Can We Change Our HOA Budget After It Is Already Approved?

We are in Illinois.

Our board is planning to spend a lot of money on a project that most residents do not want at this time.

We have elections coming up soon with several people running for a few spots on the board. It is almost 100% certain new people will be elected to the board because the current members are unpopular due to bad decisions and mismanagement. Our current board's plan is to pass the annual budget for next year to include this project BEFORE they announce the election results. They believe if they do this, we will have to do the project because it is in the budget. They seem to believe the budget cannot be changed once approved.

If new people are elected, are we able to change the budget and stop this project by redistributing the funds they are planning to use for it to other things (like reserves savings)? Or is a yearly budget essentially set in stone once it is approved?

I agree. Easy enough to do as Kerry says.

Note that a budget is a spending plan, not an obligation to implement specific projects. Even if the money is budgeted, there is no requirement that the board needs to spend that money.

Condominium or Non-Condominium? Was your Declaration recorded on or after August 10, 1990? The Illinois Condo Act appears to have some very specific requirements re budgeting.

Thank you all for the replies. Luckily they won't be signing the contract before the election so we are in the clear.

Can someone point me to the part of the IL condo law that talks about reserve requirements? I can't seem to find it and it isn't in our bylaws.

Essentially what has happened is our association did not properly budget for new siding on our buildings. Siding is an exterior element and is supposed to be 100% covered by our dues. But they never set aside any money for it.

Our board of 5 people is very obsessed about re-doing the siding, which will cost over $1 million. We've had two old ladies fall because of issues with sidewalks. But they don't want to spend money to make sidewalk repairs. They care only about the siding.

At a meeting about it several months ago, the board president excitedly talked about our the color of our buildings being "on trend" for 2021. She is very obsessed with having better colors and other cosmetic features. At that time they wanted everyone to pay $12,000 to have the siding redone and the homeowners through an absolute fit and delayed the project. The majority of homeowners here are working class/lower middle class folks. $12,000 is a great deal of money for most of us, especially now that some have lost their jobs due to COVID.

The board members are the financial "elite" of the neighborhood. The majority are retirees who moved here to downsize and have healthy pensions and savings. The board president is a single woman with no kids with a good career and drives a lexus, wears designer clothes, and brags about how paying $12,000 will be "no problem" for her. They all complain about how the siding looks too old and it doesn't look "nice." They have said things like "if people can't pay, I guess it is time for them to sell their homes and move" and "if they can't pay and won't sell, we'll just put a lien on their home."

We had only about $150,000 in our reserves when they first proposed this project so there was no chance of the association covering it. So they raised dues like crazy and cut services and they were able to raise our reserves to $400,000. Now she wants to drain the reserves down by 75% and then have us all pay a slightly smaller special assessment.

She refuses to consider doing a few buildings at a time. They all MUST be done NOW.

Our siding is old and will need to be replaced soon. The project is not completely cosmetic. We had one or two buildings with leaks because of bad siding. However, the majority of buildings are doing ok. They do look old and tired, but that's also because they have never been power washed (which the board refuses to do).

I and other members of the community want to wait a few more years until we can build reserves and hopefully have the association pay the majority of the cost. They are raising dues by another 15% again this year after 15% increases for the last three years. Some people will be forced out of their homes because they can't pay the dues. Our dues are already the highest in our area. We have no clubhouse, pool, etc. We barely get anything for this high price. The board plans on pushing the project through "no matter what" for next spring.

2 board members are up for re-election and I'm running along with my neighbor to try to force them out and put a stop to this. Wish us luck!

I wish I could time travel to 3 years ago when I bought this place and buy a single family home instead. What a mess.

Asil,

These are always tough to judge from a distance - however, the Board is likely moving ahead as they, the Board, see fit to do so.

Now, if the constituents of the Board - the membership - don't like what they are doing, then the membership can recall the board - or, as you suggest vote others in.

However, I must tell you, as I think John was artfully trying to do - that many COAs decline because people that live there age, and become incensed when the assessments increase - it is just an artifact of living in these communities. And, at some point, the area is now "closer in" or "becoming the hot spot" so younger, more economically advantaged families move in and want the community to reflect their standards - sometimes who communities change out over 10 years.

Finding common ground is key - perhaps form a committee to review a balanced path forward?

If the new folks are not interested in a balanced path, and continue to have the political support to increase assessments to improve the community, it is probably what it is.

Most people aren't objecting to the project itself but the terrible way it is being managed. No communication from the board (they try to do things in secret which is against the law), nasty comments from financially well-off board members who lack empathy for struggling families, terrible planning, etc. They refuse to provide meeting minutes, which is against the law in our state. Half the community doesn't even know about this project because they don't address it unless directly asked at meetings (to which we get confusing answers to our questions, if we get an answer at all. usually it's just "we'll have to get back to you on that.").

It is true some people will object to anything no matter what. It is also true that a lot of people don't bother to attend meetings, which makes it harder for the board to present their case if no one is there to listen. But they make no effort to communicate clearly. They refuse to provide meeting minutes. One resident is a web developer who offered - for free - to put a website together that anyone can access at any time, and the board refused to allow her to do this.

Hopefully we can vote out the two current members - but we can't get an answer to when or how the vote will take place since everything is virtual now due to the pandemic.

Does anyone know what the reserve requirements are in the IL state condo law or can point me to that part of the law?

