Proper protocol to increase fees

Although there are some State Statutes that specify procedures for assessment increases, It's typically the governing documents that control.

The CC&Rs typically specify that the Board would set the amount of the annual assessment. Some CC&Rs may limit how much of an increase the Board can make or the maximum amount of the assessment. However, most simply say that the Board is to fix an amount.

The Articles of Incorporation (if your association is incorporated) will also typically specify that the Board fixes the amount of the annual assessment.

The Bylaws will typically have procedures (if any) for increasing assessments. In our case, it's the Bylaws that limit the Board to 5% and requires membership approval for more than 5%.

Therefore, check your Bylaws as well as your CC&Rs.

If the governing documents are silent and applicable State statutes are silent, then the decision is entirely the Boards.

Tim touched on this, Ron, but I want to emphasize that even if your own docs simply say the Board may increase dues, state laws, such as in CA, very well mazy place a ceiling on the increase. Beyond that might require a H/O vote.

I have never heard of the president having the authority to raise fees,

If your CCRs state the board has the authority to raise fees, then that's it. If there are no words stating that the president has this authority, then he/she does not; period. Unless your documents state a specific majority vote of the board (such as a 2/3 majority) then a simple majority (more than half) of the board members are all that is required to raise fees.

Our treasurer is basically the management company we hired. Now watch someone come along and say, "No, that doesn't count as a treasurer." I wouldn't be surprised because I've gotten everything else wrong so far =\.


We have 20 units. Fees are $130/mo. $31.2k/ann. We put about 20% away for reserve, but have two major recurring expenses hitting us starting this year and all years going forward, so a fee increase is not only necessary, but critical.

copy/pasta from my other thread:

Basically, our board has been operated poorly in the past. We have common areas local to each unit that, until I came along, were thought to be the responsibility of the members. Because of this misconception, the board has never hired service providers to tend to these areas and the unit owners have stopped maintaining them.

New landscaping was also added alongside our buildings in 2013 and the board at the time didn't hire anyone to tend to these because the president was doing it himself (he was moving and most likely didn't want to tell everyone they'd have to pay for it after he left).

We've also never properly funded any reserves and there have been times when we've had next to nothing in the bank. After an insurance settlement in 2012, we were able to stash a large sum of money in our account, but now it's time to start hiring service providers to care for these nasty-looking common areas while also funding the roof reserve ar $5k per year and the misc reserve at $1k per year (I stashed some extra settlement money into this one for good measure).

Decisions of the Board are made by majority vote.

Note: The Board fixes the amount. This means, it's a decision of the Board - the whole board.

Yes I mean a majority vote of the Board done at a meeting where a quorum is present.

This means that as long as a quorum is present, the vote for increase can take place and, as with any vote of the Board, majority rules.

Based on the responses so far, it appears your board will have the final say on fee increases - our documents say they can be increased up to 5% over current year assessments, otherwise homeowner approval is required.

Just like your reserve situation in your other conversation, homeowner education is essential. I would provide homeowners with a copy of the budget and explain what the deficiencies are, and then describe what the board will do with the additional money. If you have major expenses coming down the pike, you should tell them what will happen if the assessments aren't increased - better to pay a little more every year over time than be socked with a special assessment that no one can afford.

If people still balk, tell them current services may need to be reduced or cut out altogether because they will also be increasing - do they want to take on those services personally? If not, they will have to do like everyone else does - pay up and adjust your spending accordingly. If they don't like it, no one's forcing them to stay, so they can always sell their homes. But who will buy it when the association's finances are so shaky?

Communication is the key - everyone has a right to know where the money's coming from and where it's going, so the board should also be reviewing its practices and vendors to see what can be tweaked. Tell the homeowners what you're and ask them for suggestions. You'll find many will shaddap because actually going out and getting bids, negotiating contracts and checking a contractor's background requires WORK - and of course, they don't want to do that either....

however:

the association MUST be 'properly funded'

if the BOD does NOT properly fund as per the covenants then they are NOT performing their function as a corporate BOD

then any member may petition a court of law to appoint a receiver

said receiver WILL fund ALL covenant required issues

INCLUDING the receiver's salary and costs

If y'all are NOT incorporated it will quickly become 'every man for himself' chaos

BEST OF LUCK