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Voluntary HOA but mandatory dues????

Started by SteveS22 • 13 replies • 2613 views

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SteveS22 (New Hampshire)
Posts: 6
Posted:
I live in an HOA that is voluntary. One can choose to belong or not belong. The HOA agrees with this.

Several residents are non members. Most agree that they should pay for the necessary repairs and/or maintenance to the common road. The trouble begins over what is necessary. For example the HOA decided that seal coating the road would add to its life. Some non-members do not agree that that is a necessary expense and refuse to pay for it.

The HOA argues that they decide what is necessary and they further state that postage, supplies, legal fees etc., are related to the road therefore non-members must pay these costs as well

Some non-members have conceded under the threat of litigation while others have told the HOA to sue them. I can see this getting very expensive.

The road is deeded to most of the owners (members and non-members) but there is no agreement in place to cover the cost sharing.

Is anyone aware of any legal cases where this type of issue was resolved? Do non-members have to pay anything? If they do where is the line drawn? Can the HOA charge whatever they want?

KevinK7 (Florida)
Posts: 1,343
Posted:
You may want to look at your states corporate laws. My neighborhood tried this among (among other things). If you look at the specifics for laws governing corporations it states that only members can be made liable to the corporation. Of course your situation may differ because you have a common element - a road. Since your documents don't specify cost sharing, I could see each side having an argument to make and a ruling going either way.
GnomeX (Washington)
Posts: 253
Posted:
Quote:
Posted By SteveS22 on 10/19/2013 2:43 PM
I live in an HOA that is voluntary. One can choose to belong or not belong. The HOA agrees with this.

Several residents are non members. Most agree that they should pay for the necessary repairs and/or maintenance to the common road. The trouble begins over what is necessary. For example the HOA decided that seal coating the road would add to its life. Some non-members do not agree that that is a necessary expense and refuse to pay for it.


Seal coating will generally increase the life span of the road.

Quote:
Posted By SteveS22 on 10/19/2013 2:43 PM

The HOA argues that they decide what is necessary and they further state that postage, supplies, legal fees etc., are related to the road therefore non-members must pay these costs as well

Some non-members have conceded under the threat of litigation while others have told the HOA to sue them. I can see this getting very expensive.

The road is deeded to most of the owners (members and non-members) but there is no agreement in place to cover the cost sharing.

Is anyone aware of any legal cases where this type of issue was resolved? Do non-members have to pay anything? If they do where is the line drawn? Can the HOA charge whatever they want?

In our state, an HOA can bill non-owners for the use of roads. You cannot land lock people but they do not get a free ride. They have to also pay for the road upkeep and associated costs. I would consult with your state's law however.

Basically what you have is a case of free-loaders wanting to not pay for a service they use.

If your HOA can legally force them to pay, and the non-members are a high enough percentage of the shared costs, the HOA should pursue every legal option to force them to pay.
JohnB26 (South Carolina)
Posts: 1,569
Posted:
Get an actual CERTIFIED copy of your deed AND any Covenants or Restrictions attached or referenced thereto from the 'register of deeds' (usually @ the county courthouse).

Read same CAREFULLY ~ very carefully.

If you understand - question answered!

If not, have an attorney VERSED IN BOTH real estate AND contract law review the documents and explain them.

Any other course of action would only be guesswork ~ either on our part or on yours.

Good luck.

CAVEAT EMPTOR

SteveM9 (Massachusetts)
Posts: 3,699
Posted:
Quote:

In our state, an HOA can bill non-owners for the use of roads. You cannot land lock people but they do not get a free ride. They have to also pay for the road upkeep and associated costs. I would consult with your state's law however.


Yep. Even in states without this law, a lawsuit by the HOA can force you to pay plus back dues and interest. You can get a free ride for many voluntary associations, a road is not one of them.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Steve,

Welcome to the forum.

There is a case from the Arizona Court of Appeals that addresses this issue. In that case, two owners accessed their properties by an easement that neither owned. One owner had a Jeep and liked the rutted road; the other had a sedan and wished to have the road paved. The Jeep-owner promised to assist with maintaining the road but never did anything. The other owner had the road paved and sued the Jeep-owner for his share of the costs.

The court held that those who use a road or other easement have a legally enforceable obligation to contribute to the costs of maintenance. But the court also held that maintenance must be mutually agreed upon, implying that all parties must participate in negotiations in good faith.

Applying that decision to your case, the HOA cannot unilaterally dictate what work will be done. The work must be agreed upon by the parties as will the amount each pays for the work.

