/10/2019 7:08 AM
Common expenses through property taxes?

Common as in common to the Association?

I’m not following, unless this relates to lighting or some other municipal bond loan collected via the property tax system.




I think the poster was making an analogy. Property taxes are based largely on the value of your home. The fact a single person in a large home uses the roads and other services much less than a large family in a small home doesn't matter. So the idea of assessments based solely on the value of your home is a common one when real estate is involved - it's not just HOAs that do it.
JohnC46
(South Carolina)

Posts:9660


12/10/2019 10:31 AM  
I can understand an association having different assessments but it must be based on actual cost versus value of the home. On poster said the association may have to carry some insurance on townhomes that the private homes carry on themselves. In this example, assessments should be higher on the townhomes. Another poster said if all homes equally sharing the pool then their portion of expenses should be the same.
CD6
(Texas)

Posts:30


12/10/2019 11:25 AM  
Hmm, our HOA assessments are based per originally platted lot, empty or otherwise.
You can combine adjacent lots into one lot but you will pay for two lots.
We have houses from just over 100K(grandfathered in)to a few in the 400-500K range.
Everyone pays the same and yes, I get the "we don't live there or use the amenities" excuse as well on a regular basis.
JohnC46
(South Carolina)

Posts:9660


12/10/2019 2:25 PM  
Posted By CD6 on 12/10/2019 11:25 AM
Hmm, our HOA assessments are based per originally platted lot, empty or otherwise.
You can combine adjacent lots into one lot but you will pay for two lots.
We have houses from just over 100K(grandfathered in)to a few in the 400-500K range.
Everyone pays the same and yes, I get the "we don't live there or use the amenities" excuse as well on a regular basis.




Same argument as well I do not have children in the school system so why should I pay taxes for that?
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