Mandating use of a specific Utility vender - Internet Service

Started by JohnC73 • 21 replies • 593 views

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JohnC73 (Massachusetts)
Posts: 344

Posted:

Can a by-law require ALL owners to purchase an Internet Service from a specific vendor?

The BOD is proposing a by-law to be voted on by the owners in September to require ALL owners to purchase internet and the fees will be included in our Condo dues. I think this by-law has little chance of passing, but I'm wondering if it is legal to force an owner to purchase from a specific vendor.

We are a seasonal HOA and 25% of the owners DO NOT have have any Internet service. Also, in our area there is only 1 Internet provider, so currently, we don't have any options to choose another vendor. From a price point the deal, on the surface, sounds very good. The only catch is in order to get this price the Internet company is requiring ALL owners to sign up for the service and pay for it YEAR ROUND. Many owners use their condo 3 months of the year, the summer months and then leave for the season. We are no even open during the Winter unless you pay a special assessment for plowing and water is shut-off. About 1/3 of the park are occasional weekend warriors to ski and snowmobile during the winter.

Again, I doubt it would pass a vote of the owners, just curious if this sounds legal to require an owner to purchase a service they may not want.

Thanks
John

MarkR21 (North Carolina)
Posts: 710

Posted:

Sounds dumb
I’m sure it will get voted down
Most bylaws require 66 or 75% to change rules

CathyA3 (Ohio)
Posts: 6,299

Posted:

I think your governing docs would need to have language in them giving the association the right to purchase utility services. You also have to consider the potential liability the HOA is taking on when it inserts itself into what is normally a business-customer relationship. Do you want to deal with irate owners whenever the internet goes out? Will you have to employ someone to support the community network?

I know some communities do this. But even if it's an option for your community, buying full year service for a mostly seasonal community sounds like a bad deal for homeowners. It also would benefit a subset of owners at the expense of others, and that's generally something that should be avoided.

And think about it - these companies wouldn't offer such things unless they believe it's in their financial interest to do so. Locking yourselves into a particular technology doesn't make much sense when there are so many options available (and more all the time).

JohnC73 (Massachusetts)
Posts: 344

Posted:

Thanks Mark and Cathy,

I agree, it sounds dumb. The new BOD member has good intentions as it would be a significant savings to some, but not all. For me personally it would be close to a wash. I'm grandfathered in with the Internet company because I have a plan they no longer offer, but I get to keep until I cancel. I pay $27.99 for internet while many others pay 2 or 3 times that. Granted my internet is of a slower speed, but it suits my needs just fine and I rarely have buffering issues when streaming my youtube tv.

It would require 2/3 vote to pass. I don't think it would pass.

Thanks
John

TimB4 (Tennessee)
Posts: 21,059

Posted:

Bylaws are different then covenants (although, not always in a condo development).

Often, bylaws require less approval percentage then covenants.

I believe that to add a new service, the Association needs to amend the covenants. Covenant amending typically require 2/3 approval to adopt (which is why I expect everyone has said it requires 2/3 vote).

I would suggest to bring up to the board the need to amend the covenants vs. the bylaws to add a new service.
You may need to pay an attorney to write a letter on your behalf to get the Boards attention.

Hope this helps,

Tim

JohnC73 (Massachusetts)
Posts: 344

Posted:

Thanks Tim,

I'm always confused at which type of items belong in each of our Condo Instruments. We are governed by 3 documents. These documents include the Declaration, Bylaws and Usage Regulation. The Declaration is the document I believe you are referring to that is the one that would need to be changed.

Yes, the declaration requires 3/4 vote to change, the bylaws require 2/3 vote. I doubt this would pass either, but the article needs to be proposed to the correct document.

Thanks again
John

SteveH35 (Washington)
Posts: 339

Posted:

Quote:

Posted By JohnC73 on 06/20/2022 2:56 AM
Can a by-law require ALL owners to purchase an Internet Service from a specific vendor?

