Help Residents Pay HOA Fees

Our community was in desperate need of some infrastructure upgrades like repaving the parking lot. The Board passed a special assessment fee of $1000 and offered residents the opportunity to pay the fee in installments. Unfortunately there are several low-income families who are unable to complete the payment within the timeframe. I would like to offer these residents help, not threats of legal repercussions. There are also some families that cannot afford to replace a broken appliance, like a stovetop. I have started researching charities, grants, and non-profit organizations who claim to help low-income families.

Have you had any success linking families with the help they need to pay rent/HOA fees/home repair costs? If so, which ones? I believe the HOA should exist to help the families in the community, and I appreciate any help you can direct me to.

Could you go over your state rules regarding funding the reserves, did past hoa members not fully fund it, how come you ended up with a special assessment?

Board,

Need a bit more info ...

COA or HOA?
How many units?
How much common property?
How much has been allocated to Reserve Funds prior?
What are assessments per whatever period?
Does the $1000 simply pay for the parking lot, to does it increase funding in the Reserve?
What do your governing docs say about special assessments?

I know you mean well, but I don't think it's appropriate for the board to offer financial assistance to pay assessments. That will create far more problem than what will be resolved. for starters, what would be the criteria your use to give them assistance versus someone else? How do you know they've in financial straits (e.g. Job loss)?

It is a good idea to refer people to agencies who may be able to help. In my community, we have a 411 service that refers people to various social service agencies. You might also ask homeowners if they've aware of programs at their church and list those resources in your community website or newsletter - or both.

As for the special assessment, the best I can suggest is to have them request an extension of a special payment plan approved by the board. The family should provide some sort of written verifiable proof of financial hardship (this is required by our board before we approved a payment plan and The board's decision is final). The

The decision to extend the payment should also be based on the family's overall payment history and how much they still owe on the special assessment. As long as they keep their end, you don't have to refer it to the association attorney or charge late fees. You should also put a limit on the extension, no no than 6 months, and make it clear if they don't hold up their end, they risk the plan being cancelled and the account referred to The association attorney for collection. Put everything in writing and don't extend the payment period last 6 months.

Looking ahead, your board should commission a reserve study after this so you can get a handle of what you'll need for future repairs and replacements for the common areas. The reason many communities have to resort to special assessments is because they don't have a reserve fund or its terribly underfunded. Often, the underfunding occurs because people to nuts over assessment increases. No one likes to pay more for anything, but you can't expect major repairs to cost what they did 5 or 10 years ago. If you budget doesn't keep up with inflation, you'll find up in the same pickle you find yourselves in now.

BoardM,
I have recently had a few debates with the board I am currently on about writing off debt for Medical reason and in one case giving a Gift to a homeowner that was let go when our HOA changed Management company. She handled Social events till the company lost the contract.

Being a Board Member gives you the Fiduciary Duty to care for the Dues that are paid to the association and make sound business decision with those funds. You should never IMO play Robin Hood and take from the Richer and give to the poorer members of your HOA. Sounds cold but that is what it boils down to. What would happen if a group of a Religious group were elected to the Board and decided that the Community should tithe to the Charity they chose for you? You should never give Other Peoples Money Away.

Many of your questions should be answered by your Board colleagues, so start there. However, if you get blank stares or hear a lot of "er, uh, I dunno, can you repeat the question", don't be surprised. Some may even pretend you didn't ask the questions at all because they know what the answers are and you'd be appalled at hearing them. Nevertheless, ask anyway and if you don't get information that way, there are other places you can look - and you need to look because I suspect your community is in or heading for a lot of drama money-wise, and someone needs to be able to understand what's at stake.

Here's some more stuff you need to read, starting with your CCRs and Bylaws. There should be language stating what the common areas are. Helpful hint - consider the number of buildings that make up your community and how many units are in each one. For each building, there will be plumbing, roofing, carpeting in the hallways, elevators, etc. Those are examples of common areas and when they werar out, the association has to pay for repairs or replacement.

