Discovered: miscalculation leading to over/under-charging common charges.

There likely have been sales since the error started until it was corrected.
The Association likely can not give back (due to not knowing the whereabouts) overpayments to those previous owners.

Why didn't those who overpayed question the billing when it was happening?

In my opinion, it's likely best to just move forward from here.

The proper procedure would be to credit/bill the current residents based on the correct calculations. Those that have left handle on a case by case basis. If there is a refund due based on the mis-calculation, then refund the amount instead of fighting any legal action that someone may take.

Angelo

How much money per unit are we talking about?

That's about what those who overpaid were refunded by the MC. No refunds came form the HOA.

Sorry, but the Association is the one who would pay the refund. The overcharge didn't go into the bank account of the MC. Mistakes happen. Identify them, make them whole and move on.

I also never suggested that the MC should be the ones on the hook. The Board are the ones that are ultimately responsible for the management of the association, not the MC. People who where undercharged SHOULD have been billed, so the books are balanced.

Of course, unless the amount is fairly trivial, one problem is where is the association going to get the money to make the refunds. The options seem to be:
1) raise dues (or cut back services) for all - the owners getting refunds would actually be partially funding those refunds through the higher dues.
2) use reserves or other money the association already has. This is really just option 1, but more indirect.
3) Recoup from the underpaying owners - I wouldn't want to be at the next annual meeting after that is attempted.
4) Pursue the old management company for the money - likely they wouldn't pay without a judgement, that could potentially cost more than you would recover, and if you lose a suit, you've just thrown more money away.

I don't know the best answer to the situation, but none of the options above seem overly attractive. My preferred path would be to take this a lesson learned, management companies need to be overseen, the board can't just trust that they will always be perfect.

Beyond that, I would think that any of the affected owners should have been able to look at the annual budget and determine what they should have owed based on their proportionate share and caught this a lot sooner. Our association has the same dues for everybody, but if I lived somewhere that had square footage dues allocation, I'd take the time to plug a few numbers into a calculator or spreadsheet and verify they were correct.

I hope I understand you but the total income from unit owners added up and bills were paid from our operating account.
The amount charged for each unit was erroneous because the "% Interest in Undivided Common Element" was wrong.
Some paid too much. Some paid too little.

Over the years I have handled about 10 associations that dues were based on formulas not on an equal basis. They involved just condos or condos with mixed use. Never had any that were town homes or detached single family homes.

In all of the cases we took over from other management firms but were never given a spreadsheet detailing the calculations. We generally had budgets that were separated into fixed expenses and variable expenses. All that was needed was carefully reading and understanding the pertinent sections of the CCRs detailing how the assessments were to be calculated. Once you have a firm understanding, its just a numbers game.

Where you run into potential problems is when you change management companies WITHOUT anyone in the community having a understanding of the process.

Unless fraud is committed, ultimate responsibility falls to the Board of Directors per the CCRs.

Missed that the problem was created by your old MC, Angelo.

In our case, the MC voluntarily reimbursed from the time that they took over, about 3 years earlier. The errors were no doubt there from the developer turnover 5 years before that, but our HOA attorney opined that the current MC had no responsibility before we hired them.

Our MC in '09 was trying to break into our urban area as a major MC player. I don't think their reimbursement to the Owners who paid too much was out of the goodness of their hearts. Nor their "donation" to make up for those who paid two little. During a good part of the 3-year errors period, our treasurer was a CPA.

They did indeed pick up a good share of the HOA MC market in my city over time.

Without the boring details, we have other variables too beyond a simple sf variance. We also have two special areas where the Owners pay a different amount than what we all share equally. We have three reserves accounts. All of us contribute to one; 5% of the owners contribute to "their own," and about 75% of Owners contribute to their own. Billing along some of these other dimensions was flawed for years.

I'm not defending what our MC did, Richard, only relating what occurred in my HOA.

You potentially send notices for current owners (some pay past due while others have future assessments reduced by overpayment). The potential issue you have with past owners is generally the HOA in many states has to provide information as to status of HOA assessments owed at the time of property sales. When the HOA states assessments are current and does not collect past assessments at the time of a sale ... what is your recourse ... virtually NONE.

On those properties ... I potentially would send a letter to the last know address for those who overpaid to let them know to contact you with updated address to send refund (this is a CYA) so you can prove that you made an attempt to contact to avoid future litigation. For those who underpaid ... I agree with Tim ... It is best to just move forward.