HOA collect insufficient assessment options

Started by SteveH15 • 5 replies • 778 views

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SteveH15 (California)
Posts: 28

Posted:

to all, I am the president of our HOA in the neighborhood of LA. Our condo consist of mixed use, 90 units of residential, and 8 unit of commercial. Per CC&R, each have seperated budget and pay its own expense plus reasonable reserve fund. This has operating for 10 years now. The board through cost auditing have discovered that because previous BOD (also developer) "mixed up" all the HOA fee into 1 account, therefore, results in residential has subsidized commerical side for past 10 years. That means the commercial 8 units has pay much less and need to repay back the insufficient assessment for the past 10 years. This added up to about 10K per commercial unit.
Obviously this will create some financial hardship for them.

My questions is that if HOA can ask them to pay back over 48 month (4 years), that will sort of adding 40% of their current HOA (should be). Yet still lower than the average HOA fee for similar commercial HOA fee near by.

is this make sense? or any others suggestions you can share. thanks

TimB4 (Tennessee)
Posts: 21,059

Posted:

I would send the documentation of the audit of the commercial accounts with a demand letter for the payment of past due assessments. I would specify that since this was a bookkeeping error, there would be no late charges assessed for those assessments. I would then add that the Board, understanding a potential hardship, is willing to discuss payments plans if desired.

Let them suggest a time frame vs. the board suggesting a time frame.
The Board can always counter any proposal if needed.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Side note - check with an attorney, there may be a statute of limitations on past due debts.

SteveH15 (California)
Posts: 28

Posted:

for your info. there is NO SOL issue here as we are NOT to bring this to the law suit. this matter simply is "insufficient of assessment" due to the 'error' or 'careless' of previous BOD/developer.

TimB4 (Tennessee)
Posts: 21,059

Posted:

I understand the reason for the error. However, it's possible that the Association might have to eat any debt outside the SOL (which is 4 years in CA) regardless if you go to court or not. Hence the reason to check with an attorney.

SteveH15 (California)
Posts: 28

Posted:

california CVP code 337 define the 4 year SOL, that means if we want to press the legal actions, it will allow us to start from 4 years back from the time of discovery. my understanding is that we can go back from the date of association formed which is 10 years. -- because this is qualify as "insufficient of assessment".

we do not want to press the legal actions, we just need to follow the rules of CC&R.

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