These usually don't fall apart at the same - this year you have the parking lot repaving, but next year, you might have to address the elevators and the year after that, the roofing. The reserve fund would be used to paif for all that and a reserve study helps determine the useful life of each item and an estimate of how much you need to have in that fund to pay for repairs or replacement. A portion of your assessments should be deposited into the fund (by the way, that money's separate from the operating budget, which pays for routine expenses). Generally, reserve studies are done every 5 years and t also factor in inflation (2020 dollars won't buy as much in 2030).

If there's a reserve fund, there should be a reserve study - hopefully, there's a recent one you can review. If it's over 5 years old, the board needs a new one. Then take a look at the budget - the study had recommendations as to how much should be deposited in the fund. How close did the board follow those recommendations? Is the fund now depleted or close to it because of all the other projects? When were those done - it's possible the previous boards put off repairs until that didn't work any more, but by then the work cost more.

You don't say how long you've lived in your condo, but it seems to me you don't know much about this special assessment and you should. I know you weren't on the board at the time, but usually HOA bylaws require homeowner approval of special assessments. You said the board passed this, but was that done according to the documents? If not, you have another set of issues to address if this special assessment wasn't approved properly. Otehrwise - was this passed before you moved in? If so, did the previous owner tell you this was coming down the pike (if not, sadly, that's not unusual either).

Thank you. I am being intentionally vague to keep the post anonymous, but I understand I am not providing you with enough information. I apologize for this. The Special assessment was approved by the homeowners, the board at the time said either Special Assessment or a large monthly HOA Fee increase. I would like to learn more about options other HOA's use to address finances. Coming from a position of ignorance, I would think having an annual or bi-annual increase in HOA fees that follow the inflation rates makes sense. The HOA fees should be as steady as possible, because steady fees are easier for families to predict and plan for, while a surprise special assessment can be a huge financial burden.

So the author voted on a special assessment, doesn't know anything about the financials, doesn't know anything about the reserves and its current status, but still voted on it? And now he wants to help owners pay for the special assessment?

Some bylaws also state that only members can vote on a special assessment usually 50% at the meeting or by proxy, may want to check on that as well.

And THAT's why people need to READ their documents! You're correct that different HOAs do it differently, but I'm far less concerned with what they do because I don't live there, and that's the approach I think others should take. It's always been odd to me that people think they can use (and sometimes misuse and abuse) their homes, whether it's the refrigerator or the garage door opening. Sooner or later stuff wears out and you have to replace or repair it, and none of that is free. Then there's inflation - can you think of anything that costs exactly the same as it did 5 or 10 years ago?

I don't what's going on in this community, but considering the stuff people often discuss on this board when it comes to special assessments, budgets and assessment increases, I wouldn't be surprised if some (most) of the homeowners poo-pooed the need for a reserve fund and certainly didn't want to pay more in assessments because "they're too high." I'm not a fan of paying more either if I don't to, and maybe because I dealt with this stuff during the 10 years I was on the board, but I know I'd be pretty ticked at a special assessment upon finding out no one planned for the day when the roof would have to be replaced or the parking lot repaved and restriped. What happens if the board says a special assessment is needed at the same time my furnace breaks down or I find out I need a major operation that will keep me off the job for three months?

Am I the only one who is reading into this that it's kind of a cluster *ck? No one thought this whole thing through...

First off, a "general" special assessment for a project doesn't just come from the "sky". There has to be REAL #'s. I can't imagine a parking lot repaving costing 200K. IF there are 200 members and they each pay 1K a piece. That is even with the best case scenario. Sounds like the HOA is trying to jam a bunch of projects into 1 giant special assessment. Which can be done IF it's disclosed a breakdown of each project costs and assessment.

Think that is one of the first mistakes here. The board/HOA members probably had a laundry list of things like parking lot paving, general maintenance, and establishing a reserves etc... Well then let's just raise the dues to 1K to cover all of this. Done.

Not how a budget in a HOA works. A HOA could have taken a loan if they wanted. Which can be a good/bad thing. I think the HOA board took on more than it can chew. Should have broken this up for over a time line. Considered their residence incomes. Now it just sets it up to force owners to have liens.

