HOA Dissolution In Order

Meadow Oaks HOA Dissolution in Order

It is increasing apparent that the Meadow Oaks Home Owners Association should be dissolved. Beginning in January, 2007, the new President and Board of Directors decided that it was time for an increase in the semi-annual HOA dues from $90.00 to the maximum that the Board could raise it (10%) to $99.00. While $18.00 dollars per household ($5,418.00 for 301 total households annually) is not a great deal of money (increase) as a whole, the fact of the matter is that we have nothing to show for this increase. Let's take a look at some financial numbers:

At present the new HOA dues are $198.00 per resident annually. Additionally, if you are to buy a house in the development, you are required to pay an additional $100.00 initiation fee. This initiation fee, enacted in May, 2006, is slated for the perimeter fence maintenance, fences that are owned by the residents themselves, not the HOA. Meadow Oaks receives a total of $59,598.00 per annum on dues plus approximately $1,000.00 per annum on home sales. What are we getting in return?

* Meadow Oaks HOA members (all 301 households) pay the maintenance on the City of Corinth owned Meadow Oaks Park at a rate of $20,000.00 per year. Surprising that the HOA pays for maintenance on a park that is not owned by Meadow Oaks HOA.

* Meadow Oaks HOA receives water credits from the City of Corinth for watering the park that the City owns, not Meadow Oaks HOA. In December, Meadow Oaks HOA received an invoice from the City of Corinth for $3,200.00. That is in addition to the $20,000.00 that we pay for maintenance. $23,200.00 for a park that we do not own!

* Meadow Oaks HOA now, as always, must share the park with any resident of the City or for that matter any person at all. While there is no harm in this, we are still paying for the park maintenance that the City owns or the City controls, etc. We have no say on what happens in the park!

* Meadow Oaks HOA does not own any common area or property. We pay in excess of $60,000 per year for nothing.

* Meadow Oaks is purported to be a Not for Profit organization, yet we maintain in excess of $55,000.00 in money bearing accounts (instruments). Why does the Meadow Oaks HOA Board of Directors deem it necessary to raise the annual dues on its residents by the maximum rate of 10%?

* The Meadow Oaks HOA Board of Directors has decided to maintain the perimeter fence that is owned by the residents. This fence is not owned by the HOA. Additionally, in 2002 Meadow Oaks HOA paid for staining the fence for 3 coats of stain at a cost to the HOA of $4,200.00. The bid was for a fully power-washed and power stained fence, 3 Coats; however in 2006 the Meadow Oaks HOA Board of Directors approved a contract for $5,600.00 for a single coat hand sprayed application. Money not spent wisely!

Let's face it Meadow Oaks Home Owners Association residents: We do not own any common areas, we are paying for maintenance on a park we do not own, we pay for watering the park that we do not own, we pay for maintenance on a fence that we do not own and now the Board raises our rates. We have no business collecting money from residents in Meadow Oaks for NOTHING!

More to come.

Corinth, TX

JoeW:

We could go on for days. Here is a breakdown of the HOA Dues expenditures in the past year:

Income: $55,197.00

City Park Maintenance: ($23,693.00) We don't own this park!
Management Fees: (13,615.00)
Lawyers: ($8,417.00)
HOA Activities: ($8,460.00) Annual Party for kids
Insurance: ($6,194.00) We now have property insurance on property we do not own!!
Bad Debt, Collections, Administration, etc: ($7,543.00)

Net Income FY2006: ($14,345.00) As in Negative 14K.

Joe, we own absolutely no common areas, no road right of ways, etc. We are basically collecting money to make a Management Company, Insurance Companies, Lawyers and a Lawn Service Company money while we go in debt!

I haven't been following this thread, so I may be missing something here. but just looking at the financials, here is what I would do immediately:

Decide what expenses can be reduced.
The decide if dues should be increased.

At the minimum $15,000 must be cut.

Management Fees: (13,615.00) You can reduce this by renegotiating the services. Decide exactly what you need, and if necessary put it out for bid. Your association can probably get a good manager for around $9,000. We pay about $7500 to a national company. Some require a minimum of $1000 per month. You don't need that.

Get a goal of $7500 but budget for $10,000 Savings = 3,615

HOA Activities: ($8,460.00) Annual Party for kids
That is too much. Budget $1,000 Savings = 7,460

Insurance: ($6,194.00) We now have property insurance on property we do not own!!

Talk with your broker and interview a new broker. Get that premium reduced. Budget for $5,000 but shoot for less. Savings = 1,194

City Park Maintenance: ($23,693.00) We don't own this park!
Write a letter to your Mayor, and send a copy to every one of the city counsel members stating that the HOA is ceasing the maintaining of the city parks, and ask them when they will take over the maintenance responsibility. Then call to get on the agenda and attend a counsel meeting and ask when they will bet taking it over. First get a plat map and the tax records to prove who owns the property. Take that with you. Give them notice that you are ceasing the maintenance in x days and that you wish to cooperate with them so that they pick up the maintenance at the same time as you cease it, so the park does not have a down maintenance time.