One question that should be asked is whether the HOA can represent its members in negotiating road repairs. In my state, they cannot because one must be an attorney to bargain for another. This means that all the road users, whether HOA member or not, must negotiate either for themselves or through their own attorneys.

The Arizona case I referred to above is Freeman v. Sorchych and the original opinion may be viewed online at:
http://azcourts.gov/Portals/0/OpinionFiles/Div1/2011/1%20CA-CV%2009-0720.PDF
TimB4 (Tennessee)
Posts: 21,062
Posted:
Quote:
Posted By SteveS22 on 10/19/2013 2:43 PM

The road is deeded to most of the owners (members and non-members) but there is no agreement in place to cover the cost sharing.

Start checking county records. Typically when private roads are used there is some sort of "private road agreement" or PRA filed with the county. It may be as simple as each owner will take responsibility of the road along their property to the middle of the road.

The Association should also verify that it has the authority to maintain the road in front of or uses an easement on property of non-members.

As for seal coating, I believe that the benefits are debated by every Association.

What everyone agrees with is that seal coating does make the roads look nicer. This may or may not help to attract buyers.
SteveS22 (New Hampshire)
Posts: 6
Posted:
Nothing on deed about HOA. There are NO covenants or restriction for the HOA. The HOA was started long after the development was done. Lawyers only say that the obligations to pay come from common law and that they law states one must pay what is reasonable and necessary.....that leaves a very large gray area.
SteveS22 (New Hampshire)
Posts: 6
Posted:
The law and the lawyers say that one must pay the reasonable and necessary costs of the road. I believe all of the non-members agree with that. The problem that is developing is what is necessary and reasonable. I used the example of seal coating but what if the HOA decided to paint the road purple. It is their road and I am sure they legally can do it but would the non-members owe money for that? The HOA feels any expense that they incur is necessary and reasonable. Since this issue developed the HOA has gone about various projects on the road that are not IMHO necessary. The stated reason they are doing this is too create a pattern of expenses to run up the amount of money the non-members will owe. They want to amount to be large enough for when they go to court. The HOA expects non-members to pay their pro rata share of the legal costs to sue them.

The additional issue is the HOA will not provide complete documentation of what the bills and expense are for. In one case they provided a copy of an invoice made out to a neighbor, who is not on the board. When the HOA was asked for a copy of the contractor invoice that had a description of work done they refused. I cannot fault a non-member from wanting more information.

I see this as a mess for members and non-members and it appears that there is no definitive laws to define what must be paid other than reasonable and necessary. I think the Arizona case may be helpful but am hoping there are more cases out there that address the issue.

There is no language on the deed that provides any sort of language about cost sharing.
SteveS22 (New Hampshire)
Posts: 6
Posted:


In our state, an HOA can bill non-owners for the use of roads. You cannot land lock people but they do not get a free ride. They have to also pay for the road upkeep and associated costs. I would consult with your state's law however.

Basically what you have is a case of free-loaders wanting to not pay for a service they use.

If your HOA can legally force them to pay, and the non-members are a high enough percentage of the shared costs, the HOA should pursue every legal option to force them to pay.

When you say associated costs do you mean associated with the road directly or do you mean the HOA? My HOA wants members to pay for the road AND the costs of running the association. I cannot understand how the HOA thinks people owe this money too.
GnomeX (Washington)
Posts: 253
Posted:
Quote:
Posted By SteveS22 on 10/20/2013 7:15 AM

When you say associated costs do you mean associated with the road directly or do you mean the HOA? My HOA wants members to pay for the road AND the costs of running the association. I cannot understand how the HOA thinks people owe this money too.

Well it is not just the road repair and maintenance costs. You still have some overhead to pay someone to do the accounting for the non-members. Accounting for non-members as in sending them billing statements and tracking non-members accounts receivable. Unless of course it is just an unpaid office volunteer doing the accounting.

Why should the members have to bear the overhead for the accounting costs of non-members? As long as it is reasonably apportioned then I don't see a problem with it.

In our case we don't bother with the non-members that use the roads as it is just a small number of parties. One non-member is county public transportation (buses). If we pursued the county, they likely would just drop service to our neighborhood. Another is a logging easement for a logging company. And the logging company only logs every few years and hardly uses the roads. We do have a few homes behind our association but it has never been pursued and the revenue it would generate is so small.

