Need advice--new to forum

Started by RitaW • 9 replies • 1330 views

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RitaW (Tennessee)
Posts: 16

Posted:

Hello from TN---I am new to this forum but I’m so glad I have found this site.

I need to give some back ground and this may be long and I’m sorry---but I really need advice---

We are a SMALL PUD (we actually own the land our home sits on) Association developed in 2004 with 6 duplex type unites (12 pvt elements in all) with 17 members. The property does not have a pool, club house, etc—just the pvt elements and small commons area (we have a total of 4 acres). We are self run—no management company and have very limited money. The last budget was just for known yearly expenses and nothing added for a working find. Most owners are older (over 70) and pinch each penny but it’s not because they have to.

We have a 1M dollar Hazard insurance ($275 a year) with no DOB insurance. We pay $40 to the TN State and around $8,000 for lawn maint. We have had some 1 time special assessments but nothing major. All of these average around $700 a year per unit. We have never had a CPA audit the books and when I checked on getting one done, the lowest price I could get was $2,000.

We have just elected a new 3 Member BODs and I have been just been appointed as President. We have only 1 old officer from the previous administration and that is the S/T

My question is – should we have another member meeting and go over the CCRs and Bylaws and hope that the members will agree to add the insurance and do the audit or do we just assess the budget and move forward with the additional insurance and an audit? I’m sure will have a mutiny –--- because they have gone with it for 4 years and everything has been fine—

As a note, I found out that I could add a rider on my pvt insurance policy for “asset loss” which covers me up to $50,000 in case of a law suite.

Any advice would be greatly appreciated.
Rita

DaneC (California)
Posts: 210

Posted:

Perhaps with just 17 units, you probably have full disclosure to the other members, so that they know exactly what the funds are being used for. From what you state about one time special assessments, and from the little you mentioned, I am guessing that your regular annual budget may be around $10K to $15K - do you want to spend $2K to confirm that?
One question though, what's going to happen when the roofs need to be replaced?

How about asking your insurance agent to come over and have a chat with the membership?

KarenT (Washington)
Posts: 250

Posted:

Rita,

I am the president as well as the manager of a very small PUD(12 single family residences) in Washington State. Do your CCR's state what is required for the insurance? If so, that should be your governing document regarding the type of coverage you need as a officer of the association. You should definitely make sure you have the appropriate coverage as a officer. FYI - we pay $500.00 annually for our insurance :-)

RitaW (Tennessee)
Posts: 16

Posted:

Thanks so much---—yes--our CCR states that the DOB ensure adequate liability insurance and hazard insurance—it also says the Treasure is to “cause” an annual audit—neither had been done except the Hazard insurance. Our insurance agent says the BOD insurance might run around $750 a year and I’m currently requesting a quote for raising our hazard

The roofs are at owner’s expense—as are all outside repairs to the private elements ---the HOA only provides the maint to the grounds or maybe put in some ground improvements.

GloriaM (North Carolina)
Posts: 829

Posted:

Sounds like you need to have a good budget in place, instead of having special assessments.

RitaW (Tennessee)
Posts: 16

Posted:

thanks, Gloria, the BOD met last night and worked out a budget. We allowed 10,000 for lawn, $275 for insurance, $40 to the State of TN, est of $750 for BOD liability insurance and $1000 for a working fund---which comes out to about $945 a year for 12 units. The $10000 for lawn was as cheap as we can get and the insurance is a "have to have", the BOD liability is something we have never had but after reading about it, we think we do need it and the $1000 working fund is something we have never have either. The troops are now "crying"---we have 2 units for sale and the current owners think this will hurt the sale of their units. We don't want to do that --- so, we now think we could remove the $750 and maybe lower the $1000 to more like $200---and just do special assessments if we need to---

what do you think???

RogerB (Colorado)
Posts: 5,067

Posted:

Rita, I think you need sufficient assessment to meet all operating expenses plus add to the reserve fund so that a special assessment is never needed. Consideration of how this may affect the sale of a property is not a consideration IMO.

RitaW (Tennessee)
Posts: 16

Posted:

Thanks, RogerB---I know you are soooooooo right--I really think the 2 units for sale are over priced anyway. We now have a new BOD and I am a new President---the old BOD had never set a good budget in the past 4 years and we "newbees" do want to do what is right for our HOA owners--and I know we can never please everyone. We are actually new owners too only having lived there less than a year but I know in times past, there have been Special assessments from time to time and no one really had a problem with that--they just don't want those monthly fees high-- it beats me--I'd rather pay a few dollars extra than be hit with a $100.00 fee---but most of our owners are on thet "fixed income"--and I know you've heard that before--I told them just because I work--I'm on a fixed income too--haha--but these are wonderful condos in a high priced area and I know most all of the owners paid "cash" for their units--each over $200,000---so they pinch pennys on everything else--but they want their yards to looks nice--

So, I got a call from one of the BOD and I think they are going to "rethink" the budget. I know if the BOD starts "backing down", we'll be back to the same old thing.

Any other advice--???

KarenT (Washington)
Posts: 250

Posted:

Rita,

I agree with paying a fee extra dollars in dues rather than a special assessment from time to time. Our HOA has the same issue. We tried to raise the dues by a mere $5.00 per month to start a reserve account and you would have thought we asked for $500.00!!! Well needless to say the $5.00 a month was not done so when we had to raise dues it was by $25.00! Budget and reserves benefit everyone!!!

Good luck!

RitaW (Tennessee)
Posts: 16

Posted:

thanks, Karen--I hear ya!!! Our lawn budget is being increaded to include a back bank area that was not in our 2006 budget and we were paying for it as it was mowed. Now we are getting a good deal from a new company and we've only had to increase the lawn budget by 3% to cover the extra cost. We paid out over $3,000 this year to get it mowed. So, they'd rather pay the $3000 over 6 months @ $41 extra per unit than to increase the assessment by $21 for 12 months to cover it--it's the same amount of money--just spread out--ha

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