Voiding HOA election

Our HOA recently held an election to substantially raise HOA rates to cover the transfer of ownership and operating costs of community facilities from the developer to the HOA. We were initially told this large increase was required for the transfer to take place, but have since learned that the HOA could've assumed ownership with a far more modest fee increase. A number of homeowners would like to change their vote, but under California Civil Code Section 1363.03 they cannot change or even revoke their ballots after submission.

How can individual homeowners either change or revoke their initial vote or simply void the entire election?

Thanks - yes, it was voting on a motion and the documents do have that verbage. I agree we could have another homeowner vote to overturn the measure they just passed, but that seems like an inordinate amount of work when just getting a homeowner quorum is quite a struggle.

Ultimately, I would like to just void the election since new material fact came out after the initial ballots were cast, but I was warned this might become a legal battle that we really don't want to bother with (or pay for).

Alternatively, it would be nice if homeowners could just change or revoke their votes, but this seems to be expressly prohibited under under California Civil Code Section 1363.03.

But, I agree, we may have to issue another vote and I will raise this issue if it must come to that.

TomJ2:
You are speaking about a vote taken to raise fees to cover costs and now decide after the vote members are not happy with the new fee increase. IF transition from developer control has been completed and your assn. is now under resident control, instead of trying to 'undo' what was done, look ahead and work from that angle.

It is not unusual for the developer to lowball fees to entice buyers. When the turnover takes place it is common for the fees to be raised to cover needed expenses. Hopefully, the developer also presented you with a Capital Reserve Study which shows future repair/maintenance with costs for the
specific years' life cycle.

The Good News is you now have a resident Board who will review all current expenses carefully to determine whether there can be some trim or not. Show all line items on a financial report and then base the assessment fee on expenses vs. income not forgetting a portion for the capital reserve fund.

If the Board is one who has high energy, they can take the opportunity to network with other communities for contractors in the area who will come onsite to offer bids for their work (lawn maintenance, snow removal). Compare these bids with what you have presently ESPECIALLY if you are continuing with the contractors the developer used. It is wise for an Assn. Board to know the contracts and how they can be written, changed and managed for the best possible price.

The Board can determine the needed Assessment Fee and hold a vote to ratify the budget. What was done can be undone by another vote--but only after some carefully researched financial documentation is done to back up the recommended fee. Whether the fee is increased or decreased, residents will be assured of a Board who is looking out for community interests in wanting to
use funds wisely. Keep us posted on your progress!!

TomJ2 - I agree with with Paul. Raising dues now may prevent further more frequent increases in the future and gain valuable earned interest if invested properly. There is clearly a potential silver lining to be realized for the future.

TomJ2 - Just to clarify matters (for me) you have $700K in expenses and how much in annual revenue?

The Board in and of themselves should not void the community vote. The community should try to accomplish this. Naturally it's in no ones best interests to have such a surplus not tied to any need, especially an unjustified $1M. The funds may need to be given back to the community at some point. In my HOA if there is a surplus the community votes at the annual meeting or when the surplus is realized to have the money given back to the owners or re-invested into the association. I'm pretty sure there are accounting and IRS principles/practices that prevent this from happening consecutively however.

Now - here's where I believe you and everyone else in your association have to be extremely careful in your reasoning regarding the necessity of the surplus. In essence don't put the cart before the horse. Meaning, has an independent professional transition engineering firm provided a capital reserve analysis and deficiency report on the developer's construction of the community? If not, IMHO you have no basis to state that $1M is excessive, or a surplus. That surplus may actually be necessary to keep on hand until the association Board/attorney/engineer can negotiate a settlement with the developer. If the above reports have not been performed you won't know and have independent proof how much the developer low-balled the original budgets, and you won't know the deficiencies in the construction of all the elements the association is responsible to maintain. Until you see the above reports, you've no idea how vast the differences are between reality and developer projected figures.

Tom

Your situation is common amoung new developments when they are turned over to the Residents. The final closeout costs are normally larger than anticipated and are usually picked up by special assesments to homeowners after a vote like yours.

Sounds like the Board added a little padding to the estimate to assure a smooth closure. Now that you have gotten rid of the developer your HOA can start developing its own budget and the monthly dues may be re evealuated and may just be lower. If that the case then your Board should place the difference into their reserve account each month so as to assure that you ahve future funding.

California law also limits annual dues increases to 5% per year without a vote of the association membership. However they can be increased by as much as 20% to pay for special items that occur on an emergency basis.

Check the Sterling Davis Act and the Corporations Codes for the particulars. Also special assesments can only be a one time item and can not be carried over. Special assements would be for items such as new roads,new common area improvements etc. Simply review the budget and make sure the board is within their budget each year. Our HOA dues are %86.00 per month and we have 52 homes. Our budget is around %52,000.00 per year and our reserves are at about $150,000.00.