Now we do have a developer wanting to build about 100 homes behind our association and the developer is wanting to force the association to allow access through our roads instead of county roads. At that point we WILL have to bill those non-members in this new development.
LarryB13 (Arizona)
Posts: 4,099
Posted:
Quote:
Posted By SteveS22 on 10/20/2013 7:03 AM
Nothing on deed about HOA. There are NO covenants or restriction for the HOA. The HOA was started long after the development was done. Lawyers only say that the obligations to pay come from common law and that they law states one must pay what is reasonable and necessary.....that leaves a very large gray area.

Steve,

From what you have posted thus far it appears that the HOA has no standing regarding the roads. The roads were not deeded to the association and the association did not exist until long after the original deeds were recorded. The fact that some people agreed to join an association does not create an obligation on non-members.

All owners have some obligation to maintain the roads and common law supports the idea that the owners must agree to some sort of plan for maintenance. Since the HOA is not an owner it cannot dictate what will be done and since it is not an attorney cannot represent owners in negotiations over the roads. You purchased in good faith expecting other owners to do their share only to find a non-owner HOA trying to control road maintenance.

No matter how you slice it, though, this is going to cost someone some money. If it was me, I would consider filing for a court order to require the individual members of the association to negotiate the road maintenance on their own and to shut the HOA out of the picture entirely.
SteveS22 (New Hampshire)
Posts: 6
Posted:
Quote:
Posted By LarryB13 on 10/20/2013 1:27 PM
Posted By SteveS22 on 10/20/2013 7:03 AM
Nothing on deed about HOA. There are NO covenants or restriction for the HOA. The HOA was started long after the development was done. Lawyers only say that the obligations to pay come from common law and that they law states one must pay what is reasonable and necessary.....that leaves a very large gray area.


Steve,

From what you have posted thus far it appears that the HOA has no standing regarding the roads. The roads were not deeded to the association and the association did not exist until long after the original deeds were recorded. The fact that some people agreed to join an association does not create an obligation on non-members.

All owners have some obligation to maintain the roads and common law supports the idea that the owners must agree to some sort of plan for maintenance. Since the HOA is not an owner it cannot dictate what will be done and since it is not an attorney cannot represent owners in negotiations over the roads. You purchased in good faith expecting other owners to do their share only to find a non-owner HOA trying to control road maintenance.

No matter how you slice it, though, this is going to cost someone some money. If it was me, I would consider filing for a court order to require the individual members of the association to negotiate the road maintenance on their own and to shut the HOA out of the picture entirely.

Larry,

The developer owned the road but in subsequent litigation the ownership of the road was transferred over to the voluntary HOA. So, I think they have standing.

I think you are correct that court will be the only solution. Sad part is that we are talking very small sums of money that non-members and the HOA disagree on. I cannot fathom how a Judge would rule that non-members must pay whatever the HOA says. HOA is determined to win this but I think everyone will end up losers in the end.

SteveS22 (New Hampshire)
Posts: 6
Posted:
Quote:
Posted By GnomeX on 10/20/2013 10:42 AM
Posted By SteveS22 on 10/20/2013 7:15 AM

When you say associated costs do you mean associated with the road directly or do you mean the HOA? My HOA wants members to pay for the road AND the costs of running the association. I cannot understand how the HOA thinks people owe this money too.


Well it is not just the road repair and maintenance costs. You still have some overhead to pay someone to do the accounting for the non-members. Accounting for non-members as in sending them billing statements and tracking non-members accounts receivable. Unless of course it is just an unpaid office volunteer doing the accounting.

Why should the members have to bear the overhead for the accounting costs of non-members? As long as it is reasonably apportioned then I don't see a problem with it.

In our case we don't bother with the non-members that use the roads as it is just a small number of parties. One non-member is county public transportation (buses). If we pursued the county, they likely would just drop service to our neighborhood. Another is a logging easement for a logging company. And the logging company only logs every few years and hardly uses the roads. We do have a few homes behind our association but it has never been pursued and the revenue it would generate is so small.

Now we do have a developer wanting to build about 100 homes behind our association and the developer is wanting to force the association to allow access through our roads instead of county roads. At that point we WILL have to bill those non-members in this new development.

You point is valid BUT in this HOA the accounting was always handled by volunteers UNTIL some people resigned. The HOA then pays the volunteer so they can then bill the non-members. The HOA is do nothing to avert the train wreck by creating new bills that never existed before.

I should note that some of the nonmembers resigned because the HOA refused to allow people to see the books. Legally they have to BUT one must file a civil suit to enforce. I think we have a runaway board but most folks really could not care and they are allowed to drag the HOA into IMHO needless litigation.

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