Budget Approval Process

We do not need approval although we always hold a meeting and go over the new budget and explain the rate increase. You need to refer to your governing documents. There is no one answer.

Small MINORITY.

Steven,

Everyone on this site would recommend that the Board (and members) comply with the rules and statutes that govern their Association.

Keep in mind, there are two ways to have approval of the budget:

1) Vote for approval.
2) Ask if there are any objections - if none, the budget is adopted.

Per Roberts Rules of Order:

If the board is in obvious agreement, the chairperson may save time by stating, “If there is no objection, we will adopt the motion to…” Then wait for any objections. Then say, “Hearing no objections, (state the motion) is adopted.” And then state any instructions.

In my opinion, the question could be asked either way.

This reads to me like a majority of homeowners (a number larger than the quorum required to hold the meeting) have to attend and vote to reject the proposed budget. If You don't get a majority of those present to reject the budget, it passes whether the quorum was met or not. Of course I'm not an attorney, so it may be best to run this past him or her.

Seems to me the board should already know the answer to this question and plan for this even if you're pretty certain the budget will pass. In this case, you said the assessment would increase because the property management company's fees are increasing, so why don't you just explain that to the homeowners? Give them the numbers and a description of what the company does. In fact, have the property manager and his/her supervisor attend the meeting so people can ask questions?

No one likes increases, but are more likely to agree if the board is honest enough to explain and show where the money's going. You should be joining this whether the assessment increases or not.

If you don't want to go through this every year, you may want to propose to the homeowners that the documents be amended to allow the board to set increases up to a certain percentage over the current years assessment. Anything higher would require homeowner approval. Our documents set the maximum increase as 5%, so that could be a start.

Do not confuse 51% of those at a Meeting and 51% of all owners. Many do confuse the two.

According to what you posted, a meeting of the members is required, but quorum is NOT required. No vote to approved is require only one to reject.

Soif 6 people show up to the meeting and 4 vote agaisnt, I would say Houston has a problem.

To my eye, the wording is a little ambiguous: "Unless at that meeting a majority of ALL unit owners or any larger vote specified in the declaration reject the
budget, the budget is ratified, whether or not a quorum is present."

It doesn't state a majority of all owners present at the members meeting, but, instead, it states "all unit owners."

ADD ON
This is a very common misconception. As I said earlier 51% of those at a meeting is not the same thing as 51% OF ALL UNIT OWNERS.

The homeowners are not called to the annual meeting to approve the budget.

The majority of all homeowners must appear and subsequently vote to reject the budget.

It's as if they would vote "YES" in favor of rejection. The HOA board approved the budget earlier so the business flow is towards the budget taking effect unless homeowners truly revolt.

The board needs to hold a meeting to submit the new budget for ratification but many boards could and will argue that the pandemic changes things...I disagree with that but attorneys will argue for special consideration.

The budget will take effect unless an outright majority of property owners appear at vote NO on budget ratification. Otherwise, the budget automatically takes effect.

On second reading, you deserve a meeting at the least.

Would you agree that at a minimum an Owner Meeting needs to be scheduled as required in the bylaws? I appreciate the clarification around greater than 50% need to reject and that is of all homeowners not just on who attends the meeting. Very significant understanding. I don't think there is enough consternation around the increase in the budget to reject, just want the process to work as designed so we don't start bad habits so early in our existence.

From the DE Ombudsman's office. You might want to share it with your Board and let them know that you are thinking about filing a complaint with the State.

https://attorneygeneral.delaware.gov/wp-content/uploads/sites/50/2017/03/ELECTION_SERVICES_Secret_Ballot_Draft_3.pdf

Good to see your insights, NpS. Hope you stick around for a while this time. There's a thread called "Board member refuses to Act" for a PA poster. Maybe you know some PA legal nuances to help them?

Interesting take on my comments and feeling that I am leaning towards micro managing the Board. I am far from a micro manager but we are a new community and want them to follow the rules and set the right precedent for future boards and decisions. They are instituting a price increase to the Management Assoc Dues in 2021 but with little documentation and explanation to the community. I don't have an issue with the increase just want transparency for the reasons why and make sure we follow the correct process in getting it done.

Task completed as requested. Happy New Year to you and to everyone else on the forum.

I wouldn't call it micro-managing - yet. You're correct in wanting the rules followed, along with explaining to the homeowners why some costs go up. As I said earlier, no one likes assessment increases, but most thinking people understand inflation. What your new community is about to find out (I'm sure the board has already) is that developers typically keep assessments low to sell the homes. when the community's turned over to the homeowners, the new board usually finds out those assessments really are too low to provide services and fund reserves, so they have to raise assessments - and people get pissed.

This is why I'd love to see state legislation that mandates some sort of education for new boards by the developers or at least be more realistic about association costs at the start. Of course, most developers don't bother to educate the homeowners on the ins and outs of homeowner association management - maybe they think people will run away from the responsibility (which some of them will) or because they don't care if the place explodes after they leave, and why should they? They've already been paid.

This could be part of the reason that board member tried to "shut down" the homeowner who asked about the fee increase - instead of being candid, he or she may have feared the response would make him look stupid or incompetent. However, people getting P.O'ed at a HOA board isn't new (why else does this website exist), so what the board AND the homeowners need is some education on best practices for HOA management.

Everyone else here knows my next suggestion - you or the board (preferably both) may want to have a look at the Community Association Institute website. This is a national organization of HOAs and the companies that serve them, and while not everyone likes every stance they take (depending on what's going on in your state), they do have a great education section where you can get books and brochures on a number of HOA issues, and many are geared for people who don't know anything about HOAs. Your area may even have a local chapter that sponsors educational seminars where new and old board members can meet people from other communities to exchange ideas and horror stories. Of course, you can still wear out the search button on this website and find old and new conversations on a number of association issues and see what your community can adapt or avoid at all costs.

For now, get that meeting called as soon as possible - and if this board doesn't cooperate, you and your neighbors may find voting them out may be the first task you need to do in order to find people who will follow the rules and be more candid and transparent with the homeowners. But the board isn't the only one - perhaps now would be a good time to organize some advisory committees to take a long look at the documents to see what makes sense and what may need to be changed - these aren't the 10 commandments set in stone. Just be sure you get a good HOA attorney to guide you because you want the changes to stand up in court. You can start with something as simple as deleting references to the developer in your documents. Good luck!