LL (North Carolina)
Posts: 2
Posts: 2
Posted:
Hello. I am so much hoping you can shed some light here for me. I served on my HOA Board a few years ago in Western North Carolina when during that time we paved our main road via putting the issue up for a vote which passed by majority and then a SPECIAL ASSESSMENT was assigned to all 81 lots in our subdivision. At that time, our ByLaws, Covenants, etc. were literally a mess, but we subsequently adopted the NORTH CAROLINA PLANNED COMMUNITY ACT Chpt 47
I was asked to serve on the Board again last year when a Board member left and they were short 1 member (we are 5 total).
This new Board all of a sudden has caught me by surprise when at last months tele-conference Board meeting I was informed that there would be a SURPLUS of funds from our "general maintenance/operating funds". 3 out of the 5 Board members live on a side road that is gravel but in wonderful condition - all level and rather wide. These Board members want to use over $11,000 in surplus funds to PAVE side roads in our subdivision. They want to begin first with their road as they have 7 properties on that road while other side roads which are in poor shape have either 2 properties or 3 properties.
The issue I am in strong disagreement with is that during the course of my service on the Board in 2006, 2007 and part of 2008 I learned alot from the major main road paving that paving is considered a CAPITAL IMPROVEMENT project.
I learned at that time also and even from our HOA attorney at the time that the HOA Board CANNOT use "general maintenace funds" (we collect $320 per property per year) for anything other than general road maintenance (i.e. snow/ice removal, grading of side roads and gravel if necessary, patching the main paved road for wear and tear, professional fees, insurance, postage)
This NEW Board wants to take the Surplus funds from the general operating funds to take about $8,000 or $9,000 to pay for half of the cost of paving the side road where 3 Board members currently reside at. I feel very uncomfortable about the whole thing and do NOT agree. According to N.C. Planned Community Act - Chpt 47 which we adopted in June of 2008
ARTICLE IV - ASSESSMENT AND COLLECTION OF COMMON EXPENSES
SECTION C - Common Expenses Attributable to Fewer than All Lots
Number 3 - Any common expense or portion thereof benefiting fewer than all of the lots shall be assessed exclusively against the lots benefited.
Being that paving is indeed a capital improvement and NOT regular road maintenance and paving "a side road" would only benefit say 6 lots - how can money be taken from the general funds to pay for a capital improvement which would normally require the approval of the majority of the lot owners via vote for assessment?
I interpret this document that to say that we as a Board CANNOT use money from the general fund of annual dues for any "common expense" that benefits fewer than all of the 81 lots in the subdivision. So my own personal interpretation is that we cannot use the funds from the general Budget to use to pay even a portion of paving side roads that will benefit "fewer than all of the lots".
I STRONGLY believe that if side roads are to be paved, as that is a capital improvement project, it needs to be presented to the ENTIRE Membership for their consideration and for their vote and if it passes by a majority, that a SPECIAL ASSESSMENT needs to be made to ALL property owners for this purpose but to pave ALL side roads, not just 1 side road every so often or every year or so.
Because I have DISPUTED this, the Board submitted questions to the current HOA attorney which is NOT the same attorney who helped us adopt the N.C. Planned Community Act in 2008. The attorney, after over 3 weeks just replied today and I strongly feel that the way the questions were worded by the Board were not truly clear to him and so he gave vague replies such as "the regular annual assessments are already designated for use as road maintenance, therefore you do not need any vote other than the annual vote to approve the budget for the upcoming year. This would include usage of the funds for side roads"
Notice he does NOT mention the word PAVING here. The Board members have immediately replied via email saying that all questions were answered to their satisfaction by the attorney and that the attorney did in fact say yes, when his reply was what I quoted above, vague and not clearly black and white. Which brings me to another issue - the Board presented to me the Budget during the last Board tele-conference meeting and the word ROAD WORK REPAIRS AND PAVING SIDE ROADS for $ 11K appeared with ROAD MAINTENANCE being a separate line item at $8K. When another Board member and myself objected to this idea because we did not feel it could legally be done, the other Board members suggesting changing the verbiage to ROADWORK REPAIRS AND IMPROVEMENTS.
I still felt uncomfortable sending out the Budget notice to the membership with this verbiage knowing that it truly meant to "pave side roads" so my other fellow Board member requested the Budget Meeting Notice to be sent out with another modification in parentheses (e.g.paving side roads using saved revenue)
I strongly believe that if there are any SURPLUS funds from the General Operating Funds, that they be placed in Reserve for unexpected emergencies and repairs.
I am still disputing this and will stand firm in front of the membership at the Budget meeting next month that I do NOT agree with this nor was I a part of the idea/conception of using surplus funds from the general expense account to pay for a capital improvement project.
