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Subject: Rules for non profit POA assessment increase
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JohnH38
(South Carolina)

Posts:78


01/06/2020 7:48 AM  
Our POA is in SC and is designated as a non-profit. SC recently passed a legislation that HOA have to announce an increase in the assessment and do so by a vote of the board in front of the members. However the SC homeowner association act does not apply to non-profit HOAs ergo my question is what is the requirement for assessment increase for a non-profit in SC?

Thanks
AugustinD


Posts:2411


01/06/2020 8:03 AM  
I see that two sections of the SC HOA Act do not apply to HOAs that are non-profits. One of these sections concerns the annual budget. For the SC HOA Act, see https://www.scstatehouse.gov/code/t27c030.php. For the SC Nonprofit Corporation Act, see https://www.scstatehouse.gov/code/t33c031.php . By my reading, the SC Nonprofit Corporation Act does not have any restrictions on increasing the assessment or budget.
JohnH38
(South Carolina)

Posts:78


01/06/2020 9:04 AM  
After going through the website, I don't see any clause regarding assessment.

Our CC&Rs states they have to be announced, e.g. voted by the board, NLT one month prior to January first.

They just announced an increase three days prior!

Thanks
AugustinD


Posts:2411


01/06/2020 9:23 AM  
Posted By JohnH38 on 01/06/2020 9:04 AM
Our CC&Rs states they have to be announced, e.g. voted by the board, NLT one month prior to January first. They just announced an increase three days prior!
Maybe you know this already, but FWIW, I think the CC&Rs control here. I think your board violated the CC&Rs and their fiduciary duty. The fact that the SC HOA Act's section on assessment increases does not apply is not relevant. The Board has to follow the CC&Rs on something like this. As needed, and as you may be aware, Section 27-30-340 has a mechanism for filing a complaint with SC's Department of Consumer Affairs Services for Homeowners and Homeowners Associations. An SC HOA member has to take certain steps to try to resolve the dispute before filing a complaint with the latter department.

Of course, if the budget increase is desperately needed, I for one am not sure of how hard I would fight this.
GeorgeS21
(Florida)

Posts:1877


01/06/2020 9:26 AM  
JohnH,

I can't recall from previous posts.

Are you on the Board?
JohnC46
(South Carolina)

Posts:9053


01/06/2020 9:31 AM  
JohnH

I am also in SC and our Covenants say the BOD can raise the yearly assessment (dues) as much as they want as long as they do it by presenting the upcoming years budget (via US Mail to each owner) on or before 12/01 to become effective on 01/01. Owners do not get to see it before and do not get to vote on it.

Owners can call for a Special Meeting to reject the proposed budget before 01/01 but 51% of ALL OWNERS would have to disapprove. If that happens the HOA, can raise the dues bu US Gov Cost of Living (usually 2 to 3%).

No need for us to look at what the State says as ours docs fully cover the issue.

Your docs sound some what the same.
JohnH38
(South Carolina)

Posts:78


01/06/2020 9:52 AM  
George,

I'm not on the board, and the board has total control of the elections. They treat the CC&Rs like toilet paper. My mailbox was stolen a few days ago, by the board president but go and prove it beyond a reasonable doubt.

Rogue board failed community.

Thanks

SheliaH
(Indiana)

Posts:2882


01/06/2020 10:47 AM  
You said your CCRs require the board to announce the upcoming year’s fee before Jan. 1, so if they did that on Dec. 29, it would appear they are in compliance (that’s three days before Jan. 1). That said, I agree the homeowners should have received more advanced notice. Our documents require homeowners be notified of the upcoming year’s budget and assessment on or before Dec. 1, and the board can raise it up to 5% over the current year (anything higher requires a homeowner vote).

Although your state now has a law requiring that fee increases have to be voted upon by the board in front of the members, but you may want to check the effective date and who it applies to. Sometimes these changes apply to ALL HOAs, while others are applicable to HOAs established on or after a specific date, so you need to check that as well to see if it even applies to your community.

Is it possible your board DID vote on the assessment a month or two ago, sent out an announcement, but you missed it (maybe it got lost in the mail?) Have you asked the board why they waited until near the end of 2019 to say anything? If so, what was the response? If you didn’t ask them, why not? As Augustine noted, the state will ask if you made an effort to resolve the problem before filing a complaint.

No one likes fee increases, but sometimes they are necessary (I guarantee you wouldn’t like a special assessment because current assessments weren’t enough to fund reserves and pay routine expenses). Take a look at the board meeting minutes for the past year and note the discussions. While you’re at it, get a copy of the new budget and compare it with last year’s – what line items have increased and why? Yes, you’ll have to ask the board about that too. If you come up with an alternative, let them know.

(Which is why more advance notice was necessary – that would give homeowners more time to review the budget and ask questions, and the board would have time to address them before the budget and new assessment took effect).

Finally, if your board ignores the CCRs and has “total control” of the elections, that’s because the rest of the homeowners (you and your neighbors) allow it. That’s the only reason bad boards get away with being bad, and I have never understood how 3, 5, 7 or however many board members are able to intimidate an entire neighborhood. It’s a little more understandable in a tiny community (although still unacceptable).