Our HOA in FL has 5 board members. The previous board was gonna Levy each home $2,500 to buy a new road. So, we held an election and changed over 3 of 5. The day of the election, the previous board held the annual budget meeting 30 minutes before the election and arbitrary rammed through a quarterly assessment increase to "fund the roads project"

After the election, we're holding our first post HOA meeting and we're planning to motion to rescind the previous budget that was approved at the last meeting by the previous board and then motion to replace it with the exact same budget minus the quarterly assessment increase.

Today, our current President told us new board members that our HOA management company had said the budget is already done and cannot be changed.

Is that correct?

Or, am I being mislead?

It's a family homes HOA, not condo.

The previous board has not signed any contract for the roads.

My concern is that our HOa management company is just managing the board for the results it wants rather than what the community or this board wants.

And if you're on the board (actually, all homeowners), you should already know how budgeting works. That may be addressed in your documents - pull them out and read them. Especially, if you're on the board because you need to know how the community is supposed to be run.

If the contract hasn't been signed, don't do it until after you've resolved this issue. Oh, and it would help to take a look at the income/expense statements for the last 2-5 years to identify trends - what line items have gone up faster than the others and why? That may explain why the last board felt the new road was necessary.

If you decide against the new road, pay attention to other line items that have skyrocketed - you may need that quarterly increase to cover them. Start with your association's master insurance - HOAs everywhere have seen an increase in premiums, some larger than others (ask anyone in Florida).

Back to the road - did you review the reserve study to see what it said regarding the useful life of the road (maybe you're overdue for a new one?) Has the budget kept up with the reserve study's funding recommendations? If not, that may explain the big increase in assessments.

Please start a new thread. For now:

You have not identified any law that was broken.

FS 720 has certain rules on budgets that provide limited opportunities for owners to object to certain, statutorily specified things. So far I am not convinced any statute sections were violated.

Please confirm you are talking about the first board meeting after the annual owners' meeting.

Communicating by online forum on complicated questions requires accuracy, if the input is to be at all helpful.

Assuming the board former complied with all the requirements of the bylaws and FS 720 for the annual budget, then for legal reasons I advise against changing the budget per se. What the new board can do is recognize that the budget is only a guide. There is no statutory requirement to do exactly as the budget says. Hopefully you can imagine how difficult it would be to do exactly what a budget, written months ago, says when circumstances can turn instantly and change priorities.

On the other hand, FS 720 has some rules about reserve funding that your board needs to study closely before just blowing off the road repairs.

I advise doing a keyword search for "budget" at http://www.leg.state.fl.us/statutes/index.cfm?App_mode=display_statute&URL=0700-0799/0720/0720.html

Start a new thread, and I might have a series of questions to ask you (about reserve accounts, per FS 720) that help narrow down the new board's options.

This is going to be hard for a layperson to understand.

Annual board meeting?

Or annual owners' meeting.

There is a huge difference.

A board vote may not lawfully be taken at an owners' meeting.
FS 720 is relevant.

If that is all that is done, then no, this is not a lawful action.

One of the reasons the board cannot just rescind the previous budget is because FS 720 requires that the annual budget be presented to owners (obviously in advance of the year for which the budget is prepared).

You do know what FS 720 is, right?

Here is an example of another possible reason rescinding the budget may not be lawful, from FS 720, in the "Budget" section:

After one or more reserve accounts are established, the membership of the association, upon a majority vote at a meeting at which a quorum is present, may provide for no reserves or less reserves than required by this section. If a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves and such result is not achieved or a quorum is not present, the reserves as included in the budget go into effect.

The problem with not starting a new thread is that the OP may return with an update. Then we are discussing two different HOAs in one thread.

The other problem is that Illinois laws are quite different from Florida laws.

On the other hand, to give you the answer I think you want:

HOA Boards are volunteers. Many boards just make things up as they go along. You say you are interested in a "simple" point of order, as though you think there must be some authority that has a rule for this point of order. There is. But if you do not like the authorities named so far, just go for it; rescind the budget; approve a new budget; and see if anyone threatens suit. Volunteer boards do this all the time. For the money you are being paid, "making it up as the board goes along" is hard to argue with.

First, HOAs do not generally have annual "board" meetings. Do you mean annual meeting of the members (owners)?

Are you on the Board now, Dyno? If not it would be very hard to try to rescind the 2024 budget.

Whether or not a 720 board can rescind a budget that was already approved will not be in your Bylaws and has nothing to do with a "point of order," which is from Robert's Rules and doesn't seem relevant here.

We can assume you'd want to rescind the budget because with the road work built into it, the dues are much higher than without this work in the 2024 budget. Is that correct?

In my state, a budget can be rescinded, but certain steps must be followed exactly. Our Board did this for 2016. It was quite messy as owners paid a certain amount of dues in Jan. & Feb. and then a different amount the rest of the year.

You need to find out if FL 720 permits rescinding the budget. Or perhaps some other FL corporations code will help you. Only a very few here are willing research state statutes and I'm usually not one of them.

If you are on the Board, make a motion as the next board meeting to contact your HOA's attorney to learn if and how to rescind the 2024 budget. If a majority of directors agree with you, proceed and get the expert's advice.

Elles' comments are useful when she brings up your HOA's reserves. Normally to resurface, etc. roads an HOA will have been contributing to reserves for a number of years so that funds will be there to pay for at least a portion of the work. If your HOA has zero $$$ in reserves for the roads, no wonder there must be a big increase in dues to pay for the work. So that is a reason to not rescind the increase but to instead make a motion to place $xx of monthly dues into reserves to pay for the road work.

A Budget is nothing more then an educated guess as to where monies will be spent. Just because there is a budgeted item, it does not mean that money must be spent on that item. As the item is part of the Operating Budget I say the BOD could it allot it to any item(s).