Top 10 Reasons to Pay Assessments

I'm attempting to post on our association website, reasons that owners should pay their assessements in a positive way. I don't want to bring up late fees, collection notices, liens, etc. I was thinking of expounding on the good each and every assessment does for the association as a whole. I did a search on these forums for "Importance of Paying Assessments" and didn't really find anything helpful. Thus, this thread...I'll start by listing a few reasons...

1. Assessments pay for maintaining and upkeep of the association's physical assets which in turn helps maintain and possibly improve every owner's property value.

2. Proper budgeting of assessment fees allows the ability to build a reserve fund to pay for capital replacement. This can prevent an association from becoming unkept, struturally unsound, and undesireable.

3. Paying assessments can mean you do not have to provide your own landscape maintenance or snow removal. It can assure owners that all properties/units will be maintained to the same level.

4. Paying assessments can fund a professional management company to facilitate and guide the association.

5. Assessments can fund beautification of the common elements. It can help make your home inviting for you and guests.

Please help me in posting the Top 10 (or more) Reasons to Pay Assessments.

Thanks
Rick

Here is a statement we have:
Assessments are important to the financial ability of the Association to maintain common areas, and to pay for other necessary operations of the Association, all of which helps maintain property values and the quality of the community.

I found this looking up how to sell a dues increase, but you could possibly use the info to word something that would work for your purpose.
Look up this stuff as your state probably has it's own requirements. I found some of this on the CAN website which has a link on the left:
1.Too many delinquent dues could effect your ability to obtain certain types of insurance or at least will make the cost of it more expensive.
2. Some State laws requires associations to adequately budget so as to avoid special assessments unless waived in writing by a majority of residents. One problem with "taking the waiver" is that the association is then declaring that they are underfunded leading to at least three other issues:
a. Banks are becoming more particular about loans in this climate. Not only are they more stringent on the buyer's credit, but they're becoming more stringent on associations as well. There are banks out there that will not underwrite a loan to a community that is underfunded because they fear that if a huge assessment comes due the buyer will walk sticking the bank with the bill.

b. FHA has recently tightened their rules too and they are starting to ask for reserve information more than they used to.

c. On the newest Ohio residential property disclosure form, sellers are required to disclose if they have reason to believe that a special assessment is possible. If an association is expressly underfunded, then an assessment is a possibility and must be disclosed to prospective buyers. That's going to turn buyers away. What happens if the seller doesn't disclose and an assessment hits a few years later that the reserve study warned about? Look out seller because the buyer might now have a cause for a civil suit against you.

Those points are aimed squarely at the "I'm going to sell before an assessment hits" crowd.

Hope this helps you come up with something.

You prevent your credit rating from taking a huge hit when the association has to file liens on your property, file a lawsuit against you and garnish your wages.

You also prevent three months of non-payment of perhaps a few hundred dollars from erupting into a bill of several thousand dollars - which will now include late fees and legal fees the Association incurs to - file liens on your property, file a lawsuit against you and garnish your wages

You help avoid special assessments which can be several thousands of dollars a pop and must be paid in addition to monthly, annual or quarterly fees.

In regards to reasons to pay assessments. I would also research county/state statutes in regards to homeowner association fees and membership in a HOA. In our area, the city/county have statutes requiring our subdivision to have street lights and pay for them. They require us to have storm water detention ponds and maintain them. If the By Laws/Indentures have been recorded with the county, the residents are bound by law to be a memeber and follow the rules ( including fees if they are in the By Laws/ Indentures. Our By Laws require maintenance of signs and common areas as well as having liability insurance. Unfortunately, the county/city do not assist in enforcing a HOA By Laws. But you can cite that they exist. If the city/county must step in to assist with maintenace, the costs will be owed by individual residents and could become quite expensive.

Hi Rick,

Did you complete your "top 10 reasons..."? I would be interested in seeing it.

BTW, (I am also in IL) - I was looking at my HOA's property mgmt. website, reading the summer newsletter. I am guessing we may have the same PM company - by any chance are you the Rick W.... mentioned in the article on pg. 8?

If you are, congrats on a job very well done!

And, I would be interested in following up with you regarding our shared PM company as my BOD is having some issues (maybe to the extent of changing), and am interested in your thoughts about the PM company.

Thanks,
Bonnie

Rick,

Good info!

