Is HOA Dues a Two Way Contract?

Here is one for the "legal eagles" on this forum. Over the last few years many homeowner's (14 out of 50), have refused to pay their dues on the grounds that the common areas were un-kept. Now we all know that by buying a house in this Florida community you agree to the assessment of dues and that should be the end of the story right? However, the Covenants and Restrictions do state that the responsibility of the HOA is to "maintain the common areas in good repair". That is one of the main reasons that we have an HOA and that we collect dues in the first place. Now if the common areas fall into ruin, in this case the sprinklers stopped working so all the grass died, the entry lights do not work, the community park fence fell down and the community dock fell over, the trees aren't trimmed, and I just found out that we didn't even have insurance, plus the HOA does not send out an annual statement, can I blame those members for not paying dues? Now we finally are starting to put the community back together with a new Board, and a badly needed Management company. But we have to special assess the homeowner's to fix the place up. The homeowner's who paid all along say it's not fair that they should be assessed when many homeowner's haven't paid. The homeowner's that haven't paid say that they will not pay the past two years because nothing was done, but they will pay "from now on". The special assessment is turning into a disaster that threatens to disolve all the hard work we are trying to do, but without it we don't have the funds to do anything anyway. Our attorney at the management company says that all homes must pay the assessments reguardless of the condition of the common areas, however he also states that the Covenants is a contract with the Homeowner's and they may sue us for the return of dues based on the breach of that contract. So we should consider ourselves lucky that so many homeowner's paid durring the time the common areas were un-kept, and they may also want their money back if a "breach of contract" suit was sucessful by a non-paying Homeowner. So, is the Covenants and Restrictions a legal contract that goes both ways, where the homeowner is bound to pay assessments but that the HOA is bound to provide a reasonable service for those assessments?

It's a double edged sword in a HOA. The people who refused to pay because they felt the area was in disrepair where shooting themselves and the others in the foot. You can't improve an area without money. You can't send notices out because that costs money. (Postage, office supplies and paying someone to write/send the notices costs money.) You can't even enforce the lien/foreclosure process on the non-payers because it costs money to file and/or seek legal advice. It's the small costs that add up in a HOA.

The HOA is ONLY funded by the owners for the owners. There's no other sources of miracle income coming into a HOA. You have to pay to play. That's a hard concept to get through. Many people think they are entitled to the full $100 worth of dues they may pay a month. They don't realize that money has to be shared amongst ALL the other needs of the community. It's much like a "Kitty" in playing poker. The best hand wins the pot but everyone paid in.

No, you can NOT stop paying your HOA just because you don't like something. The HOA also can NOT forgive someone from paying their dues for returned services. If someone volunteers to change out lightbulbs, the HOA can't deduct the cost of their labor and light bulb expenses from that member's dues. They can Pay them and purchase the light bulbs for the member to replace but they can't reduce the dues owed.

It is also important to point out that the members who don't pay, don't vote. They should lose their voting rights if they are NOT up to date on their dues. That means they can get out voted by the "good" members for having special assessments. Their vote won't count to counteract a majority vote of good standing members.

I would also consider looking into placing liens on the non-payers. Atleast give them notice that your HOA can do that and may if they don't make payment arrangements. It does cost money to file a lien in some states, but it will send out a message. One that the good payers will appreciate that there is some kind of accountability for NOT paying. Otherwise, your "good" payers may not see a bad side and not pay themselves. That's a bad cycle. One that many HOA's go through.

Jadedone4:

How it was perfected; this was a townhome community 168 units in NJ. It was built in 1975 when HOA's first came into existence. They went through many MC's and finally in 1990 had a board that wouldn't retire, didn't hold elections, didn't enforce the "Master Deed" (CCR's), ran the HOA into the ground, placed Band-Aids on the units (if a repair was needed just did the absolute minimal on it), kept throwing good money into bad situations. They had a playground that kids couldn't even play on the equipment just wasn't safe; the wooden set had splitters so bad kids were hurting themselves. The homes were so run down that Owners were selling their units for $23,000.00 in 1998. The units had up to 1,800 sq. feet, people were loosing serious money.

Every time Owners would go to the board for repairs all they were told is we have no money. The pool had no furniture, owners had to bring their own chairs, ants over ran the pool; although there was a small cement area around the pool, owners had to place their chairs in the grass, if the grass was even mowed.

This board reigned with a heavy hand and hired a maintenance crew, paid out over $60,000 in salary and insurance. The crew was always seen driving around never working, sleeping in the clubhouse, while the owners watched their investment be ruined.

Sick and tired of hearing they had no money, watching this horrible situation; it took one small group of committed owners to overthrow this board. They hired an attorney, went around with a petition (worded correctly) got the required amount of signatures, held a meeting, placed their money in an escrow account, and were successful in overthrowing (3) board members.

They elected a new board; this board went out to bid to hire a MC. I was lucky enough to be awarded the contract. Within 6 months, I collected all their dues, negotiated a contract to box & wrap all 168 soffits with vinyl; the board Okayed the firing of the $60,000.00 employees and sub’ed out all of the work. We did a complete face lift on the exterior of the homes, purchased pool furniture, umbrellas, put additional cement around the pool for a larger decking, made repairs to the pool, hired a landscape company, renamed the HOA (with approval and amendments) the Owners wanted to change from the reputation they had with a new name, purchase beautiful new entrance signs, place lighting at the entrance signs, fixed sidewalks, and so much more…..

The changes were so obvious that the newspaper and the Mayor noticed that they questioned, what is going on at “*&%$#@*# HOA? They did an article and the prices for these homes went from $23,000.00 (that when I sold my business in NJ in 2001 and resigned from managing them), these townhomes were selling for $198,000.00.

Having said all of that, it is possible to turn around a failing association through a saying by Margaret Mead “Never doubt that a small group of thoughtful committed citizens can change the world. Indeed it is the only thing that ever has.

“Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws” - Plato 427-347 BD

It was done through the attorney and legally set up as escrow account through the courts. Because of the way it was done, no late fees or liens could be placed on the unit owners.

Could a Owner on his/her own just arbitraraily place their money into an escrow account? No, this HOA went through the proper channels, therefore legally could not be touched.

Thank you Roger, but you already know the answer to that one. lol