Sounds like need more details in the HOA's finances. Plus is this a special assessment or was the overall dues raised to 1K a year?

Lotsa good replies for you, Board. And good resources too.

How many are actually behind on their payment plan of your 200 condos. As suggested by a poster, I also think you should try to make new payment arrangements for them. Call each to a executive session (closed) meeting and see what can work.

To learn what your HOA's obligations are, do read your CC&Rs. As a director you have legal obligations that are spelled out in writing indoor governing documents.

KerryL1,
I have read your posts over the years and this may be that first time I disagree with your comments.

You mention invite all of the Past due homeowners in and hear their Story. I have heard a 100 stories over the years and the one common denominator is Poor Me. I always remind my Board that if we could pay our Bills with excuses I would welcome them all. Instead we have to pay them with Cash on hand and that requires people to pay as promised and let the board do the job of running the HOA as a business.

Boards should not be in the business of seeing who tells the best story. Who has been the victim of the worst luck. Who is the least fortunate. It never stops, Boards need to be in the business of managing the HOA as a Business. Anything less is not doing your Fiduciary Duty. Look it up and board members please follow it.

Unfortunately I have to agree with Mark here.

It's one thing to deal with the occasional unexpected reverse, such as identity theft, that will cause someone to get behind on their assessments. But the OP is talking about people who basically can't afford to own their homes. It's not the HOA's job to fill in the gap, and trying to do so puts the interests of those owners ahead of the rest of the community.

If people want to get together on their own to help their neighbors and connect them to resources, that's their business. But as I've found out with people who have some sort of ongoing issue causing their financial problems (eg. chronic unemployment) then these resources just allow them to avoid the hard reckoning that could result in their truly getting themselves out of trouble. I know that it hurts to watch this happen. But governments and charities have been trying to solve this problem since governments and charities were invented - it's well beyond the scope and responsibility of an HOA.

Augustin,
Sorry every time I hear anyone say payment plan I remind them. When you buy into an HOA you are on a payment. It is pay your dues Monthly, Quarterly or Annually. People break that plan by not paying as directed and then they want to get a New Payment plan. They are usually high risk at that point to repeat this behavior.

So you object to an in-house payment plan. In my experience this leaves either (a) going forward with the steps to place a lien on the home; or (b) sending the amount owed to a collections agency or collections attorney. For (a), the HOA can wait until the home sells (possibly years down the road) to collect, or it can foreclose on the lien (which is expensive and will likely exceed, for one, the $1000 owed). For (b), the collections agency/attorney will keep a chunk of what is owed. If the collections agency/attorney goes to court, then again, the expense is likely to exceed the $1000. The options that make sense to me are either set up a payment plan; lien the home; or a combination of both. Plus CathyA3's HOA's attorney's counsel that the HOA should show it gave the member every chance to pay the debt (in case the HOA has to go to court) sounds wise to me.

How do you propose to collect the debt, Mark?

Even only a couple of years in my current HOA, ALL property owners that have had issues paying their annual assessment, have had issues paying on their payment plan. While this is a tiny percentage of the property owners, it has been sadly consistent.

The most fascinating case is the property owner who wanted to apply three years of interest, finally paid after starting foreclosure process, toward future year's assessments. This owner had been in arrears, at some point, every year for 10 years - and, had paid zero for the last four years. This one was a legacy issue we resolved ONLY by starting the foreclosure process.

Our process is to bill Dec 1 for 1 Jan annual assessment due date. Then there is a 30 day grace period, then a $25 property manager fee and the start of interest. Each month a new statement is provided to the property owner. We gladly take partial payment, but interest continues on the unpaid balance. On Aug 1, if the unpaid amount is at least the annual assessment amount, then the account automatically goes to our attorney for collection. If the attorney is unsuccessful in contacting the po then the po is sent an Notice of Intent to Lien, then 45 days, then the property is liened. If there is still no action on the part of the po, then we have to decide whether it is worth it to start down the path towards foreclosure. If we feel this is justified by the property value being far higher than the amount owed the bank, then we will entertain a Notice of Intent to Foreclose, then Foreclosure.

