Needed Funds For Community Voted Down

I know there are many differences in the governing documents of HOA’s. I have been on the board for a while now but we have not yet had a vote on dues increases during my tenure.

We now have a need for a dues increase and possibly a special assessment substantial enough to require a vote of the homeowners. Our governing documents say we have to meet a 60% quorum at the first meeting in or to have a legal vote (or a 30% quorum at the subsequent meeting if the quorum in the previous meeting was not reached). But even if the quorum is reached, the motion only passes if you have a 2/3 minimum vote.

So let’s say we meet the quorum and do not get enough votes. So that’s it? How are HOA’S supposed to raise the necessary funds to properly run the community if the homeowners can just vote “no”?

Excellent question. Nearly everyone who posts on this website has or is wrestling with this question. Sadly, many people are short sighted and push off problems as long as possible until they can't - ask the former residents of Surfside how that turned out. And there have been other incidents, although not as dramatic as that.

Regarding your documents however, are you sure you aren't quoting the requires for a special assessment vote? Usually, you do need a significant number to authorize that. That"s not the same as an increase in assessments which you pay every month (or quarter or year) Assessments are a legal obligations whereas dues are usually voluntary, like a club membership.

Go through the rest of your documents to look at the board's powers. Typically, the board can increase assessments without a homeowner vote, unless the proposed increase exceeds a certain percentage? For example, our board can increase them up to 5% from the current year's assessment, but anything higher has to be approved by homeowners. As you can imagine, that's not very much and our community's reserves are so low that at this year's "annual meeting," the president announced the assessments will be increased every year at 5% for the foreseeable future. This was after we had a presentation by our reserve study specialist on what the community needs are expected to be and how far behind we currently are.
I put "annual meeting" in quotes because we were two people shy of a quorum. Since nothing official could happen and the current board members stay on until they resign or are voted out, they went ahead with the agenda and the presentation.

If the board can increase assessments up to a certain point without a homeowner vote, do it. If the documents really require that percentage, you'll need to educate your community in a big way - which you should already be doing. Show them the numbers and tell them the truth as to what's needed along with any estimates you've received on repairs and replacement costs. If you have a recent reserve study, add that to the information campaign. Better yet, ask the reserve specialist if he or she could attend a special homeowner meeting to provide information on the study and homeowners can ask questions.

From there, the homeowners can make an informed decision. if avoiding a special assessment is what they want, they'll have to accept the assessment increases - and that may be an annual act. Getting a loan won't help - it'll drive up costs because you still have to pay monthly routing expenses and the loan payments, plus fund reserves. Worse case scenario - you have to increase assessments, and issue a special assessment (which must be paid in addition to the regular assessments) AND get a loan.

If homeowners have a better idea, they need to bring it up and explain why it's a better option (who knows, they may be right). If homeowners still don't want to pay, perhaps they should vote to turn certain association responsibilities over to the homeowners and then everyone can be responsible for services on their own property, like lawn care. Too bad it still may put off the inevitable.

Good luck in whatever you do - you may be in for a rough ride.

We had our attorney review our GD's for a Special Assessment TO FUND OUR RESERVE ACCOUNT. Our Board voted dues increases are very straight forward. No more than CPI of previous year. The legalize contained in a Special Assessment section was very confusing. It cost us less than $500.00 for him to do this. This may be a good option for you.

Also inquire about adjourning the meeting until you can get the votes needed to pass.

Per an earlier thread by the OP, this is a Georgia townhome HOA community.

TamaraR1, would you please confirm this community is not subject to the Georgia Condo Act?

Would you please quote verbatim what your covenants and bylaws say about dues increases, special assessments, and the powers of the Board?

So far I see nothing helpful in the Georgia POA Act, as given here:
http://gaddislanier.com/wp-content/uploads/Georgia-Property-Owners-Assoc-Act.pdf

When the governing documents set the bar high for a special assessment, I think the purpose is to encourage boards to stay on top of reserve studies and reserve funding each and every year. Else their hands may be tied the way the OP so far describes.

I realize this does not help when prior boards neglected funding or maybe a big emergency arises.

Melissas' comment of building trust is vital. All Boards should make this a priority and do all that is necessary to accomplish this goal. Unfortunately, as this website displays frequently either individual Board members or the whole Board plays a secretive game with the owners.

