Charging Owners For Various Things Bought With HOA Money

A HOA is a non-profit corporation in most cases. I am not sure if yours is or not. I am going to ASSUME it is. That means that it must spend as much as it collects on items it needs for maintenance/operation expenses. Many HOA's don't have "funded clubs" but yours does. Because of this the HOA provides them money so that they can sustain themselves. The "clubs" may not be non-profit but for profit. They also may also take that money they make by selling those items to put them back into their club funds.

It's like a Church gathers tithes ever Sunday but still have a "White Elephant" or Bake Sale to help fund some of it's projects. Do you want to take back your tithes because you bought a clock at a yard sale?

Anne, does the original source of the money for the clubs come from the Operating budget or the Reserve budget?

You may need to get a legal opinion, but first you should read your governing documents to see if this sort of spending is even allowed. However, for now I'm going to assume that it is since your community has *a lot* of social activity - if it were questionable, I would expect more homeowners to be complaining.

So what can you do? My biggest concern is that it doesn't sound like you have much support for your point of view. Are there others who agree with you - maybe among those who didn't attend the meeting?

The thing is that in HOAs, you need allies in order to make changes to the status quo. It doesn't matter if you're 100% correct and your neighbors are totally in the wrong. If you don't have allies, then your other option is the legal route. Florida's laws provide for some form of alternative dispute resolution that don't involve a full-blown lawsuit. But a warning about going the legal route - it can be time-consuming, unpredictable, and may antagonize your neighbors and make it unpleasant to live in your community. You have to decide if the money issue is worth the blow-back you may get.

I do not see a problem. Seems the HOA gives the clubs some seed money but it gets returned. You do not have to take advantage of what the clubs are offering.

For a HOA to qualify as 501(c)(3) would be highly unusual. HOAs are almost always nonprofit but this is not under IRC 501(c)(3). Instead, HOAs nonprofit status is typically covered under IRC Section 528, also known as 26 USC 528. The latter is very different from 501(c)(3).

You're going to have to investigate this, probably getting an education in the process, and then report back here.

My point is that our HOA dues paid for the food in the first place and they are charging us for it at activities and meetings. So in essence we are being charged twice.

The clubs give monthly reports of their expenditures and intake - how much money they made. They have to give back any unspent seed money they were provided by the Board but all the profits they made off sales of food and ticket prices of dances, dinners, and Bingo - that is what they are allow to keep. BTW, they never turn down the yearly money even when they have surplus.

We are not a condo, we are a park of 210 manufactured homes who formed an HOA in 1980. The annual dues set aside money for reserves and pays electric and water for clubhouse (and pool), for the use of the pool, the maintenance of our streets and common areas, repairs and general upkeep and lawn care of areas around our clubhouse, common areas and storage buildings. We have no security gates or guards and the hot tub and fitness center were closed due to liability insurance rate hikes. We pay a Special Assessment fee every other year for things that were not budgeted correctly or surprise expenses like a new pump for the pool and new air conditioner for the clubhouse.

It is the fact that they are charging for food that was already purchased with HOA funds. And you are right about taking advantage of their offer, it is precisely why I do not attend the dinners for $25 or the Bingo for $50 or the dances for $20 or buy food at cards or Bingo. I see it as food already paid for with our HOA fee and members should not be charged twice.

Thank you for your reply.

Anne

I can understand the BOD asking people to vote the changes up or down in their entirety. It could be a real cluster kiss voting on each change. individually. They are not forcing the changes on you as owners get to vote on it thus I disagree with your lawyer.

Also as far as tax differences/breaks your accountant should be advising the pros and cons, not a lawyer.

Re: the section in bold above, if your board members are not lawyers, they have no qualifications to be re-writing legal documents. It's extremely likely that some of their work contradicts current law, especially if they're also monkeying around with tax considerations. Homeowners should not vote on any of their handiwork since there are so many ways that this can go sideways.

I think this is much more serious than any issues with funding the social clubs, and it needs to be addressed before the board gets you into real trouble. The sooner, the better....

The operating budget.
Unused funds are returned and carried over to the next year's budget.

I mentioned that (about no legal oversight) at this morning's meeting and I was told the Board has been writing the rules and regulations, the By Laws and determining policy since day 1. These documents have been amended every 2 to 5 years if they need to be amended. I was told no one ever complained about the Board doing it before and I had no basis for my argument since it has been the status quo for them to write our documents since 1980.

So I wrote an opinion paper this afternoon and intend to photocopy it and distribute it tomorrow to all 210 homes to ask them not to approve the Proposal because they are being forced to vote YES on the whole package - and the only vote the Board will accept is an approval vote. They raised the quorum from 10 percent to 30 percent of those present for approvals, so that is one thing they might not get because only about 75 people come out to board meetings. If owners vote to approve, there is no turning back. The Board said they will not make changes on stuff that was already approved. So knowing this going in, I said in my opinion paper that they should not vote on this or any Proposal that they cannot change for 2 to 5 years when the documents are rewritten.

The more phone calls I get, the more I regret ever standing up at the board meetings. I have lived her for 10 years, and own my home and land outright. I refuse to become a hermit like some of the owners who don't agree with what is going on, and gave up the fight. They pay their HOA fee and cut themselves off from the community and functions. That's not me. But you are right, I need more owner support or this is a waste of time.

Bylaws are typically a majority or 50% plus 1, WHILE CCRs are typically 2/3's or higher.

Anne, can you answer the questions above?

If you read your community's Declaration and Articles of Incorporations, it likely will say whether the HOA is subject to FS 718, FS 720 or some other Florida statute. Which statute applies will tell you (and this group) a lot. For example, Florida Statutes Chapter 718 applies to condominiums.

People here have a lot of experience with Florida statutes. By not digging a little to find out which ones apply, I think you are hurting your chances of getting meaningful advice.

You could also go to this site https://dos.myflorida.com/sunbiz/search/ and look up your community's name. See what the site says about what type of organization, exactly, this is. Report back here.

I suspect that this is a distinction without a difference. The Florida Not For Profit Corporation Act FS 617 likely already applies. I see FS 720 says this, "The purposes of this chapter are to give statutory recognition to corporations not for profit that operate residential communities in this state, to provide procedures for operating homeowners’ associations, and to protect the rights of association members without unduly impairing the ability of such associations to perform their functions." Maybe the board just wants the wording to be consistent with FS 720 and FS 617.

About how much money does the HOA give to these various clubs, net (meaning what the HOA gives initially less what the clubs return)?

You say you think you are being double charged. I say a fair interpretation of what is going on might be the HOA subsidizes social activities to some extent, under a provision in the Declaration or bylaws about assessments going in part for the "welfare" of the HOA. Otherwise, these clubs profit. Do they do so legally? Perhaps an important question to ask is whether the clubs' profiting violates a covenant on business operations on common areas.

Otherwise I am struggling to nail down exactly what the illegality is here.

I also keep in mind that someone driving to Costco, cooking, setting up et cetera has some value.

After voicing your concerns, maybe the best way to address this by far is to see if others feel as you do and then change the board. The board consists of all volunteers. It's not a fun volunteer gig at all. I am not saying this means the board should be violating the covenants. I am saying that letting some things slide, so one does not have to serve on the board, is sometimes a better option than having to serve on a board.