If you want change, it can happen, but it’ll take some work. Start talking to your neighbors and attend the board meetings, and demand answers to your questions. You may not always agree, but there should be some sort of logical thinking behind the decision. If you’re still unhappy with the board, all of you will have to vote these folks out or recall them (check the documents to see how that’s done) and put in people who will do what you want (one of them may have to be YOU).
JohnC46
(South Carolina)

Posts:9053


01/06/2020 11:15 AM  
Posted By SheliaH on 01/06/2020 10:47 AM
You said your CCRs require the board to announce the upcoming year’s fee before Jan. 1, so if they did that on Dec. 29, it would appear they are in compliance (that’s three days before Jan. 1). That said, I agree the homeowners should have received more advanced notice. Our documents require homeowners be notified of the upcoming year’s budget and assessment on or before Dec. 1, and the board can raise it up to 5% over the current year (anything higher requires a homeowner vote).

Although your state now has a law requiring that fee increases have to be voted upon by the board in front of the members, but you may want to check the effective date and who it applies to. Sometimes these changes apply to ALL HOAs, while others are applicable to HOAs established on or after a specific date, so you need to check that as well to see if it even applies to your community.

Is it possible your board DID vote on the assessment a month or two ago, sent out an announcement, but you missed it (maybe it got lost in the mail?) Have you asked the board why they waited until near the end of 2019 to say anything? If so, what was the response? If you didn’t ask them, why not? As Augustine noted, the state will ask if you made an effort to resolve the problem before filing a complaint.

No one likes fee increases, but sometimes they are necessary (I guarantee you wouldn’t like a special assessment because current assessments weren’t enough to fund reserves and pay routine expenses). Take a look at the board meeting minutes for the past year and note the discussions. While you’re at it, get a copy of the new budget and compare it with last year’s – what line items have increased and why? Yes, you’ll have to ask the board about that too. If you come up with an alternative, let them know.

(Which is why more advance notice was necessary – that would give homeowners more time to review the budget and ask questions, and the board would have time to address them before the budget and new assessment took effect).

Finally, if your board ignores the CCRs and has “total control” of the elections, that’s because the rest of the homeowners (you and your neighbors) allow it. That’s the only reason bad boards get away with being bad, and I have never understood how 3, 5, 7 or however many board members are able to intimidate an entire neighborhood. It’s a little more understandable in a tiny community (although still unacceptable).

If you want change, it can happen, but it’ll take some work. Start talking to your neighbors and attend the board meetings, and demand answers to your questions. You may not always agree, but there should be some sort of logical thinking behind the decision. If you’re still unhappy with the board, all of you will have to vote these folks out or recall them (check the documents to see how that’s done) and put in people who will do what you want (one of them may have to be YOU).



Shelia

The OP said his docs say NLT (No Later Than) one month before 01/01. Same as my docs say.
His BOD presented the dues increase on 12/29/2019 which is later than one month before 01/01.

I say all well and good but their new budget (including the dues increase) does not take effect until 01/01/2021. Yes 2021, not 2020 as they missed the 2020 window. Now the question is how far (time and money) is the OP willing to go to pursue this?

As far as ignoring the CCR's (which it appears they do), the answer answer is replacing them.

GeorgeS21
(Florida)

Posts:1877


01/06/2020 11:46 AM  
Hmmm ... yeah, let's say the Board in question simply is a bit goofy, or someone was ill, or forgot ... and the dates weren't met. i.e. no one said, "Hey, let's treat the CCRs like tp and not do this on time."

What happens?

Meh - what happens is everyone pays the new dues amount - or, holds a special meeting to recall the Board because they didn't meet the timelines. Or, the Board calls a special meeting to inform everyone of the new budget, again, and now provides 30 days notice of the new amount - and, then sends out new notices to pay the original amount provided too late.

Or, everyone gets mad and goes home?
GenoS
(Florida)

Posts:3495


01/06/2020 11:55 AM  
Posted By GeorgeS21 on 01/06/2020 11:46 AM
Hmmm ... yeah, let's say the Board in question simply is a bit goofy, or someone was ill, or forgot ... and the dates weren't met. i.e. no one said, "Hey, let's treat the CCRs like tp and not do this on time."

You left out several possibilities, one of which is they have so little regard for the statutes or their own Bylaws that they just don't care. No one forgot. No one was sick. "Goofy" has only one definition in Florida and I can assure everyone he's not on their board.

Indifference in the exercise of one's duty to follow the statutes and Bylaws should be borderline criminal negligence.
GeorgeS21
(Florida)

Posts:1877


01/06/2020 12:47 PM  
Criminal negligence ... hmmm, don't think not getting the notices out on time in an HOA/COA is going to rise to that level.
GenoS
(Florida)

Posts:3495


01/06/2020 12:55 PM  
It should if that's what it takes to gain compliance.
GeorgeS21
(Florida)

Posts:1877


01/06/2020 12:58 PM  
Seriously?

I just see the look on the judge's face.
GenoS
(Florida)

Posts:3495


01/06/2020 5:11 PM  
You have to change the laws first. I thought that was self-explanatory.
GeorgeS21
(Florida)

Posts:1877


01/06/2020 5:56 PM  
Change the law for this?
GenoS
(Florida)

Posts:3495


01/06/2020 7:11 PM  
Posted By GeorgeS21 on 01/06/2020 5:56 PM
Change the law for this?

Directors who blatantly ignore the law should be held accountable. That's arguably the most important change that should be made where dysfunctional property associations are concerned. This isn't rocket science. Laws should provide for penalties when people break them.
GeorgeS21
(Florida)

Posts:1877


01/06/2020 7:16 PM  
So much for recruiting new volunteers directors for an already thankless job.

Seriously, you’ve probably way overreached on this ...
SteveM9
(Massachusetts)

Posts:3516


01/06/2020 7:25 PM  
No matter what you think of laws or rules, your HOA is simply passing along what it costs to run your hoa. Things cost money and your sharing the cost.
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