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Subject: We have a mess on our hands
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MarieB5
(Pennsylvania)

Posts:2


05/15/2020 5:15 AM  
I'm not sure where to begin but I know in my heart of hearts our HOA is trouble... We are a small group with 16 single family homes. We have some common space that is maintained by the HOA, 67 maple trees that line the main street, and two very small lanes that are ours as well. Our CCRs are from 1994 and no bylaws. The CCRs are mostly written around the declarant and have a few mandates in them ie no fences unless you have a pool, you cant change the color or material of your home, no clotheslines kind of stuff. very basic. For the most part its an easy going development with everyone keeping their yards and homes nice. So the hoa board really doesn't have a lot of hard work managing the homeowners.

Here's my concern:
1.) All the homes are stucco. some of the homes are in dire need of a full stucco replacement that costs anywhere from $80K-150K depending on the level of unknown damage. Realtors are telling us that folks are afraid to buy stucco homes so automatically we loose 50% of potential buyers. Comp homes with any siding other than stucco are averaging 150K more. With this in mind the HOA board will not allow any other siding options, we are mandated to keep with stucco. I'm concerned that a member will eventually bring suit against the HOA which will cost us all money to cover the legal fees.

2.) The 67 maple trees were planted incorrectly 20 plus years ago and all are suffering from root girdle. We have recently had an arborist advise that over the course of 2-5 years most the trees will die and within 10 years all will die. The removal and replacement cost is roughly $120K. The HOA has known this day was coming for for at least 6 years but did not set money aside in the reserves to cover this catastrophic loss. They are talking about a special assessment to cover it which equates to $6200 per home.

3.) Our two little 20 year old lanes are starting to show their age but yet we do not have a cost study done to know what maintenance should be done routinely nor the life expectancy of the lanes with an estimated cost for full replacement.

4.) Our Covenants do not have any guidelines for elections or even board positions. We had an election 2 years ago for an HOA president and then shortly after an election for a treasurer. Prior to this election we had a President for 18 years and an occasional treasurer. Yet we have a 3rd member on the board that was appointed by the recently elected Pres & Treasurer. He calls himself the architectural committee. None of this makes any sense and when you ask a question the answer is that's the way it's always been and the conversation is immediately shut down.

5.) I've asked to the see the annual meeting notes prior to moving in and there are 6 memos available - no one knows where any of the rest are for an HOA that has been in existence since 1998.

6.) I've asked to see the meeting notes for every time the board has met - there are none.

7.) Our dues is very low - $600 per house per year. Our reserves are low roughly $7K. Our operating costs consist of insurance, a p.o box and landscape (mostly mowing of the common spaces and some mulch)

The original homeowners here are apathetic while the new residents are becoming apoplectic.

HELP!!!!

SheliaH
(Indiana)

Posts:3224


05/15/2020 6:13 AM  
How many homeowners would you say are apathetic vs. apoplectic? If the second group outnumbers the first (I assume you're in that number), that may be enough to make some changes. You already know that won't be easy because everyone else has let things go on for so long, they don't want to deal with the discomfort of making necessary changes. It's human nature - most people know deep down how f***ed up the place is and hope to be out before the caca hits the fan. So fasten your seat belts - this will be a bumpy ride.

Start with reviewing your documents (again) - if you don't see anything about the board, it may be you're looking in the wrong place. The CCRs dictate how the common areas are to be used, whereas the Bylaws dictate how the association is run - that's where you'll see information about the board. If there isn't anything in the paperwork you got at closing, you may want to check with your county recorder's office to see what's on file.

You will need to push for a come to Jesus meeting with the homeowners (all of them) and this is where you and everyone else can express your concerns. From what you've said here, that would be: outdated documents, no board elections, no board meeting minutes (those reflect the official actions of the association and should NEVER be thrown out - the association risks getting into major legal trouble otherwise), assessments that haven't kept up with inflation (which is why your reserves are dangerously low), and a lack of a reserve study (which would give you guidance on how to fund the reserves).

You won't fix everything overnight, but this meeting would be a good time to at least make a plan. There are 16 homeowners, so that's enough for several small groups to be established to take a deep dive on certain issues and make recommendations. One group could address updating the documents, another the trees and roads, a third reviewing finances, etc. There's a lot to do and you can't expect the board (such as it is) to do everything.

Yes, assessments will have to go up - you can't expect 1998 dollars to buy the same amount in 2020 (everyone forgets about inflation). Finally, warn everyone of what could happen if these issues AREN'T addressed - significantly higher costs for everyone and possible receivership. That happens when people throw up their hands and don't volunteer to serve on the board. Without a board to oversee the association's operations, you'd have to get a judge to appoint a receiver to oversee the association.
The receiver only answers to the court and homeowners wouldn't have any say in how the community is run.