At the same time try to get the expenses reduced by renegotiating a month to month contract with the landscaper, explaining that you're trying to get the city to take it over. Write specs and get competitive bids. You can probably cut out at least $5000 from this amount. The goal is zero
Savings = $5,000

Bad Debt, Collections, Administration, etc: ($7,543.00)
This is terrible. You need to fire the management company. But first get them off their butt and tell them to collect this money. You should have a goal of no more than 7% of your monthly income in arrears, and zero in the 90-120 arrears bracket. (Your arrears should never be over $320 in any month) Get on top of this without delay. One time savings of about $5,000 (You may have some collection costs that aren't recouped.)

Lawyers: ($8,417.00)
You need to look at why you're spending this kind of money on lawyers and reduce that expense.

We have close to $100,000 income and haven't spent a dime on attorneys in many years. Potential savings = $5,000 goal is zero lawyer expense.

1. child party 7,460
2. attorney fees 7,000

(Those two items will get you in break-even state.
3. City Park 23,693
This is your single biggest expense. Get on that yesterday.

4. Bad debts 7,000
Get on top of that now

5. Insurance 2,000 approximate savings. Get quotes now to reduce it

6. Management fees 4,000 savings.
While they're working on getting the assessments current, be negotiating a new rate with them. Simultaneously begin getting quotes from other management companies. Specify the exact services you need and provide the same specs to each company. This company has not done their job. Once you have all the ducks lined up, then you can make a change. That is, unless you and the current management company come to an acceptable agreement.

You're right, I missed the word "may" in the park issue. However, I think you may have a problem with the dissolution section.

Section 7.6 Term. This Declaration and the vovenants and restrictions contained herein shall run with and bind the land and shall remain in full force and effect for a term of thirty (30) years after the date of this Declaration. Thereafter, this Declaration and the covenants and restrictions contained herein shall be extended automatically for successive periods of ten (10) years unless amended as provided herein. This declaration shall be teminated only by an amendment affected under paragraph (b) of Section 7.12 which expressly provides for such termination.

I think the problem arises in that this section states that the documents "shall" run with etc., not may, for 30 years. After that they can be amended to be terminated. At least, there is enough of a question here to have it seriously looked at by an knowledgable attorney prior to going through all of the hassle, just to find out you had to wait until 2027 before you could actually vote on this issue.

Sorry, I didn't see any article on the web site

Joe

JosephW - "Run with the land" means that the provisions contained in the cc&r's are perpetual. Therefore it means that the Association has the perpetual ability to decide it may not maintain the Park Area. Additionally, Section 7.12 states (b) At any time, the Owners of the legal title to 75% of the Lots may amend the covenants, conditions, and restrictions...

"At any time means" the owners do not have to wait to amend so long as the Declarant's rights and authority were vested with the Association.

CareyB is right on point about double taxation!! I think the first thing to do is develop a dialogue with the owners and board, and then the city on taking ownership of the Park. This would substantially reduce the budget.

CareyB:
It appears that much conjecture is going on without knowing the truth behind it--the biggest problem being the city park which your HOA must maintain.
Why not go to the 'horse's mouth' and speak with the developer and the city to arrive at a solution for this maintenance problem that is eating up your funds.

You can bring questions to the floor all you want and schedule as many meetings as you want to hold, with or without quorum, but until you research with the city over this issue you are wasting breath and energy.
You need to create a Committee/Task Force for the park issue and perhaps spend some funds to research the options open to you; first, discussion with an HOA lawyer is needed ASAP.

Why can't you:
- go door-to-door with a petition to request a special meeting
based on your DECL., petition is to be signed with not less than
1/10th of total membership
- Special Meeting Topic: Vote whether to terminate contract with city for
maintenance of park
The Board Secy. is to schedule the special mtg where vote will be taken and majority rules.

You say you are able to terminate city contract in 30 days. Now, why does the MC and Board seem opposed to terminating the contract? What is the payoff for your Comm. to continue responsibility for the park? Just ASK!

You need to address your mgmt. company's job description: if you don't have one for them; create one. Read the contract; ensure they are fulfilling all their responsibilities--they work for you. Network with other communities to see who they have as MC; ask for copy of their contract.

I hear the frustration in your posts about the Board and MC not wanting to deal with issues; however, you do have recourse as long as you have 1/10 of membership to sign petition for Mtg. you can have discussion and get input
from all.

CareyB - on what grounds are you going to remove BOD members who's terms don't expire? typically removal of a BOD member comes from the owners that elected them. removal of an officer is typically at the pleasure of the BOD. Plus, you don't need to remove the other 2 BOD membes because IF you get your 3 elected you'll have a quorum. are you going to be one of the 3 going up for election?