Receivership costs

Started by JamesS25 • 4 replies • 5342 views

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JamesS25 (Virginia)
Posts: 2

Posted:

Hello Everyone,

I would like to know a ballpark cost for placing our HOA under receivership. 28 lots. Annual expenses about $22K. I don't want to do this. I probably won't do this once our members have an idea of how much their annual dues would go up. Annual dues now are $900. I've searched the forums under 'receivership' and found lots of great docs and only one that states a dollar amount increase for a 280 member HOA.

Thanks!

Jim

DonnaS (Tennessee)
Posts: 5,671

Posted:

James,

Much will be decided by the size of your HOA but this bit is from a top HOA lawyer in Florida.

"A. When an association is improperly operated and the members are nonresponsive, any member can petition the court to appoint a receiver to operate the association. It could be that the members have just let the association go into default and there is no active board. It is not a permanent fix but can last for several years. The costs are extremely high as the members must pay for not only court costs, they must pay for a professional receiver. These costs will be added to the normal operation expenses, causing an extremely high fee.

The receiver has broader powers than the board and will strictly enforce the rules and finances. Members lose their right to vote and have no input to the operations. With the receiver's fees and the court costs, it could add thousands of dollars each month to the association's normal operational costs.

I would strongly suggest that the board engage a professional manager or management company to help operate the association. Normally, a manager can take the daily workload off the board and can more professionally operate the board.

DanielH1 (California)
Posts: 482

Posted:

I'm just talking out of my *** but here's my guess/calculation.

Receiver's fee: $200/hr * 40 hrs/mo * 12 mos/yr = $96,000

Assume that reserves were underfunded for a while and need to be caught up: $10,000

Hire an expensive management company: $12,000

Actual annual expenses (provided by you): $22,000

Total: $140,000/yr

Per unit: $5,000/yr/unit or $180/mo/unit

Your mileage may vary.

Your receiver will certainly want to get paid well for his time. He will certainly have no interest in minimizing his billable hours. He will certainly not worry much about cost.

You will be using an expensive professional for a "tiny" HOA. So, the costs can't be spread over 100s of units, only 28.

At $75/mo now, your HOA is super-cheap. Your residents should get their act together if they want to keep it super-cheap. If they sit on the sidelines, costs will explode. (I know, I know, they won't listen until it's too late. Then, it will be: "If I had known that it was going to be like this, I would have volunteered!")

RogerB (Colorado)
Posts: 5,067

Posted:

James, you didn't say why a receivership is being considered. This would be a last resort and increase assessments 2 to 3 times. Why not hire a good management company and authorize them to do most of the functions. Alieviate the Board members of almost all of their duties by delegation and oversight of the management company. Furthermore, if necessary in order to get members to serve on the Board, they can be paid if necessary and allowed.

JamesS25 (Virginia)
Posts: 2

Posted:

Everyone,

Thanks for the quick replies. I got what I needed. Costs will at least double and possibly triple/quadruple. Apathy is the name of the game in our HOA but we are all friends. I am sure that once I spread this bit of joyful news then people will step up to fill the vacancy.

Again, Thanks!

Jim

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