This is a business - and, while there are circumstances warranting delay, there are rarely any where, as a fiduciary, it makes sense to forgive. But, it being a business, one must be flexible enough to know when the HOA can't win. Note - I particularly dislike paying attorneys when there is nothing in it other than principle.

Sorry - I got off the topic a bit.

I do agree with most of the posters - the Board should not be involved in locating and developing alternative payment sources for owners. The task of the Board and property manager is tough enough.

$15,000 is just my estimate of how much it will cost us for a full Reserve Study. The actual number might be higher or lower. We have 75 buildings that will need re-roofing over the next 5 years. Each will cost a minimum of $14,000. I think that warrants including each of them separately in our list of reserve components. All roofs were re-done in 2007. I understand that the "20 year useful life" estimate back then was overly optimistic, but I think 15 years is something we should have expected. Not 12. My inclination is to NOT go back to the same roofer who gave us that 20-year estimate back in '07. He was also the low bidder (by far) back in 2007.

My hope is that a full Reserve Study would provide us with an independent opinion into the roofs and how much longer they will last. With our current reserves situation, the difference between 2 and 4 years is significant. A couple of people on the board are of the opinion that we should let a roofer - THAT roofer - tell us when a roof needs to be re-shingled. I almost have to restrain myself from reaching across the table to throttle them.

There are already homeowners screaming that they need to be first on the priority list for new roofs because they had a small pinhole leak 3 years ago. The board will listen to those people and resist obtaining any kind of outside expert help. We're looking at Reserves expenditures of $300,000 a year for 5 years in a row starting in 2021 and there is no one on the board that has any kind of clue about what's going on or the gravity of their responsibility to manage those projects. This may be the year I finally decide to move.

Pretty scary, Board. Several things you relate you were told sound nonsensical on the surface.

Since you are a Board member, you have access to the financial records, right?

Yikes. I agree that you should go after the embezzlers - they committed a crime. Hopefully you'll be able to recoup some of that money.

The comment about it being illegal to use the reserve fund probably means that the reserves typically can't be used for operating expenses. Reserves are for big-ticket items such as roof replacement or re-surfacing the streets. Operating expenses are routine maintenance items (ie., the stuff that's in your annual budget).

Only the real mopes go for outright embezzlement. Kickback schemes are slicker and harder to detect, not to mention much harder to prove.

Again, we have little evidence to support most of this discussion.

Accusing Board members of embezzlement is serious stuff ... let’s wait till the OP provides a lot more info.

The information you have all provided has been extremely helpful, and I am pleasantly surprised to find such a helpful group of people - thank you all. To be honest with you, my appointment to the board was only a few days ago and I had no idea what I was getting into. I am not sure they expected me to do any research at all - they do not know me well yet.

Congrats on joining the Board... Board...

Hope none of scare you off here. You are really are amongst "friends" or people who are wearing similar T-shirts...

It is truly a different perspective being ON the board than staring at one. Having come from both sides myself, I like to give advice from both views.

Really do think you walked into a bit of a cluster.... However, there isn't a person here who hasn't done the same here. Just be aware and do you research. Don't take things on "face value". You aren't dealing with "experts". Just people who's only qualification to be in a HOA is because they own a house. So don't expect a board full of doctors, lawyers, realtors, and general professionals. I'd say if you did, your board may be even worse off... LOL!

Feel free to ask questions here. We may bicker with each other and disagree. Our purpose should still be the same even if our perspectives aren't. That is to help those who get on their HOA boards and want to know more.

Best place to learn first is your documents. CC&R's, By-laws, and Article of Incorporation is your "Bible". My best suggestion is to bring a copy to every meeting. Plus if someone asks a question tell them you will refer to the documents and get back to them. Don't try to knee jerk react. Don't be intimidated by lawsuit threats. Most of all keep your head above water and Breathe!