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Subject: Is it me?
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08/31/2019 3:30 PM  
Hello everyone,

I am a member of a small (18 unit), self-managed condo HOA. I purchased my unit 11 months ago and I recently attended my first annual HOA meeting. I attended in hopes to meet some of my neighbors. Even though we are small, we all don't know each other. I am a private and reserved person so I'm not opposed to this, but it would be nice to know people's names and faces, especially with how small our community is. Our community isn't gated so it is easy for anyone to walk through. During the meeting, I noticed only 7 unit owners showed up (about 85% of our units are owner occupied), of which 5 of the 7 are board members. I believe 4 out of the 5 board members have been board members for at least 10-20+ years. I asked if the other members are involved behind the scenes and the board said that they have always relied on the board to handle everything and don't complain or have any issues.

Our building was built in the 70s and the layout is more like an apartment. There are no guest spots, the parking is subterranean with most unit owners having garages with doors that close, while some of us (myself included) have parking ports. The only shared/communal places are driveways, stairways, and some shrubbery surrounding the building. Our HOA dues cover trash, water, general insurance (we are in CA and do not have earthquake insurance), and various maintenance/repairs to the common areas/items the HOA is responsible for.

During the HOA meeting, we received a copy of the budget, balance sheet, profit and loss, and reserve allocation. A little background about me--I have a financial background and am a controller for a local company (I understand/have prepared tax returns and have helped prepare compiled/reviewed/audited financial statements for private companies and nonprofits [no HOAs]), this is my first experience as a member in an HOA, and my first time owning a "home." I'm writing to see if my thoughts and feelings towards members of the board and how our HOA is managing our money is valid or if I'm expecting too much.

I didn't ask too many questions during the meeting because 1) it's my nature to process things first and sometimes that takes a couple hours to a couple of days, before I ask a lot of questions and 2) I'm new to the whole HOA scene so I didn't know what was normal/not normal for an HOA. I have a total of three fiscal year financials for my HOA. Our dues are $275/month (about to be raised significantly if we add on earthquake insurance in the amount of 150-200/month, but will be raised regardless because the board said our utilities and insurance expenses are increasing). Our reserve account has a $150k balance and our operating account has about $65k. In my 11 months of living in my unit, I personally feel that our HOA provides the bare bones for the unit owners. Repairs/maintenance are done when there is a complaint of something wrong. I provide for my own monthly pest control and dryer vent cleaning.

When I sat down on my own to review the financials later in the week, I saw that our net income is about $20k a year. There are not many categories to our reserve allocation--roof, fence, and major repairs/improvements. Of the 200k in reserve, about $150k is allocated to major repairs. I sent our BOD an email inquiring what consisted of major repairs. I also inquired about the amount of interest earned from the amounts we have in the bank (less than $50), if we can find a savings account or CD, or money market to make additional income to offset the increase in expenses, if our budgeted net income could be used to offset the increase in utilities and insurance expense or even a part of the earthquake insurance. I didn't see an amount or date that we're trying to have our reserve reach so I asked them about that as well. I also made sure to thank them and to let them know that I am extremely appreciative of answering questions I had during my last 11 months and everything they do in the background that we aren't aware of.

The BOD replied to have me meet with two of the members on the BOD. During our meeting, we discuss the questions that I had. They told me that they plan to repair the roof in bits and pieces as long as they can because replacing an entire roof is expensive. I inquired if there has been any leaks from the roofs into units and they said yes so I voiced that it it makes me a little nervous that we have an older roof and we only repair it when an owner informs them that there is a leak as this could potentially lead to large/major damages one day. The major improvements category was for a number of things they listed and that they will keep on adding to that portion of the reserves as everything is so expensive. I asked them if there has been a recent reserve study. To which they replied that they paid a company to do the reserve study years ago but they ended up doing on the work so they didn't think it was worth the $200 for more studies. When I mentioned that I thought it was legally required to do some sort of study or to revisit the study, they said that's what the annual reserve allocation is. In addition to our roof, I asked them about our plumbing lines. The ones we currently have are original to the building and all the units will have the rusty orange water come out for a couple of seconds sometimes. Our units share two main water lines. One line covers 9 units so if any unit has any potentially major plumbing repairs, that side of the building would lose water access if the water was shut off for the one unit. My plumber told me it will only be a matter of time until something happens as the lines are close to their useful life. I understand that re-piping the plumbing lines are very costly, but I'm also scared of lines leaking/bursting and causing floods in downstairs units (this happened to my friend's galvanized pipes). The two board members told me that their plumber said the pipes are in good working order.