In California, it a majority of a quorum, which for passage is a majority of members, even if the governing documents removed quorum.

BancsS, we call it a Capital Improvement Fee and it goes directly into the Reserve Funds. The fee is .5% of the sales price.

Personally I am in favor of such.

I'd LOVE to see that in my community - next time I attend a board meeting, I'll suggest it. I'm also sure our treasurer (also a realtor) might squawk at this - anyone got a snappy comeback besides everything else that's been mentioned regarding the importance of reserves?

When we re-wrote our governing docs we put this in. I was expecting some blow back but very few people complained about it. Like everything else that we changed we spent a lot of time educating owners on what was new in the docs and why the change was needed and how it would benefit them. Transparency and education is the key.

The buyer. However, I would guess a seller could agree to pay it since the HOA doesn't see the closing papers???

All I know is that this has been in effect for a year and condo's are selling like hot cakes despite this additional fee. I just sold mine and the buyer didn't flinch when I made him aware of the fee. As long as the funds end up in the Reserve's it really doesn't matter to me who pays.

I am not opposed to the buyer paying the fee but it depends on how much the fee is. Home prices have risen so much in the last year that it would add another expense on to the buyer. I don't claim to know what would be a fair way to calculate that fee. Perhaps one years' assessments regardless of what month the buyer moves into the community. My annual assessments were set at $500. But I live in the Midwest where real estate prices are lower compared to the coastal states. I also realize that annual assessments can be set much higher than mine were based on location and what amenities the community offers.

I have managed over 200 properties in 14 years and not one had that clause in their CCRs. Now I do know they exist as I have seen them in other states. I feel it should be the seller, not th buyer paying them, call it deferred maintenance.

In the case of the OP, they haven't voted on a dues increase for the number of years she has been on the Board, which, has been some time. Let's say for argument sake, they never had a increase and the reserves are next to nothing. The membership approves a Capital Improvement Fees, but only after they sell, and oh, BTW, we will stick it to the newbies coming in. Let's say the property 20 years ago sold for $100K, now selling for $500K. New buyer is on hook for $25K upfront, while the oldies, but goldies, have no responsibility whatsoever. I will go out on a limb and say it got....100% support, without having to create a raffle.

Personally, I wouldn't be buying into a sham like that.

It would be $2500 and not $25,000. I hear you Max and understand your reasoning. However I see it as a safety net. We all know that condos are notorious for not adequately funding their Reserves. The end result is poor maintenance and owners getting knocked up with periodic special assessments to cover something that should have been funded. As a buyer I would gladly pay this fee if I could review the HOA budget and see that they were not ignoring reserves and that my condo would be taken care of without the fear that I would get an unexpected assessment for something like roofs or roads. There are exceptions but for the most part special assessment's shouldn't happen and I see it as a result of poor management and budgeting.

I really do understand your reluctance. We thought long and hard about this subject before we moved forward and included it in the new docs. I don't regret it. The great thing is that buyers are free to say "no way" and look elsewhere. As I stated before it has had no impact on sales and our condos continue to see in a matter of days.

F.Y.I our condos are now selling in the mid 200's. We are tucked in an area where we are surrounded by $800K and up neighborhoods and even before the market got hot the condos sold almost instantly once they were put up for sale. I did some research before we added this fee and for the last 5 years on average 13-16 condos sold. Our average age has to be in the mid 70's and we have many that are mid 80's and up. Sadly a lot of the turnovers result from owners dying. If I was a betting man I would wager that this year there will be at least 20 condos sold. For whatever reason once the market heated up and people saw what they could sell there condo for they put them up for sale.

My point is this fee will result in a good chunk of change over the years. I hope that future Board are responsible and use this money to prevent the disaster that occurred previously over the years. This fee could actually end up lowering the monthly assessment since part of this money is used to fund the Reserves.

Personally, I will probably never buy in a condo community again. They serve a purpose and for some it's a good choice but I don't want to take the risk anymore which was a major reason why I sold mine. Buena Vista Va here I come!

I can just imagine the chunk of change that a clear majority of present owners decided to assess all future owners at JohnT38's COA. Next week, maybe this COA would like to take a vote on the following amendment:

After purchase, all those owners who bought after April 30, 2022 shall be solely responsible for paying all the expenses of the Association. All owners who bought before May 1, 2022 shall henceforth be relieved of paying any regular or special assessment.