Guidance on prorating condo fees

Our condo building of fewer than 20 units has units that vary in size from less than 800 sq/ft to nearly 3200 sq/ft. During development in the early 2000s the 100% of the fees were prorated based on square footage of the units. Shortly after the declaration was amended and the fees were charged equally to each unit. Voting rights have never been prorated. The majority of units fall below the median sq footage with 3 very substantially above. This has created a lot of passive discontent in the community.

I think 100% and flat models are two ends of the extreme. Is there a general rule on how much of our fees should be prorated (i.e just the reserve component)? If your condo community is prorating how is it doing so?

In Florida condos and HOAs can have fractional weighting on voting rights.

The norm in Florida is that dues are prorated typically by sq footage especially when units have such a large disparity in size. Look at any condo and compare the dues on a 3/2 1400 sq/ft and a 1/1 780 sq/ft and there is a difference. Consider that the disparities we have substantially help the resale value of these very large units and hurt the resale values of the very small units. I could be wrong but I feel like our board has the fiduciary responsibility to let the homeowners have a say in this.

I'm posing the question to those in these communities to determine how they prorate so that our board can present options for the membership to vote on. I cannot the change fee schedule but I can give them a voice and the results can be the Board's defense against unfairness if it does not pass a vote.

Thanks, AugustinD for the explanation. Now that I've read this, I don't know why ANYONE would buy into a community with this type of set-up, but that's just me!

I stand by the rest of my answer regarding an owner's meeting - Erika, if your board seems reluctant or is flat out unwilling to address the issue, it's vital that the rest of the homeowners make it clear that this issue MUST be addressed - and if they can't or refuse to do so, perhaps a recall is appropriate. If that becomes necessary, you'll have to keep reading your documents to see how that's done. Sometimes all it takes is a special meeting to discuss the matter and then a homeowner vote. However, you'll need to have people willing to step up and take their place - and one of those new board members may have to be YOU.

I believe age discrimination is against the law.

A couple aged 30 have four kids and buy a three bedroom condo.

A retired couple aged 65 buy a one bedroom condo.

The retired couple have less voting rights because they already raised their children?

Really

Please post all the HOA elections that were done using your outlandish system.

Not sure that nice thing is part of MarkW, Augustin.

For the archives, just a few examples of condos whose Declarations dictate what I described:

https://www.graystonecondo.com/uploads/1/3/8/7/13878770/graystone_amended___restated_condominium_declarationv9.pdf

https://www.smprop.com/ftp/HOAs/1101VillageRd/GoverningDocs/Declaration/SECOND-AMENDMENT-FINAL-6.23.08.pdf

ftp://ftp.ci.missoula.mt.us/DEV%20ftp%20files/SubZone/CoSub/BonnerMill/1stSufficiency/BonnerSectionE.pdf

http://georgetown.org/pdfs/ggaf/12.2.10/12.2.10DeclarationOfCondominium.pdf

https://www.apcha.org/DocumentCenter/View/730/Condominium-Declaration-for-Hopkins-Roan-Condominiums-PDF

http://thelegacyminneapolis.com/wp-content/uploads/2017/08/Declaration-8.25.17.pdf

http://farviewcommons.org/documents/Declaration&ByLaws.pdf

Also google:
condominium declaration "allocated interest"

Where in my response did I say there was an issue with the math?

Your comparison to owning shares in a corporation doesn't entirely mesh with me either. Of course, you have more say if you own more shares I do or vice versa because you have more money at risk. My concern is the expense used to repair and maintain the common area. How does the size of your condo have anything to do with the elevator - we all use it? It shouldn't make a difference if one person lives on the 5th floor and the other is on the 10th.

You do choose the size of condo you want and can afford, but when it comes to expense, I believe in simplicity whenever possible, especially in HOA land because Lord knows everything else can be twisted as hell (otherwise why would this website exist?)

I don't care if someone has a house larger than mine - that alone would indicate he/she will have more expenses for that unit (e.g. more carpeting to lay), but assuming everyone has two spaces in the parking lot, it would be a lot easier to say repaving it will cost X, so we'll divide the cost. The concrete will eventually wear down, whether you have a hooptie or a Bentley.

Pfft.

Mark

You said:

Why? I've conducted hundreds of HOA elections and not one had a anything but one vote (not a percentage) of per unit owned. I call BS

Mark, you may have conducted hundreds and they may all have been one vote per unit but I think Aug has shown you there are other vote proportion methods.

