HOA Increase of Dues

Started by TamH • 10 replies • 2366 views

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TamH (California)
Posts: 30

Posted:

Our board has voted to increase our dues this November 2011 and then again after the first of the year 2012. Some of us are understand, in the reading of our DC&R’s “In each succeeding twelve month period thereafter” that if we have an increase of dues in November that the Board must wait twelve months before another increase can be made.

Please help us with your knowledge in the below reading of our DC&R’s

Until January 1 of the year immediately following the conveyance of the first Lot to an Owner by the Developer, the maximum annual assessment shall be $xx.xx per month.
In each succeeding twelve month period thereafter, the annual assessment may be increased by the Board of Directors. Not more than 15% above the annual assessment for the previous year without the prior affirmative vote, in person or by proxy, of not less than two thirds (2/3) of all the votes entitled to be cast by all Members of the Association.

This HOA is in the State of Idaho…there are no Statutes for HOA’s

TamH

FredS7 (Arizona)
Posts: 927

Posted:

Not a lawyer- but- "each succeeding 12 months" seems to mean "a 12-month period beginning on a Jan 1 anniversary." And I read "in" to mean "during" which can be any time during that 12-month period.

So I read the two increases as allowed given the text you quoted (provided the second one takes effect in January).

BradP (Kansas)
Posts: 2,640

Posted:

This all depends on how you do your billing, is it annual, quarterly, monthly? They could raise this November for whatever is left to bill in 2011 and then turn around raise your 2012 dues in January.

BB5 (Missouri)
Posts: 145

Posted:

Does the HOA fiscal year have anything to do with this?

PetunkaM (Florida)
Posts: 1,009

Posted:

Not more than 15% above the annual assessment for the previous year without the prior affirmative vote, in person or by proxy, of not less than two thirds (2/3) of all the votes entitled to be cast by all Members of the Association. (Tam)

Tam,

I read it as follows: BOD can increase dues as many times within a Fiscal year as they want to as long as the total increase for the given year does not exceed 15% of the total budget for the previous year.

Let’s assume your budget was $100K in 2010. So, they can do 8% of $100K in January 2011 and another 7% of $100K in June 2011. The Board is therefore authorized to increase the 2011 dues by $15K WITHOUT the owners’ approval.

However, your docs should also state what % of any increase goes to Reserves (or any special funds you may have) and what % goes for operating expenses. That is rather important because you ought to know where the money is going.

MichaelK11 (Texas)
Posts: 432

Posted:

Is the increase in November for the remainder of the year? Or is it retroactive for the whole of 2011?

What is going on that they need to raise dues in this manner? Have they spent this year's dues and the HOA's reserves, and does it look like they are also requiring next year's dues be paid early, and does it look like they are spending next year's operating budget as it comes in?

Or have previous Boards been remiss about raising dues as necessary over the years, so they no longer support a reasonable and consistent operating budget?

Or is the Board not clearly revealing the HOA's finances?

My Deed Restrictions contain similar language to yours. Mine also state that my HOA Board must announce the Annual Assessments (and the budget) for the coming year before January 1st. Taken together, this leads me to conclude that my HOA is not permitted to raise dues retroactively in the middle of the year. It is certainly not permitted to raise dues twice in a period of a few weeks -- each time the maximum allowed for the year, and the second time based up an improperly elevated amount from the previous year.

BradP (Kansas)
Posts: 2,640

Posted:

I would think the november raise should be prorated for the rest of 2011 from the time of approval...perhaps others on here could clarify.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Looks like the first increase would affect Nov. and Dec. and then in Jan. another increase would be assessed for each month following after that.

Just my guess, given the OP's info.

RogerB (Colorado)
Posts: 5,067

Posted:

TamH, My interpretation is:
The phrase "each succeeding twelve month period" is "until January 1 of the year immediately following ....". IOW this defines a time period equal to the calendar year.

With regard to raising the assessment "Not more than 15% above the annual assessment for the previous year" this allows the Board to raise the assessment up to 15% in any calendar year.

Therefore, the Board may raise the assessment in November 2011 up to 15% for 2011. And in 2012 the Board may raise the assessment up to 15% more than the end of 2011.

MichaelK11 (Texas)
Posts: 432

Posted:

Regardless of the meaning of the document, there's something inappropriate about announcing the assessment rate for the coming year, setting due dates, billing, accepting payments, and then near the end of the year announcing a retroactive revision and demanding further payment for dues already paid.

I wonder if there is law about this (in your state or in mine).

In the case of my HOA, it was an annual assessment that was due (and paid by most) back in March, revised in October to the maximum that would have been permitted for the entire year, followed by an increase announced six weeks later for the following year, due on January 1st.

Again, why does your HOA suddenly need much more money than previously?

CharlesB17
Posts: 112

Posted:

I have said this in the past. In the times of financial burden, as we all are in at the present time, there needs to be someone on your BODs that is forward thinking. What I mean by this is to look out side the box and find additional methods to generate revenue. We have done this and I personally know of some other Associations that have used a model similiar to ours to generate cash revenue and ease the burdens of the already over burdened owner that pays on time. I see too often, that so many associations see they fall short of revenue and immediately say, we can raise the dues. That is all good if! and I said IF! there are no one that is past due or behind on their dues. And or there is not a single unit that is not in foreclosure. But, most associations raise dues to carry the foreclosed owner's dies and or the owners that are past due.
There are so many otherways to generate that lost revenue.
If anyone would like to discuss our model, you can contact me via E-Mail - [email protected] and I will exchange ideas.

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