The BOD is proposing a by-law to be voted on by the owners in September to require ALL owners to purchase internet and the fees will be included in our Condo dues. I think this by-law has little chance of passing, but I'm wondering if it is legal to force an owner to purchase from a specific vendor.

We are a seasonal HOA and 25% of the owners DO NOT have have any Internet service. Also, in our area there is only 1 Internet provider, so currently, we don't have any options to choose another vendor. From a price point the deal, on the surface, sounds very good. The only catch is in order to get this price the Internet company is requiring ALL owners to sign up for the service and pay for it YEAR ROUND. Many owners use their condo 3 months of the year, the summer months and then leave for the season. We are no even open during the Winter unless you pay a special assessment for plowing and water is shut-off. About 1/3 of the park are occasional weekend warriors to ski and snowmobile during the winter.

Again, I doubt it would pass a vote of the owners, just curious if this sounds legal to require an owner to purchase a service they may not want.

Thanks
John

Charging for a single vendor's services to deliver internet service in your assessments has been done before and it's perfectly legal so long as your declaration / CC&Rs allow for it.

JohnC73 (Massachusetts)
Posts: 344

Posted:

Thanks Steve,

I'm fine with going along with the will/vote of the owners. It is unlikely to pass though.

The 25% of the owners that do not have internet are elderly and on fixed income. I not a fan of asking these elderly owners to subsidize my internet.

Thanks everyone for all the feedback.

John

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I think we may be missing an angle here. Could it be that the HOA wants to include offering internet service with their dues? Which means if that is to happen, then the HOA would have to go down to just one provider. That is because the HOA will be the customer of the internet bill. Which will be split evenly amongst all the members equally whether or not they participate in using the internet.

It has it's benefits as some of those unable to afford internet service maybe able to at a reduced price by adding it to the dues. Having a bill split amongst many people can reduce individual expenses. Like we paid for lawncare for the entire HOA. It broke down to about $25 per household. I pay $50 a mow on average twice a month for lawncare out of my HOA.

Now I am not a fan of an HOA adding internet or pest control to their expenditures. It doesn't mean it can't happen. It would be a vote of the entire membership to decide. Plus it would have to be written into the documents to reflect what dues are going for.

So the HOA mandating the specific internet vendor is because they have to sign a contract with that one cable company for them to provide. My area we can't just order any cable company. We have to fall under the service area. Even though I may like "WOW!" it may be "Google Fiber" only offered in my area.

Former HOA President

SheliaH (Indiana)
Posts: 6,964

Posted:

In some communities that may be a requirement because of what happened when cable TV service came to a number of areas. Back in the day (the 80s or such), everyone was eager to get cable (and later internet), so counties and cities awarded bids to certain companies to service the entire area. Today, you have more choices, and when the period for the contract ran out, it wasn’t renewed in some areas.

On the other hand, when my community first got cable tv service, there was some sort of deal where the clubhouse got it for free. Today, if we wanted to change the service, we’d have to go through the same company, whether they had the best price or not. Usually, people don’t use the TV when the clubhouse is rented, so it doesn’t matter very much.

In this case, I don’t think a bylaw is necessary because this is the only internet service in the area anyway, so I’d vote against it. As a practical matter, I wonder if the provider suggested this in case a competitor shows up and they don’t want to lose business – and they want to keep the money rolling in throughout the year.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JohnC46 (South Carolina)
Posts: 14,265

Posted:

John

I assume an individual can contract for cable even if only the one company? While there could be an advantage to a package deal (less cost per unit), I do not like it as it forces one to pay for something they might not use.

JohnC73 (Massachusetts)
Posts: 344

Posted:

Quote:

Posted By MelissaP1 on 06/20/2022 9:47 AM
I think we may be missing an angle here. Could it be that the HOA wants to include offering internet service with their dues? Which means if that is to happen, then the HOA would have to go down to just one provider. That is because the HOA will be the customer of the internet bill. Which will be split evenly amongst all the members equally whether or not they participate in using the internet.