For the list I gave, I pointedly omitted any Declaration that did not explain how the "allocated interest" was calculated.

That is someone's opinion. Here is the Corporation Code for that opinion.

Corporations Code §5330. Issuing Unequal Membership Rights.

A corporation may issue memberships having different rights,privileges, preferences, restrictions or conditions, as authorized by its articles or bylaws.

Any association I have ever been involved with had one unit, one vote. I probably wouldn't get involved with an association that had votes based on a system that wasn't equal.

Beside the poster never said it was in their CCRs. They said . Get over it!

Let throw the voting nonsense away.

The condo fees can be calculated a few different ways of which some may not be fair. Remember, a good portion of governing docs are just boilerplate documents used by a lawyer(s) that are purchased by developers to place on projects they are building.

Typical prorated costs could be insurance and utilities. If the breakdown per unit is not in the original CCRs, I would strongly advocate that you don't do it now.

Charge assessments based on what is already recorded in the CCRs. You need much more experience before you mess around with legal documents and their consequences.

Knock yourself out

Thanks John, I figured there was history there.

Are you in a HOA or COA? If a COA what are the range of unit sizes?

Eric

We are an HOA with 112 owners. 40 single story duplex homes (Phase 1, 80 owners)and 32 single family one and two story homes (Phase 2, 32 owners). Our home are patio homes range for 1,000sq ft to 1,400sq ft. with about 20ft between homes. We have no amenities. Our streets/water/sewage are public but as we are a dead end neighborhood, we have no thru traffic. The HOA does all outside maintenance including landscaping and exterior home shell maintenance. We strive for and maintain a common look. We have an MC that does our dues collection, payments, and bookkeeping. They also write the nasty violation/collection letters for us. We basically run on autopilot.

Eric

I will give my two cents. I have helped write restated CCRs and Bylaws for a law firm/management company. So I know what need to go in them, what it takes to pass, more importantly, what can't be done, or if so, knowing it wouldn't pass.

If you have language and exhibits in your CCRs that allow assessments not being equal, but based on criteria such as square footage, then stay with that. If you don't but want to insert that because other fee that if they pay more they should have a greater vote, DON'T.

Most likely you need 66 2/3% of homeowners to pass, but 100% of mortgage holders to pass. Do you know how to find the investor of the note that the borrower has on their home?, or even the servicier to ask for permission. When a homeowner, who took out a mortgage signed their papers they signed a document called a PUD or Condo Rider, which gives them skin in the game. To change the rules on how assessments are created is a game changer for them.

-- The Florida Condo Act, Section 718.110 (4) states that, "Unless otherwise provided in the declaration as originally recorded," all unit owners, and all holders of liens on the units, must approve any change in the proportion of the common expenses assigned each unit. Based on what ErickR1 posted about the relative sizes of units, I estimate using square footage to determine each unit's share of the common expenses could more than double the current assessment for the three largest units. Good luck getting the owners of the large units and any lender to approve increasing its client's condo assessment.

-- I think these two sites clarify the OP's questions:
https://www.davis-stirling.com/HOME/Assessment-Allocation
https://www.hoaleader.com/public/Common-Options-for-Divvying-Up-Common-HOA-Expenses.cfm (I stand corrected: "Pro rata" and "allocation of interests" seems to be the two phrases most commonly used to describe assessing based on square footage.)

I don't think maintenance fees and assessments in Florida condos can be changed directly. They follow percentage-wise based on the fractional or percentage (undivided) ownership share of the common property and common surplus appurtenant to each unit. Based upon the square footage of each unit, for instance, the fractional share of ownership of the common elements as well as the amount of monthly assessments would reflect the proportional number of square feet in the unit as compared to the whole. The way I read it, if the percentages aren't based on each unit's square footage then the assessments have to be the same for all units.

You can't "change the fees", but you can "change the share of the unit’s appurtenant ownership interest in the common elements". Changing the latter will have the effect of changing the former.

FS 718.104(4) details what MUST be in a condo's Declaration of Condominium in Florida. Subsections (f) and (g) are pertinent. (f) says that the ownership share in a Florida condo (post 1992) may be based either on the square footage of the units or on an equal fractional basis, while (g) says the liability for common expenses has to be the same percentage as whatever's chosen in (f). i.e., based on the units' square footage (I assume this is what's referred to in this thread as pro-rated) or equally (every unit pays the same regardless of size).