You stated:

"Did you know that banks are now looking at the association
financials prior to approving mortgages? Banks now want to be
assured that associations are not only budgeting for capital
expenditures, but also check to see how many delinquencies there
are in the association. This can affect the value of our homes."

As a matter of clarification. . .

That may only apply to FHA mortgages for condos. The FHA has come out with requirements a condo must meet to qualify for FHA financing. As far as I know these requirements do not apply to single family homes. Also, I don't know that there are any such qualifications to meet for conventional mortgages. However I have heard that people with even the best credit ratings are being denied a mortgage or other financing. That's bad enough without having the HOA resp. for your mortgage being denied!

Rick

While I did not read all responses, I suggest the following tone/differences in wording:

1. Assessments pay for maintaining and upkeep of the association's physical assets which in turn helps maintain and possibly improve every owner's property value.

1a. replace possibly with will or has proven

2. Proper budgeting of assessment fees allows the ability to build a reserve fund to pay for capital replacement. This can prevent an association from becoming unkept, struturally unsound, and undesireable.

2a. Proper budgeting of increased fees will allow your association to pay/plan for future capital replacements when needed versus face future economic crisis.

3. Paying assessments can mean you do not have to provide your own landscape maintenance or snow removal. It can assure owners that all properties/units will be maintained to the same level.

3a. replace can mean with does mean or contines to mean

4. Paying assessments can fund a professional management company to facilitate and guide the association.

4a. replace can with will or continues to

5. Assessments can fund beautification of the common elements. It can help make your home inviting for you and guests.

5a. replaces can fund with will fund.

Can is a might happens versus will happen. Sell the positive.

Hope this helps.

Say, Rick, does your HOA pay for insurance for your common areas, for liability, etc?

IMO, the words "protect," "maintain" and "enhance" are the primary goals of assessments' functions and Boards' obligations.

With respects to "protect," maybe, "timely payment of dues protects us from strict demands by lenders when we wish to resell or refi our homes," or some such. In other words, you can put a positive spin on potential negative consequences on too large a % of non-payment

I also think it's a good thing to focus on what assessments DO rather than what they "can" do (which may have been John 46's point). So in the below, consider changing to:

Assessments fund enhancement of our common elements. They make your home inviting to you and your guests.

I like your positive approach.

I also like the examples that one poster gave of current improvement projects

Eyes glazing over.

John,
Excellent, excellent suggestions. I completely agree with your suggestions. I do think I posted top ten reasons on our HOA website back in 2010. Given the new interest in this list, I think it's more than appropriate to post a revised version on our HOA website.
Thanks
Rick

Carol,

I like the "protect, maintain, and enhance." It provides a good overview. Yes, you are correct, 2 years ago when I posted the initial list, the words I chose definitely needed editing

Thanks
Rick

Why is that DJ1?

You have to pay so what's the point of having reasons?

How about top ten things your BoD SHOULD DO do with your assessments.

Rick

Not meaning to be critical but what do you mean by "both sides"?

Thanks

'... Thus, I was trying to come up with a list of where monthly assessments go, what they pay for, and was hoping to do so in a positive manner.'

We have that too it's called a budget.

I'm not poo pooing on your rose colored glasses attempt to inform homeowners per se, but it seems a little condescending.

Fulfill your contractual obligation to the HOA and pay your dues or suffer the consequences.

I appreciated this post and it's intent. People often need reminded of their HOA and it's purpose. We tend to get lost in the "They and Them" of our HOA. I had a very hard time (still do) explaining to people why I would live in a HOA. The response is ALWAYS "I wouldn't live in a place where people can tell me what to do". Posting these reasons show WHY this is the way that it is. Paying as a group gets group benefits.

That would be the reaction from many members. You know, the ones who aren't interested in participating, contributing etc. And for the ones who DO care, they likely already know why they should pay dues.

An upbeat list like Rick's could go in the Newsletter where he placed his. Another good place might be a Welcome packet. Neither of these cost much $ to speak of.

I can see only good coming from such a list and I agree with Rick that homeowners who understand the reasons that their HOA's need dues will be more satisfied with their HOA's. Communication matters!

Sure they can read the annual budget but in some HOA's, like ours, there are many annual contracts so the budget is cumbersome. In addition, our summary of funds in reserves that also goes to Owners annually is very complicated. I strongly doubt that more than 5-10% of owners here read either.

John, I wasn't conveying MY response. I was trying to convey the reaction I suspect alot of the members would have.