It has it's benefits as some of those unable to afford internet service maybe able to at a reduced price by adding it to the dues. Having a bill split amongst many people can reduce individual expenses. Like we paid for lawncare for the entire HOA. It broke down to about $25 per household. I pay $50 a mow on average twice a month for lawncare out of my HOA.

Now I am not a fan of an HOA adding internet or pest control to their expenditures. It doesn't mean it can't happen. It would be a vote of the entire membership to decide. Plus it would have to be written into the documents to reflect what dues are going for.

So the HOA mandating the specific internet vendor is because they have to sign a contract with that one cable company for them to provide. My area we can't just order any cable company. We have to fall under the service area. Even though I may like "WOW!" it may be "Google Fiber" only offered in my area.

I think you nailed it. We only have 1 internet provider in the area, so we have no options. And yes, the HOA would be the customer and they would share the expense among all owners if they chose to use the service or not.

Honestly, it is a good deal for most, but not all. I just don't like forcing someone that doesn't even use internet to now be forced to help pay for mine.

I just wanted to know if it was legal and sounds like it is. There is a really high bar for it to pass and I doubt that it would.

JohnC73 (Massachusetts)
Posts: 344

Posted:

Quote:

Posted By JohnC46 on 06/20/2022 11:38 AM
John

I assume an individual can contract for cable even if only the one company? While there could be an advantage to a package deal (less cost per unit), I do not like it as it forces one to pay for something they might not use.

Thanks, This is how I feel as well.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

That is how dues work. Not everyone benefits from everything the dues pay for. How much of a jump are we talking about? Plus who says they would not use it if provided? They have grandkids and children that visit who may need access to the internet. Now a days medical equipment is hooked up to apps or monitored via the internet. I would not feel guilty about it. It's just something you all are contributing to for all to benefit despite who does or does not use it.

Former HOA President

JohnC73 (Massachusetts)
Posts: 344

Posted:

Quote:

Posted By MelissaP1 on 06/20/2022 3:00 PM
That is how dues work. Not everyone benefits from everything the dues pay for. How much of a jump are we talking about? Plus who says they would not use it if provided? They have grandkids and children that visit who may need access to the internet. Now a days medical equipment is hooked up to apps or monitored via the internet. I would not feel guilty about it. It's just something you all are contributing to for all to benefit despite who does or does not use it.

Personally, I don't know how anybody can survive without internet these days. When the BOD announced as part of their research on this issue that 25% of the park doesn't have internet I was floored.

It would be a $360/year increase in our dues. I won't feel guilty as long as it passes the vote of the owners. Many things pass that I don't like, but as you say, that is life in an hoa.

Thanks for the feedback
John

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Is the 360 for one person or for all? $360 divided evenly amongst everyone may not be so bad unless that was per individual.

Former HOA President

JohnC73 (Massachusetts)
Posts: 344

Posted:

Quote:

Posted By MelissaP1 on 06/20/2022 5:43 PM
Is the 360 for one person or for all? $360 divided evenly amongst everyone may not be so bad unless that was per individual.

More background. We have 456 owners, 306 of these owners stay in the park 6 months or less. Only 150 occasionally stay in the winter. The winter folks probably average occupancy for 20 days or less in the winter. These are park model mobile homes, hard to heat and no running water(other than a public bath) during the winter.

The cost is for highspeed internet and basic cable. It is for 12 months and forces the 306 that only use the service for 6 months or less to pay year round, granted at a lower cost.

Well, you really need a detailed spreadsheet to see if we are really saving money or just shifting the cost to the 114 owners out of the 456 total owners that do not want internet for what ever reason. I have requested that the BOD member behind this show the real numbers and demonstrate the actual savings.

I ran a cost simulator based on my estimates and see that it saves the 342 owners that currently have internet about $10/month when extrapolated over 12 months(many are only 6 monthers) while penalizing the 114 that don't want internet $20/month. So, it is a maginally good deal for the many and a bad deal for the few, the 114 that pay zero now. My numbers might be off as I had to make assumptions, really need to see the actual data.