During the meeting, I couldn't help but to feel that I was being patronized. There was also comments made that made me feel there was reverse age discrimination. The two I met with are retired while I'm in my mid-30s. They made comments on how other members of the HOA struggle financially and have high mortgages so they cannot afford special assessments and possibly earthquake insurance. I told these the two board members that I completely understand as I have a mortgage as well and they responded by saying that I don't have any children and I make more than the members they were referring to (I don't know how they came to this conclusion). I felt like I had difficulty getting answers to questions and that I was frustrating them with my questions as sometimes, they would tap their pencils on the table, take deep breaths, and quietly groaned while I spoke. They told me that because I have been here for almost a year, that I couldn't understand how expensive repairs are but they couldn't give me any estimated figures or estimations on when things will be fixed/replaced. When I try to convey to them that I've previously helped business management clients who own rental multi-family and commercial rental properties plan, budget, and interview vendors, I would get the body language that I mentioned above. They also have made comments on how they want earthquake insurance because they have put a lot into their respective units after living there 20+ years, but they don't think the younger owners would vote for the insurance because we haven't put a lot of money into our units yet, implying that we can just walk away from our mortgages and homes if something catastrophic were to happen.

I've spoken to many friends and family members regarding their HOA and they seem to provide more than mine. I know it is bad to compare, but I needed some sort reference. If we add on earthquake insurance, our monthly dues would be at least $425 to $475. Majority of the people I've spoken to pay about $500/month which includes earthquake insurance but they live in gated complexes (their complex are about the same size as mine) and get monthly pest control (I pay for my own), annual hydrojetting, complete roof replacements as stated on their reserve studies, semi annual dryer vent cleaning (I do this myself), and security cameras (I have a video doorbell). Their reserve balance isn't as high as ours, about $50k and they are slowly replenishing it.

I'm sorry for the very long post, I even left some things out because I knew this was long enough the way it is, but I am trying to figure out if I am off base and my BOD is handling things as they should or are some of my points valid? Thank you all in advance for even making it this far!



08/31/2019 4:24 PM  
Welcome to HOA living... It is NOT like your personal income nor your business budget. A HOA is a non-profit but NOT a charitable one. It's to collect from it's members what it needs to spend including a reserve account. There isn't a "profit" margin. The HOA is a collective of ALL the owner of which the board is responsible for it's daily operations. You as an owner are responsible for running or for voting people onto the board.

I don't see anything wrong with your HOA. It's running like a typical one does. It does projects as they can afford them. They are usually NOT pro-active but responsive to issues. It takes VOLUNTEERS to make things run. So if you see something that needs to be done why not volunteer?

Pest control is up to the HOA to decide if it's going to be paid for by the HOA or by individual. Your HOA decided pest control is best handled as an individual. Most likely due to the fact that it would increase assessments to do so.

My bet is most of your fellow members are living on a retirement. So the comment that you make more money is in regards these people are mostly on Medicaid or retirement funds. No longer able to make an income outside of this. They see you as someone who has potential to go find more money if needed. They have only their savings and social security.

So I say next time they want volunteers to run for the board, maybe throw your name into the hat. You may find it a different perspective from the other side.

Former HOA President


08/31/2019 5:07 PM  
Hi Melissa - Thank you for responding. I completely understand that it's not my personal/business income and budget and that it belongs to benefit all 18 unit owners. When I speak about the part of being proactive, I have in mind all the unit owners, not just myself. As much as I wouldn't want to be displaced in case anything major happens, I wouldn't want it to happen to any of my fellow owners either.

I also am fully aware of the personal time that the BOD takes out of their daily lives and I always try to let them know and show my appreciation. I tried to give them each $5 gift cards to Starbucks and on another occasion, give them fruit fresh fruit from my mother's yard, but they said they can't take the gifts because of conflict of interest, which I understand. I volunteered to be on the internal committee made up of nonboard members to review the financials, to power wash the common area stairs because I have the equipment so they wouldn't have to hire a company, get insurance quotes, and find higher interest bearing accounts, but was denied on all of these items.

They mentioned that about 25% of the owners are retired and 75% are working. I didn't appreciate their comment and felt that they were biased in their assumption that I make more money (presently), or if it could interpreted as I have the ability to earn more money, because they don't know my financial situation/obligations or health would allow me to take on more than the amount of hours that I am currently working.

I'm honestly a little nervous and hesitant to run for a board position as I feel like there is an underlying tone that they do not want to leave their positions so that's why I try to volunteer on other things.

I guess in the meantime, I'll attempt to volunteer for things I can do and help out in and maybe one day I'll be able to contribute. My friends' and families' HOAs are probably the few who are more proactive than majority of them, it seems. But it's good to know that it's not the norm to be proactive. Thanks again for your input.



08/31/2019 6:02 PM  

First, welcome to the forum.