Assessments would go sky high because you'd have to pay routine expenses, fund reserves and pay the court costs and receiver's fee (which could start at $200 a day) You think no one would buy the houses because they're made of stucco - what do you think will happen when potential buyers find out the homeowners don't even have a say in how their community is run?

I know all this seems daunting, but as long as you own a home in this community, you have to pay attention to your investment. That may be the hook you need to get people to pay attention - either deal with this now so you can sell the home at a decent price or continue to do nothing. Suing the board will accomplish nothing because there's no money and everyone will get screwed.

It's ok to prioritize what needs to be done first, but then you have to buckle down and do what's necessary. I also recommend you go to the community association institute website and invest in some of its educational materials. they cover a variety of subjects for new and experienced board members and homeowners, ranging from reserve studies to efficient ways of running the board of directors. A HOA is a non-profit, but it must be run as a business. Your community's days of running it like a casual block club have to end. Good luck!
CathyA3
(Ohio)

Posts:953


05/15/2020 6:26 AM  
Some questions:

* Do you have a property manager, or does the board handle the duties of a manager?

* Do your CC&Rs require stucco siding, or is there some flexibility?

* Do you know if your community has ever had a reserve study done, and if so, how long ago?

* Related question #1 that may require some digging: do your CC&Rs or state law require reserve studies?

* Related question #2: do your state laws require that association reserves be funded to a certain level, or at all?

* What sort of insurance does your HOA have?

* Is your association incorporated? The presence of a board suggests that you are, and this means you should have bylaws somewhere. They are what describe the number of board members, the officer positions, and the duties, and in general how your community is governed.


In general, if your CC&Rs require stucco, they can be amended to allow siding. This isn't particularly easy or quickly done, it involves legal expenses, and the hard part may be getting enough of the community on board to approve an amendment. Your community also wouldn't look very pretty during the transition period - you'd probably have to grandfather the current stucco, with the provision that it be replaced by siding when the time comes.

(Having said that, the community I grew up in was built in the 1960s, had a lot of stucco homes, and they are in great shape. This may be more of a lack of maintenance/lack of enforcement issue rather than a materials issue. I would buy a stucco house if it had been maintained properly.

Realtors generally know what they're talking about, but potential buyers may be reacting to the condition of the community rather than the stucco itself. So take those comments with a grain of salt.)

I agree that your community's finances sound shaky. Resurfacing streets can be costly, depending on the type of surface, and can easily wipe out your reserves. And if the HOA is responsible for maintaining the trees, it could be liable if a tree dropped limbs or fell onto someone's home or, god forbid, onto a person, and the HOA was negligent about maintenance.

Your hardest task will likely be convincing your community, especially the board members, that you have serious problems. Nobody likes to hear that, but sometimes you have to scare people to get their attention. The good news is that these issues are fixable.

GeorgeS21
(Florida)

Posts:2681


05/15/2020 6:51 AM  
This is likely synthetic stucco - well documented problems with early adopters. Lots of historical material, lessons learned, etc.

Where are your Bylaws?

Yep - you will need to organize the community to change docs to allow siding, or redo of synthetic stucco using new techniques. I think cementious products are probably better than wood, but that can be left to homeowners. Perhaps find a reputable siding company that will price all the houses based on size, etc ...see what kind of price en masse.

Get more opinions wrt the tress ... wait and see what happens.

Focus on comps and the stucco issue ... changing your CCRs will keep you busy.
SueW6
(Michigan)

Posts:693


05/15/2020 6:51 AM  
Everything seems important - but there is “urgent important.” So prioritize your list and work to get organized.

How is it you don’t have bylaws? Where are board roles, membership definition, and election procedures ? Check again at the county. Those bylaws need to be somewhere.

Work to offer an alternative to either add to or replace the stucco look. Bring in a Home designer/ architect to help the board.

Replace two trees a year until they are all replaced.


MarieB5
(Pennsylvania)

Posts:2


05/27/2020 5:19 AM  
Hello - thank you everyone who responded.

I'm working with an attorney now to figure our mess out. We do not have any bylaws - nothing was sent to the recorder of deeds here in PA and the HOA insists there are none. Just the Declarations which do have some very basic rules but zero operating procedures. Our board is holding an election tomorrow, and yes I'm running for a seat. Hopefully we will get some new folks and we can start to develop a plan of attack.
GeorgeS21
(Florida)

Posts:2681


05/27/2020 11:52 AM  
Now I’m confused, again.

How can you have an election without Bylaws to tell you how, when, how many to be elected, who can vote, etc?
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