Thanks
John

SheliaH (Indiana)
Posts: 6,964

Posted:

Running the numbers that way is a good idea and I hope your board takes you up on it. Then the homeowners can make an informed decision.

Better yet, I’d propose dumping the proposed requirement altogether. While I agree internet service is almost a requirement to have these days, given the type of services available, people can also make their own arrangements based on usage (it would be nice if there was more than one provider to choose from, but oh well.) It’s not the association’s fault that some people are only there during the winter or a month or two out of the year – people know their budgets and have to make the numbers work for them.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JohnC73 (Massachusetts)
Posts: 344

Posted:

Quote:

Posted By SheliaH on 06/21/2022 9:37 AM
Running the numbers that way is a good idea and I hope your board takes you up on it. Then the homeowners can make an informed decision.

Better yet, I’d propose dumping the proposed requirement altogether. While I agree internet service is almost a requirement to have these days, given the type of services available, people can also make their own arrangements based on usage (it would be nice if there was more than one provider to choose from, but oh well.) It’s not the association’s fault that some people are only there during the winter or a month or two out of the year – people know their budgets and have to make the numbers work for them.

I agree, without the details, it is just speculation. I ran some simulated reports using high and low numbers. On the low end it saves the owners that currently subscribe to internet about $10/month. On the high end, it saves owners that currently subscribe to internet about $20/month. Most likely the number is in the middle of the extremes and saves owners that currently subscribe about $15/month.

The issue is that the 25% of owners that don't have or can't afford internet have to now pay $20/month extra. Most of these, but now all are elderly owners that don't want and can't really afford internet. It almost seems like reverse socialism where the owners with less money are subsidizing the owners with more money. I personally won't support this, but it is up to a vote of the owners.

KerryL1 (California)
Posts: 14,550

Posted:

"Reverse socialism": Would that be called, um?...no further comment.

SheliaH (Indiana)
Posts: 6,964

Posted:

There are some programs that help the elderly afford internet service A-Rod they may want to check with the local agency on aging for more information. They may not be into streaming tv services, but having it does enable to use more smart technology and access telehealth services.

They could also subscribe to digital magazines and newspapers,as some of them may have somebody of program that will read the articles. That would be great for people who have vision problems Educating them on the pros and cons of getting some sort of internet service (\it's not just about price) could enable to make a more informed decision. Some areas have low cost or free classes on how to use tablets or computers (I've also seen the internet for dummies books that have o s aimed at elderly users)

But, a you said, life is a numbers game, so get the numbers, have Some meat btw and then people can decide. Perhaps the cable company can attend show up to a special meeting and make their case - wouldn't it be nice if they came up with a sweeter deal to keep the business?

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

JohnC73 (Massachusetts)
Posts: 344

Posted:

Quote:

Posted By SheliaH on 06/21/2022 7:33 PM
There are some programs that help the elderly afford internet service A-Rod they may want to check with the local agency on aging for more information. They may not be into streaming tv services, but having it does enable to use more smart technology and access telehealth services.

They could also subscribe to digital magazines and newspapers,as some of them may have somebody of program that will read the articles. That would be great for people who have vision problems Educating them on the pros and cons of getting some sort of internet service (\it's not just about price) could enable to make a more informed decision. Some areas have low cost or free classes on how to use tablets or computers (I've also seen the internet for dummies books that have o s aimed at elderly users)

But, a you said, life is a numbers game, so get the numbers, have Some meat btw and then people can decide. Perhaps the cable company can attend show up to a special meeting and make their case - wouldn't it be nice if they came up with a sweeter deal to keep the business?

Thanks, I did check into that as someone in our association pointed this out. Our HOA is a vacation home, permanent residency is NOT allowed. The goverment program is designed for people 200% below the poverty line. Unlikely that anyone that can afford a 2nd home is in this bracket - lol.

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