Operations budget deficit

Started by AlanT4 • 4 replies • 338 views

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AlanT4 (Georgia)
Posts: 2

Posted:

Does anyone have knowledge of any federal regulation or State of Georgia regulation regarding the declarant’s responsibility to pay the operations budget deficit during declarant control period? Is it legally mandatory that the Declarant accept this deficit as a cost of business?

SheliaH (Indiana)
Posts: 6,964

Posted:

That's a legal question you should put to a private attorney because most of us aren't attorneys. That said, I doubt there's any state law on this and I'm pretty sure federal law doesnt address it at all

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

ElleN (Idaho)
Posts: 4,420

Posted:

AlanT4, exactly what do you mean by "operations budget deficit"? Are you saying the Declarant prepared a budget, set the assessment accordingly, and then found that this was not enough to pay expenses? So now, the Declarant is either (1) imposing a Special Assessment; or (2) increasing the assessment in the middle of the fiscal year?

What is going on?

If this HOA is subject to the Georgia Property Owners' Association statute, then the signs are strong that the Declarant is supposed to prepare an annual operating budget and base the assessment of each owner on this. To determine whether the Declarant can either revise the budget in the middle of the year; increase the assessment in the middle of the year; or special assess during the middle of the year, read the Declaration and Bylaws carefully. If you post here the relevant sections of the Declaration and Bylaws, then this might help people help you.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Keep in mine a HOA budget works NOT like your personal home budget. It's a corporation AND a not for profit (non-charitable). Right now the Developer owns the HOA. They are owning it under their own corporation. It's a bit complicated but due to various tax and corporate laws having it under budget is not necessarily a "bad" thing. It will be when the owners take over that may cause an issue. However, how the current owner operates it is not under your control.

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MelissaP1 on 04/02/2023 11:02 AM
Keep in mine a HOA budget works NOT like your personal home budget. It's a corporation AND a not for profit (non-charitable). Right now the Developer owns the HOA. They are owning it under their own corporation. It's a bit complicated but due to various tax and corporate laws having it under budget is not necessarily a "bad" thing. It will be when the owners take over that may cause an issue. However, how the current owner operates it is not under your control.

This is true.

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