New Fees Established

CjC
Posts: 210

Posted:

We have xtensive Covenants and Bylaw documents. In the covenants are specific topics that address assessments , duties of BOD etc. No where in this document is anything mentioning special fees that the HOA can establish. The BYLAWS say that the BOD can charge a capital fee to people who buy a home here. Think of it as an additional line item that goes directly to the HOA. Does the BOD have permission to establish this fee? They say yes since it is in the By Laws, but those are not voted on by the community and the covenants do not grant this permission. It's been going on for a number of years and I bet has generated over $500,000 in the last few years.

DouglasK1 (Florida)
Posts: 2,046

Posted:

The ultimate test of whether they have the authority would be for a court to decide after a lawsuit was filed. A quicker/cheaper measure would be to get a lawyer's opinion based on a full review of your docs in the context of your state laws.

Escaped former treasurer and director of a self managed association.

ND (PA)
Posts: 792

Posted:

CjC, are you sure that your Declaration/CCRs are absolutely silent on this being a possibility? You say they are extensive, so that'd mean reading them thoroughly multiple times to be certain that they don't give your Board this authority.

In my previous HOA, the Declaration/CCRs permit the collection of a $1000 nonrefundable contribution upon initial sale, resale, or transfer of a unit in the HOA which was to be used for capital improvements or replacement of common elements.

Look for terms like nonrefundable contribution, capital improvement fee, capital contribution, initial fee, etc.

If not specifically permitted by the declaration, I don't think it could magically appear in the by-laws and be defensible.

That said, if it has existed in the by-laws since the HOA first began, that may be a bit more defensible, although perhaps still not completely legitimate.

ND (PA)
Posts: 792

Posted:

CjC, are you sure that your Declaration/CCRs are absolutely silent on this being a possibility? You say they are extensive, so that'd mean reading them thoroughly multiple times to be certain that they don't give your Board this authority.

In my previous HOA, the Declaration/CCRs permit the collection of a $1000 nonrefundable contribution upon initial sale, resale, or transfer of a unit in the HOA which was to be used for capital improvements or replacement of common elements.

Look for terms like nonrefundable contribution, capital improvement fee, capital contribution, initial fee, etc.

If not specifically permitted by the declaration, I don't think it could magically appear in the by-laws and be defensible.

That said, if it has existed in the by-laws since the HOA first began, that may be a bit more defensible, although perhaps still not completely legitimate.

ND (PA)
Posts: 792

Posted:

CjC, are you sure that your Declaration/CCRs are absolutely silent on this being a possibility? You say they are extensive, so that'd mean reading them thoroughly multiple times to be certain that they don't give your Board this authority.

In my previous HOA, the Declaration/CCRs permit the collection of a $1000 nonrefundable contribution upon initial sale, resale, or transfer of a unit in the HOA which was to be used for capital improvements or replacement of common elements.

Look for terms like nonrefundable contribution, capital improvement fee, capital contribution, initial fee, etc.

If not specifically permitted by the declaration, I don't think it could magically appear in the by-laws and be defensible.

That said, if it has existed in the by-laws since the HOA first began, that may be a bit more defensible, although perhaps still not completely legitimate.

CjC
Posts: 210

Posted:

ND_ I am sure it is not in there, we have lived here for 20 years and read the docs many times. But as you said, it has been in the By Laws for quite a while (I went to courthouse to see old docs) They only started collecting it about 5 years ago and people are really starting to grumble now.

MarkM19 (Texas)
Posts: 1,459

Posted:

CjC,

You call it an additional line item. The developer or past HOA boards may think of it as a membership fee. I am not a fan of this fee being charged on resale. I do agree with first time home sales
being charge a fee. You are joining a Association that has built and maintained a place that you now want to become a member. You make it sound like this has been going on for years. Are you the only person complaining. Why did you not say exactly what the fee is per sale? Is the money kept in a separate account that is trackable. It should not in my opinion go into the operating account.

KerryL1 (California)
Posts: 14,550

Posted:

With ND, ND & ND,* I agree--double check your CC&Rs. For one thing, the bylaws seem an odd place to put such a clause. So I'd also agree with Douglas: get an opinion from an HOA attorney.

* I thought I was the champ of accidental multiple posts!

JimC23 (Nevada)
Posts: 13

Posted:

Seems like a common fee in my area -- which is often sent over to the reserve account. IMIO, not much different from an 'initiation fee' charged to new members of a tennis or golf club.

JimC23 (Nevada)
Posts: 13

Posted:

If the Bylaws say that the BOD charge this fee, I'm not sure why you ask whether the BOD has permission to establish this fee. Admittedly, I'm a bit in the dark having not seen the exact language of your Bylaws nor knowing anything about the HOA law in your area. But if the BOD has been consistent in charging this fee for a number of years, is there really an issue? I would guess that the members at large would welcome any capital contributions to their reserve account, so long as any required contribution doesn't realistically affect their own resale value. For example, a buy-in cost of $1000 for the HOA shouldn't, in my mind, have much of a negative impact on whether or not a potential buyer bids on a home in the $500,000 range. But I'm still a newbie here and learning, so I welcome any input.

CjC
Posts: 210

Posted:

What is upsetting people is that all home sales are charged this fee. Whether or not you are new to the neighborhood. many people just move within the neighborhood and have to pay this multiple times.

MarkM19 (Texas)
Posts: 1,459

Posted:

CjC

You still have not mentioned how much the fee actually is yet. You also lead with the topic "New Fees Established" Is this because you were charged this during a Sale?

You won't change it by complaining about it on this site. I think you have a chance to modify it if you get on the board. If I were you I would start with the Refinance, and Sales inside of the Community. Those charges are excessive and IMO not the original intent of the Fees.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

While the Bylaws might be a strange place to have such a fee, it is there and it is not uncommon. What % of owner's do you need to change a Bylaw? I doubt many would want is changed as it does bring in revenue and does not affect existing owners unless the re-buy in the same association which I expect is rare.

Personally, I am all for "buy in" fees.

AugustinD
Posts: 5,144

Posted:

CjC,

1.
Voting procedures, director eligibility, et cetera are also almost always in the Bylaws, without a word on the subject in the Covenants. Does this mean the Covenants prohibit said voting procedures? No.

2.
Often there is wording in the Bylaws or Covenants to the effect that, 'any conflicts between the Covenants and Bylaws requires deference to the Covenants.' I do not yet see a conflict here. Still, to help your understanding, look for this wording. Also it's possible your state's statutes say something on the point.

3.
"Capital assets" typically refers to long-lifed (one year or more) infrastructure. I bet the purpose of this "capital fee" is to help the HOA's reserves along. Do you think your HOA's reserves are in good shape?

4.
I think the reason such fees are typically imposed on buyers is because they can afford to finance the fee within their new mortgage. The "capital fee" may seem like some flavor of gouging, but it is also true that these days, the typical American is not a saver and does not keep cash on hand for a large special assessment (if needed to shore up the reserve fund).

5.
Did the Board present a rational, financial basis for billing buyers the amount they do with this "capital fee"?

6.
What do you mean when you write, "but those are not voted on by the community"? Is the regular assessment (dues) voted on, say every year?

7.
Members who do not like this provision in the Bylaws always have the option to review what the Bylaws say about amending and take this route.