HOA Obligations in Declarations

Our Board is going to embrace revising our 40 year old Declaration created by the builder in SC. When the condo development was new, nobody cared about what would need to be done as common and limited elements aged. Our Declaration states the HOA is responsible for almost everything except the inside of the condo and garage. I'm seeking input for 2020 guidelines as to what other condo HOAs are obligated to fund. We currently are financially responsible for limited common elements like slabs, crawlspaces, driveways, walkways, roofs, attic areas, patios, decks, screened porches and sun rooms. We are considering our revised Declaration reassign these items to the owners. We have 144 condos and repairs/replacements of these are unfeasible. The Common Area elements alone can barely be managed as we have private streets and over 30 acres of landscaping, along with a pool, tennis courts and a clubhouse to maintain. Please share what your HOA must fund or any other creative solutions. Thanks!

You may need to look at more than the Declaration, which is why you need to review ALL OF YOUR DOCUMENTS with the association attorney for more information on what to do and how to do it. When board members try to amend the documents themselves, they often get in trouble because (1) they don’t have the expertise and (2) they don’t review what’s already there to see how the language needs to be changed and (3) they try to do it without homeowner approval. Even if they get homeowner approval, mistakes in drafting the amendments to the documents may render them unenforceable and ultimately cost the Association thousands of dollars.
Generally, the Declaration establishes the Association (along with articles of incorporations that establish it as a non-profit corporation), the Bylaws dictate how the association is to be run (number of board members, length of terms, etc.) and the CCRs dictate how the common areas are to be used. Although it’s in your declaration, the CCRs may also address what’s homeowner responsibility vs. Association responsibility vs. areas both are responsible for (the limited common areas).
You also say your community is having trouble paying for upkeep and repairs to the streets, landscaping, clubhouse, pool, and tennis courts, which tells me you likely have a huge problem with your budget, starting with assessments not keeping up with inflation. I also wonder about reserves – do you have a reserve fund?. If so when was the last time you had a reserve study (usually, these should be done every 5 years) and have you been preparing your budgets according to its recommendations?
(Why do I get the feeling the answers range from “no” to “I don’t know” and “what’s that?”)
In terms of creative ways of doing this, let’s begin by calling a special meeting of the homeowners to discuss this. Actually, you’ll likely need several. You need to be straightforward with the budget constraints and that everyone will have to be prepared for making some tough decisions, starting with determining exactly what the Association is able to pay for. These special meetings can be used to help get a sense of what the homeowners are willing to take on.
If they don’t want anything changed, they must accept that assessments must and will increase A LOT in order to pay for everything. Show them the numbers - the last five years or so of year-end budgets would be a start, because homeowners can look at the line items to see what’s gone up faster than others.

After the meeting(s), do a poll to see where the homeowners are at – you’ll need to get buy-in from a considerable majority if you’re to succeed in getting the documents changed (because they have to approve them).
Your community sounds like it’s a townhouse community (I live in one) and homeowners are responsible for patios – we don’t have screened porches or sunrooms. I would suggest turning those responsibilities, along with the crawlspaces and attic areas to the homeowners. Driveways, walkways, and sidewalks could remain association responsibility, but you can also establish rules concerning things like no changing the oil on the driveway (oil eats concrete) or using concrete safe ice melt which can help reduce repair costs.

From there, you could establish a special committee that could review the documents and make recommendations on what could be changed. The board should talk with the attorney first to make sure they understand if this can be done and how, so the committee will have a better understanding on what their job will be. Another committee could take a look at the last five years of budgets to see what’s increased faster and make recommendations on policies and procedures to get them under control.

One more thing – this probably won’t happen overnight and it shouldn’t because people need to make informed decisions and there’s more at stake than changing the documents. So take your time – better to do that and end up with changes that will stick. Good luck!

Have you had a Reserve Study in the last two years or so indicating how much a Special Assessment would have to be to make the repairs? Do your governing documents allow a Special Assessment? Also is there a limit on how much the board may increase the regular assessment each year? I believe best practices dictates having several meetings with members to discuss the amendments to the Declaration that you propose. I think the Board would want to speak to how much a Special Assessment would have to be for the HOA to fulfill its duty to maintain. This might sell people on the amendment. On the other hand, if I were a member of your Condo, I do not think I would vote for this amendment. Because the HOA would still have an obligation to enforce the covenants. This means the HOA would now be in the un-enviable position of requiring members maintain all the items you listed. Also one of the benefits of condos is that payments for major maintenance, on a per unit basis, are typically lower than if each member paid on her or his own. This is due to 'economy of scale.'

A reserve funding requirement would be a good idea, but reducing assessments is usually a bad idea. There’s more to HOA budgeting than reserves – for one, people often forget about inflation. 2020 dollars probably won’t buy the same amount in 2030 or even 2025. “Unreasonable” is also subjective – what’s unreasonable to you may be ok to someone else. If you have a healthy fund, you can always hold funding to the current amount for a year or two. As for the assessment, you can also reduce the percentage of the assessment increase (e.g. 1% vs. 3%) or hold the current amount for next year – we’ve done both in my community

We have engaged an attorney and realize that an Association vote is required. Unfortunately, this should have been addressed years ago as now the finances are in dire straits.

Thanks so much for your detailed response. You are absolutely correct about our financial state of affairs. We did a reserve study in the spring and the results are scary. In addition, many things were excluded which only makes it worse.