Forcing action on inadequate long term maintenance reserve

I've lived in a 12 unit condo property since 2008, I've been HOA president in the past but have not been on BOD for a few years. We are self managed and just last week voted to hire an outside management company.

For years I've been vocal about my concerns that we aren't doing enough to save for our future maintenance costs. Under my term as president we had a reserve study done for our property which showed a 7% total funding for our 30 year maintenance plan. Unfortunately, we have done nothing to address this issue and now that we have agreed to hire a management company I want to know what steps I can take, if any, to force board action to ensure full funding of our reserve account. A unit recently was on the market and two buyers were unable to secure a loan and I believe this was a direct result of our low reserve balance. I'd like to know I'm protecting my investment and if we aren't going to address this funding issue perhaps I should sell my unit.

im concerned that any action I need to take will be legal and is that something that will only hurt myself and perhaps walking away from this will be the smartest decision. if it matters our contribution to LT funding is around $5k annually. With that in mind and reviewing our LT maintenance schedule and only including the most important pieces we will have over $400k of unfunded expenses we need to account for in the next 30 years. That number is closer to $700,000 if I go with the reccomendation of the reserve study and the schedule of maintenance it estimated.

HELP! My building only sees me as an agitator because of my insistence that we are broke and can't afford to go on this way and I'm always a no vote when it comes to unjustified expenses. For instance, I submitted an alternative motion to not hire a management company for $5k a year instead hiring a consultant for a one time fee to specifically set us up onto a system that would ensure we are operating in compliance to applicable laws and regulations as well as give us the tools we needed to provide to our members as well as to lenders that need to make the determination to fund a loan for a prospective buyer. I need advice I'm just not sure what to do anymore.

Thanks for the response. For clarification, we have 4 units which are rentals. We have never had a foreclosure in the property and we have no past due or uncollected monthly fees and never have had any issues with non payments. last year we had our exterior painted for 50k, this wiped out all reserves except $15k so seeing that expense in relation to our balance was a concern for the lender.

I've tried to explain that we will owe this money I just don't seem to get through to anyone and they either don't care or don't believe what I'm saying. Everyone has a copy of the reserve study which points this information out and clearly outlines the steps it reccomended we take to address the problem, but no one wants to deal with this.. This is why I've asked what I can do to force this actio because it will continue to go on this way otherwise.

To answer your question as to our expenses for a small building we have the following items to plan for: torch down roof (never been replaced only coated past it's life expectancy) elevator (past its life expectancy), exterior facia and trim and siding painting (only been done once since 1977 hence $50k expense to repair rot and to recoat roof to extend its life even further before replacement), interior painting of hallways and carpeting, garage doors and mechanisms, windows in common areas (at some point the responsibility of window replacement became unit responsibility). No pool or anything that is non essential.

the HOA does pay for water sewer and garbage which is $10k a year. Our Cc&r or bylaws does give the Board discretion to individually divide these among units based on a calculation it deems acceptable. in the past I've offered a motion to the HOA to begin billing this per unit based on # of occupants but this has been rejected. They are not individually metered but I think it can still be a way to generate additional revenue that can go into our reserve while not decreasing our monthly hoa dues.

I have to be honest, new volunteers don't exist, I'm not considered an option because I am not viewed as in the best interests of all owners because we need to be making some hard choices and people don't want to make those choices. This is why we've decided to hire a management company because people just don't want to be involved. I'm lost for what more I can do besides selling my unit and moving out for which I just don't want to do that. But I also know I won't be able to afford a huge assessment down the road and why I'm pushing for due increases and small yearly assessments. And now with our board reccomending a management company in our last meeting and making us vote for that without the necessary time to offer up alternative solutions, I question will they really give us the advice we need because they now account for 15% of our operating budget for a job we were already doing for free. Not to mention all of our future maintenence costs are likely to increase if they are managing those projects as well.

I feel as though I've run out of options and that we are now moving in the opposite direction of where we need to be by hiring an outside manager and adding such a huge expense on ourselves. Im beyond frustrated because none of this makes any sense anymore.

As Larry said, this attitude is typical of owners in a condo and HOA, for that matter. They want to keep things ultra cheap (homeownership is anything but, regardless of where you live!). Some really do understand what's at stake, although they won't admit it - they figure when all hell breaks loose and stuff needs to be repaired, they will have sold their units and be long gone. Sadly, the board doesn't always help matters, treating everyone like they're glorified renters.

Since you had the reserve study done, you might want to call in the specialist and ask him/her to make a presentation before the homeowners to explain what a reserve study is and what it's for, and where your community stands. Trust me, a lot of people don't know - all they're hearing right now is "fees will go up and I'm not gonna pay!" The reserve specialist has already been paid, so he/she doesn't gain anything and may have several war stories to share about communities who didn't fund reserves properly.

Your new management company may also help - without naming names, they may also be able to talk about what happens when associations underfund everything. There could be a number of reasons why the buyers had trouble with getting a loan (maybe they just had bad credit), but having a banker speak along with the reserve study specialist can also help. Sometimes, people will straighten up when they learn how such short sighted thinking can affect them now AND in the future when they or their heirs decide to sell.

And if none of this works, you may just have to decide if you want to sell and move on. It's a shame, but if the ship is sinking and no one seems to be paying attention, it may be best for you to just grab a lifeboat and get the hell out. Good luck to you.

Don't be too hard on yourself - you're trying to do right by your neighbors, and while I agree more education of homeowners about what HOAs are and what it means to live in one, you can't protect people from themselves. People who don't live in HOAs have the same mindset - they think their roof, siding, dishwasher, etc. will last forever and a day and are shocked, shocked when it doesn't - and now they must fix it, but didn't prepare their budget accordingly.

As I said earlier, try calling the special meeting featuring the reserve specialist, property manager and perhaps a banker and after they've said their piece, you should let it rip with a come to Jesus style presentation, letting them know exactly what will happen if they don't get their head out of their ass. Will that change some minds? Possibly, but after you say what needs to be said, the next move is yours - I don't necessarily like the idea of your leaving the board (someone needs to be the adult in the room!), but I learned the hard way there comes a point where you've done all you can and sometimes you sometimes have to step aside before others realize what needs to be done and they have to be the ones to do it.

I was a first time homebuyer and like you, I've learned A LOT since then, especially after joining the board. It's fascinating how people want all the benefits to owning something, whether it's a house or car, or even a new suit, but don't want to do the work to get said benefits. I live in a 156 townhouse community, but after reading all sorts of posts on this board, I've concluded the smaller the association, the worse it is, because everyone expects someone else to do the dirty work. It makes you wonder how these people are preparing for retirement or their children's college fund - the same type of thinking (or not) will also get them in trouble in those areas.