Let me dispel the notion of obtaining earthquake insurance. With 18 unit and let's say rebuild cost for each unit is 300,000, that is $5.4M policy with a 25% deductible or $1.350M you have to come up with before they will rebuild. Each owner would need to come up with $75K out of their pocket. You can purchase loss assessment insurance, BUT everyone needs to do it as a requirement prior to the HOA buying an earthquake policy.

By law, Reserve Studies for each complex MUST be updated every three years. Do you need a reserve analyst doing it, no, someone who has financial experience. If pest control is in the common area, it must be paid out of HOA funds, if it is your unit exclusively, then the homeowner should be responsible. Roofs will be a huge expense and if you have tile roofs, you're not properly funded. If plumbing pipes are almost in the need to replacement, you really aren't. Special assessments will be the only way to fund those projects and from what you wrote you may not have the demographics to do it with struggles.

If you have older people on the Board and many older people in the complex, you will see resistance to change.

Best of luck


08/31/2019 7:03 PM  
Hi Richard - thank you for welcoming and your response. I think if the board were able to give me their best estimated guess on the remaining useful life of the roof and plumbing, or just some answers that resembled a reserve study, and that we're currently very underfunded, I would have felt better overall. When they told me there aren't estimated remaining useful lives, I felt like they haven't done a reserve study in the last 3 years. I have no qualms with them doing it themselves to save money. But calling their reserve allocation a reserve study didn't seem correct.

Our roof is a flat roof, if that helps at all.

I think the board and I just speak different in different ways and the way that you briefly explained it to me made more sense. I believe all the members of the board are retired and have been serving on the board since close to when they first moved in so I do think it's what you said of resistance to change. The rest of the people in the complex are in their 40s.

Thank you again.


09/07/2019 10:08 AM  
Well, welcome to the HOA. Its peculiar how these two board members seemed to know so much about you and came to the conclusion that you are better off financially then the rest of the owners. This is not your concern nor should it be the boards. However, the realistic aspect of the HOA is this just what you experienced. Our own HOA is undergoing a huge special assessment and we are replacing roofs, deckings and other long time neglected items. Our prior board ran the HOA like they ran their own budgets. A board majority which was 3 owners who were board members ran this place like they owned it. Closed minded to input. They really and I mean REALLy ran this place like ti was theirs. Using the clubhouse to host family events without reserving it, storing personal items in our office, and our clubhouse etc.

Here we are 5 years later. We have a half million special assessment because these prior board members neglected to repair and replace known issues which only has gotten worse and costing us more. One board member filed a BK, one member foreclosed and the 3rd packed it up and moved out of state.. all because they knew what was coign down the pipe. ...which is another story all in itself. They all sold within a year of each other.

We are stuck with the neglected issues and patching a roof that is 30 years old is not ok.. which is what this board did. Now, our roof is bygone repair and costing nearly double of what it was 5 years ago... people don't get it. Maintenance deferred does NOT save money...


09/10/2019 7:36 PM  
Thank you for your input. I am in agreement with you that deferring maintenance is not saving money. That was one of my initial concerns when I talked with these board members. I didn't want to have something that's in perfectly good condition be replaced, but proactive enough to know that if we are really pushing the lifespan of something, maybe it's time we consider replacing before something major happens.

The things going on with your HOA is what concerns me about mine. It makes me feel a little better I'm not alone in these feelings, but I feel awful that you have to go through what you're going through! Good luck and hang in there!


09/11/2019 7:13 PM  

I would consider you “fair game” for a committee, Board, or special study! 🙂

Seriously, offer to conduct a review of the reserve study and process ... they should accept and thank you for volunteering. If they don't I would lean in a bit more, start attending board meetings, and become port of the machine.

Don’t fade away ... get in there and help!


09/23/2019 2:13 PM  
It would appear that the age disparity is in play, however, do not be discouraged as you may conduct your own evaluation of this association. Check HOA documents regarding the process for reviewing the governing documents for your Association. Follow it to the letter! Best case they give you easy access and play by the rules. If not, there are consequences that are dictated by your state.
This board seems very short sighted in their “crisis” management of needed repairs. Should a roof fail the owner likely will suffer loss of possessions and displacement or even worse – compromised health or loss of life. If there was prior knowledge of unmet needs for roof fails that were neglected, it is hard to say what the legal consequence may be. This kind of stress is difficult for anyone and especially the elderly.
If you plan to stay in this situation you may wish to review the records, make copies and conduct your own audit of the documents. Research all contracts, for all services and vendors that are paid for out of your HOA dues. This includes utility bills etc. Each expense that is paid out of your dues should be documented and supported in some way.
Prepare yourself for the next election as you will need to be on the board to affect change. Take a board certification course (there are several on line) and have all of your facts organized. Prior to the election go door to door and meet your neighbors. Seriously! Give them the “real” reason they need new blood on the board. If permitted (by your documents)ask for their vote or proxy. I suspect the facts will play out during your review. Best wishes.
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