Please let me know if I am way off base - this has become much more work and problematic than I ever possibly imagined, but with only 2 Board members against and 3 outvoting us, it is so difficult.
I would appreciate your thoughts - what do you think?
Thanks in advance.
LL
I was asked to serve on the Board again last year when a Board member left and they were short 1 member (we are 5 total).
This new Board all of a sudden has caught me by surprise when at last months tele-conference Board meeting I was informed that there would be a SURPLUS of funds from our "general maintenance/operating funds". 3 out of the 5 Board members live on a side road that is gravel but in wonderful condition - all level and rather wide. These Board members want to use over $11,000 in surplus funds to PAVE side roads in our subdivision. They want to begin first with their road as they have 7 properties on that road while other side roads which are in poor shape have either 2 properties or 3 properties.
The issue I am in strong disagreement with is that during the course of my service on the Board in 2006, 2007 and part of 2008 I learned alot from the major main road paving that paving is considered a CAPITAL IMPROVEMENT project.
I learned at that time also and even from our HOA attorney at the time that the HOA Board CANNOT use "general maintenace funds" (we collect $320 per property per year) for anything other than general road maintenance (i.e. snow/ice removal, grading of side roads and gravel if necessary, patching the main paved road for wear and tear, professional fees, insurance, postage)
This NEW Board wants to take the Surplus funds from the general operating funds to take about $8,000 or $9,000 to pay for half of the cost of paving the side road where 3 Board members currently reside at. I feel very uncomfortable about the whole thing and do NOT agree. According to N.C. Planned Community Act - Chpt 47 which we adopted in June of 2008
ARTICLE IV - ASSESSMENT AND COLLECTION OF COMMON EXPENSES
SECTION C - Common Expenses Attributable to Fewer than All Lots
Number 3 - Any common expense or portion thereof benefiting fewer than all of the lots shall be assessed exclusively against the lots benefited.
Being that paving is indeed a capital improvement and NOT regular road maintenance and paving "a side road" would only benefit say 6 lots - how can money be taken from the general funds to pay for a capital improvement which would normally require the approval of the majority of the lot owners via vote for assessment?
I interpret this document that to say that we as a Board CANNOT use money from the general fund of annual dues for any "common expense" that benefits fewer than all of the 81 lots in the subdivision. So my own personal interpretation is that we cannot use the funds from the general Budget to use to pay even a portion of paving side roads that will benefit "fewer than all of the lots".
I STRONGLY believe that if side roads are to be paved, as that is a capital improvement project, it needs to be presented to the ENTIRE Membership for their consideration and for their vote and if it passes by a majority, that a SPECIAL ASSESSMENT needs to be made to ALL property owners for this purpose but to pave ALL side roads, not just 1 side road every so often or every year or so.
Because I have DISPUTED this, the Board submitted questions to the current HOA attorney which is NOT the same attorney who helped us adopt the N.C. Planned Community Act in 2008. The attorney, after over 3 weeks just replied today and I strongly feel that the way the questions were worded by the Board were not truly clear to him and so he gave vague replies such as "the regular annual assessments are already designated for use as road maintenance, therefore you do not need any vote other than the annual vote to approve the budget for the upcoming year. This would include usage of the funds for side roads"
Notice he does NOT mention the word PAVING here. The Board members have immediately replied via email saying that all questions were answered to their satisfaction by the attorney and that the attorney did in fact say yes, when his reply was what I quoted above, vague and not clearly black and white. Which brings me to another issue - the Board presented to me the Budget during the last Board tele-conference meeting and the word ROAD WORK REPAIRS AND PAVING SIDE ROADS for $ 11K appeared with ROAD MAINTENANCE being a separate line item at $8K. When another Board member and myself objected to this idea because we did not feel it could legally be done, the other Board members suggesting changing the verbiage to ROADWORK REPAIRS AND IMPROVEMENTS.
I still felt uncomfortable sending out the Budget notice to the membership with this verbiage knowing that it truly meant to "pave side roads" so my other fellow Board member requested the Budget Meeting Notice to be sent out with another modification in parentheses (e.g.paving side roads using saved revenue)
I strongly believe that if there are any SURPLUS funds from the General Operating Funds, that they be placed in Reserve for unexpected emergencies and repairs.
I am still disputing this and will stand firm in front of the membership at the Budget meeting next month that I do NOT agree with this nor was I a part of the idea/conception of using surplus funds from the general expense account to pay for a capital improvement project.
Please let me know if I am way off base - this has become much more work and problematic than I ever possibly imagined, but with only 2 Board members against and 3 outvoting us, it is so difficult.
I would appreciate your thoughts - what do you think?
Thanks in advance.
LL