FS 718 is pretty explicit that in order to change the percentages or, presumably, whether to change the scheme from a pro-rated share based on size to an equal share scheme (or vice versa), requires 100% of all ownership interests to approve such an amendment. Back to FS 718.110(4)...

"Unless otherwise provided in the declaration as originally recorded, no amendment may ... change the proportion or percentage by which the unit owner shares the common expenses of the condominium and owns the common surplus of the condominium unless the record owner of the unit and all record owners of liens on the unit join in the execution of the amendment and unless all the record owners of all other units in the same condominium approve the amendment."

Note that FS 718.104(4)(j) requires a condo declaration to include details about each unit owner's membership and voting rights in the association. There's no apparent linkage between a unit's fractional share of common element ownership/assessment liability and voting rights. A condo declaration can divvy those up as it sees fit. A declaration could theoretically give the bottom-floor units 1 vote each and give the penthouse unit 100 votes, regardless of size and regardless of how much each pays in assessments.

Assuming you can get 100% agreement from all the unit owners, that linkage would be up to them. I can see the desire of some to think, "Well, Joe's penthouse is 6 times as big as all the other units and he pays 6 times as much in assessments, so why shouldn't he have 6 votes?" I can also see such an amendment not ever getting 100% approval.

Yes, that needs clarification.

I realized this morning that my previous post isn't logically consistent. The statute says that since 1992, a new condo must apportion the common property ownership (and share of maintenance fees) either equally or based upon the units' square footage. But it doesn't say what may be done AFTER the initial Condo Declaration is filed, by way of amendment.

As a hypothetical, if there was a 12-story condo with 4 same-size units on each floor, but the top floor was the only one that provided an ocean view, would it be permissible to allocate a greater share of common-element ownership (and thus, higher assessment fees) to only those units with the very desirable ocean view? I don't know. I'll need to think some more about this and look for some more information that's probably available online regarding such a situation. I'm sure a lot has been written elsewhere. FS 718.104(4)(f) is probably required for all condo Declarations, even after any amendments are made. Again, I'm not sure.

FS 718.104(4)(f)
"... In the declaration of condominium for residential condominiums created after April 1, 1992, the ownership share of the common elements assigned to each residential unit shall be based either upon the total square footage of each residential unit in uniform relationship to the total square footage of each other residential unit in the condominium or on an equal fractional basis."

That doesn't leave much room for charging a higher percent of condo fees to units that, for whatever reason, are "more desirable". That change to FS 718 back in 1992 had far-reaching consequences for condos built after that date.

My previous post is one of a few I made in the last week that I would just delete if that was possible.

I just read these posts and they are interesting.

To reply to Eric, Our 200+ twin tower condos pay variable monthly fees, based on s.f., for only three variables (thus our variable rate structure.( They are water/refuse; gas and building insurance, all operating budget items. Apparently the developer assumed that that the larger units would have more occupants, and, therefore, would use more gas for cooking and fireplace and use more water and produce more trash.

This isn't the case since no matter whether units are 1,000 s.f. or 2,800 s.f. the room count is no more than 2 bedrooms + a den. I know of very few units that have more than 2 occupants, and they are just as likely to be typical size units, i.e., 1,150 s.f. as large ones. In fact most of our units that are 2nd (or 3rd!) homes seem to be the large upper floor units that are 1,800-2,800 s.f. They, then, use fewer common area amenities than the typical full-time smaller unit owners.

The building insurance variable makes sense since the larger units do have more s.f. of exterior.

I think that a more logical s.f. variable approach would be--from the operating budget: window washing, for obvious reasons. From reserves, there would-be a few: building paint; building caulking, architectural metal refinishing; decorative metal painting (balcony rails). these mainly are very big ticket items because they aren't done very often.

Some large units have 4 heat pumps in their units while most only have one, but to try to figure the electircity consumption based on the demands on our roof top VAC systems would be daunting.

I do know fractional voting rights exist. Period.

We have some w old friends who are very well-off in Quechee VT who live in an elegant HOA. I don't know what their monthlies are, but their county or perhaps VT itself does have view tax so they pay more property taxes than houses of their size because they have f views of a ski mountain and trails, lifts, etc.