Annual Assessment Per Unit Formula

Started by DanH14 • 8 replies • 446 views

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DanH14 (Missouri)
Posts: 4

Posted:

I am sure there is a topic in here already, but unfortunately, haven't been able to locate this yet...that said, apologies up-in-front for any duplicates.

My question...we have a small HOA community that includes 15 separate cabins. Cabins vary in size: studio, 2 bedroom, or 3 bedroom homes.

Currently our HOA calculates the annual assessment based on the number of "bedrooms" per unit; however, this formula has had too much gray area as some folks argue that their rooms at times are not bedrooms, but instead an office, or storage room.

I'm curious to find out if others have HOA assessment formulas in play that might be a bit more black and white.

Thank you!

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Dan

Not uncommon for dues to be equal no matter the unit/home size. Also not uncommon for dues to be based on unit/home square footage. Your bedroom formula might not be the best but it seems the issue is people wanting to call it something else. Could you just go by number of rooms?

RichardP13 (California)
Posts: 3,868

Posted:

When a house is appraised that room someone is using as a office is listed as a bedroom. That is all that counts. It is what the room originally was intended to b e used for.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Hereabouts, if it has a closet and a window, then it's considered a bedroom. The home builder that I work for stopped putting closets in media rooms or studies if the room had no exterior wall/window - liability issues if someone had used the room as a bedroom and had been unable to escape from a fire.

SheliaH (Indiana)
Posts: 6,964

Posted:

I'm in a townhouse community - some of the homes have two bedrooms, while others (like mine) have three. Our assessment isn't based on the number of bedrooms - since the assessment is used to care for the community's common areas (e.g. roofing), our budget is based on what it takes to care for all the units.

That would probably be best for your community - check your documenst first to see what the association is supposed to care for, consider the costs to provide services for the entire community and then divide by 15. If your documents state the assessment is based on the number of bedrooms (which really doesn't make sense to me), the homeowners should be able to vote to amend the documents to use a different formula. Keep reading your documents to see how that's done.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By SheliaH on 07/30/2019 10:00 AM
I'm in a townhouse community - some of the homes have two bedrooms, while others (like mine) have three. Our assessment isn't based on the number of bedrooms - since the assessment is used to care for the community's common areas (e.g. roofing), our budget is based on what it takes to care for all the units.

That would probably be best for your community - check your documenst first to see what the association is supposed to care for, consider the costs to provide services for the entire community and then divide by 15. If your documents state the assessment is based on the number of bedrooms (which really doesn't make sense to me), the homeowners should be able to vote to amend the documents to use a different formula. Keep reading your documents to see how that's done.

I am going to disagree. The assessment should be based on a number of factors, mainly what utilities might be included each unit assessments. Also insurance has to be factored in as to cost can be higher in a larger unit. In all associations I have managed over the years, if assessments were different it was always calculated by square footage and budgets were separated by fixed costs and variable costs.

SheliaH (Indiana)
Posts: 6,964

Posted:

Understood, but in the early days of our community, the assessments were based on the number of bedrooms and it caused a lot of conflicts, so it was changed. As for utilities, those are the responsibility of the individual homeowners. As for our insurance, our bigger problem was the number of claims - that got us dumped by our carrier. That happened shortly before I bought my unit and since then, we found another carrier (yes, we pay more), but we also changed a few things to keep the number of claims under control. From what I can see, the claims we have had weren't affected by the number of bedrooms at all.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

KerryL1 (California)
Posts: 14,550

Posted:

A small portion of our multi-story condos' yes is based on Sq. Ft. for gas, building insurance and water.

If the the CC&rs say bedrooms, I'd say that's it until owners vote to amend them. Meanwhile if it has a closet, as someone else argues, it's a bedroom no matter how currently used.

AugustinD
Posts: 5,144

Posted:

Quote:

Posted By DanH14 on 07/30/2019 9:01 AM
My question...we have a small HOA community that includes 15 separate cabins. Cabins vary in size: studio, 2 bedroom, or 3 bedroom homes. Currently our HOA calculates the annual assessment based on the number of "bedrooms" per unit; however, this formula has had too much gray area as some folks argue that their rooms at times are not bedrooms, but instead an office, or storage room.

First, what exactly does your HOA's Declaration of Covenants say about how the assessment is to be calculated?

Second, how many votes does it take to amend the covenants? Do you think you can get these votes?

Third, for what maintenance is the HOA responsible? Roads? Roofs? Exterior walls? Lawns? A park? A pool? A clubhouse?

If the HOA is required to maintain say roofs and exterior walls, then for fairness the assessment is probably best assigned based on square feet of the cabin. Also square feet will tend to take into account usage of the common amenities: The more square feet, the more people will be inhabiting the cabin, and the more usage the roads will get. So the larger cabins will pay a greater share of, say, road maintenance, as they should.

Fourth, what are your HOA's annual expenses right now?

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