HOA MONEY AND DO WE HAVE TOO MUCH?

Liz,

First and foremost, thanks for being part of the solution by volunteering to become involved in your Association.


Every Association is different and the only way to determine if you have enough money set aside (Reserve Funds) to repair/replace the common elements is to perform and continually update a reserve study. When we did our first Reserve Study it was determined that we needed to increase Assessments by 20% to properly fund the reserves.

Reserve Studies can be done by professional firms or by yourself. Here is a link to a thread on this forum about Reserve Studies which should be helpful:

Subject: Reserve Studies/Funds 101e


The amount of Annual Assessments are established by the Associations budget divided by the number of lots. Condominiums will sometimes divide by the percent of the building owned by the member.

The basic Budget is typically determined by adding together the following:

Your Expenses for Services (contracts, etc.), Your Expenses for Insurance (Liability, D&O, Crime/fidelity bond), Your Administrative Costs (taxes, printing, postage, bank fees, etc.), The annual amount needed to set aside for Reserves (based on reserve study) and many Associations include an amount for contingencies (unplanned repairs, extra heavy snow fall, storm damage, etc.) as well.

If you collected too much, you are typically required to place those funds into the reserves (this is typical) or refund the excess back to the membership. If you refund the money back to the membership you have zero say in how those funds are used as it's a refund for overpayment.

I would also caution you not to assume responsibility for things (like fences) that the CC&Rs do not specify as the Associations responsibility.


Covenant enforcement is always a pain in the behind for any Board.
Typically you may only "fine" if your governing documents allow fining. If not, you will need to amend the documents first. You also must ensure that the membership has a right to due process.

As an example, our enforcement policy is:

1) Informal notice (verbal or written)
2) Formal Notice (written)
3) Notice of Hearing before the Architectural Committee (who is our enforcement arm) sent certified
4) Hearing is held
5) Results of Hearing is mailed within a specific time frame
6) Right of appeal to the Board
7) If Appealed - repeat steps 3/4/5 but with the Board.

Typically, by the time it gets to before the board the issue is resolved (and some make us go through the whole process before they will fix it).

Our governing documents and VA law provide the following options for enforcement:

a) Member complies - issue is resolved
b) $50 per occurrence or $10 per day up to 90 days until member complies
c) Right to enter property to make repairs and charge the member (typically only where safety is a concern)
d) Loss of right to vote
e) loss of use of amenities

Since your in MD, I'm offering the following links that might be helpful:

HOA-USA MD State Laws resource page
Covenant Enforcement: An Overview - a newsletter from a law firm for Associations in the MD/VA/DC area.
More Newsletters from the same firm scroll down the page.

Hope this helps,

Tim

I can only offer advice about one part of your query... if you wish to offer the money back to the community to help with repairs, do NOT give money back to individuals in the form of cash or check. As mentioned, you have no say in it once a refund is given. Instead, try to get more volunteering, by using the excess funds to 1) Buy 50 gallons of paint, and get volunteers to help paint 2) Buying fencing wood, and get volunteers to help replace the worst fencing 3) Buying tools/supplies for painting/fencing/construction that the HOA will loan to owners interested in doing their own work.

Liz

Your OP makes it sounds like there has been little to no control/enforcement and now all are hoping/expecting the ARC to correct this.

If your problem is individuals not maintaining their own lot/home then look inward to your CC&R's for wording about:

1. Maintaining to community standards.

2. A fining procedure for those not maintaining standards.

3. The right of the association to do the need maintenance and bill it to the owner.

Hope this helps.

Yes, Liz, as John points out, see what your CC&Rs or other governing docs say about maintenance and your HOA's rights, if any, to do some maintenance and bill the owners.

We're a twin tower high rise and our board does have the right to enter Owners' homes to have access to clean up or paint exclusive use balconies, if needed. We haven't done it, but might by the end of the year after some other projects are completed.

But first see if you can get the board to encourage compliance with whatever maintenance rules there are. Again, a cheery newsletter can help.

Next, would come the letters to owners, calls to hearings, etc. that Tim recommends if your gov. docs permit.

And, as Melissa suggests, find a couple of handymen types or yard services that you could recommend in your newsletter.