Differential Assessment in an HOA

Started by RichardM29 • 9 replies • 227 views

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RichardM29 (Virginia)
Posts: 43

Posted:

First, please note, this situation is not occurring in my HOA! I am describing a situation in a neighboring HOA, with CC&Rs almost identical to ours.

Through unapproved processes involving BOD members that involved conflicts of interest, a lot owner was granted a lower annual assessment amount. The CC&R's SPECIFICALLY prohibit this. Why this has been tolerated for so many years is unknown to me. Now a resident wants to confront management and fix this. He's asked me to query this Board for opinions.

The amount of uncollected funds is now in the area of $20K.

Current management is aware of the differential (in fact had a role in granting it) and has shown no interest in fixing the problem

What should happen?

KerryL1 (California)
Posts: 14,550

Posted:

Your friend's HOA's manager most likely has no authority to "grant" a lower assessment. Management also has no authority to "fix this." Your neighbor needs to confront the Board of Directors who hired the manager. They are responsible.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Quote:

Posted By RichardM29 on 01/25/2024 1:31 PM

What should happen?

What should happen I believe you already know.

If you are asking what options are available:

1) Bring the issue up at the next membership meeting (let everyone know).
2) Hire an attorney for legal options
3) gather like minded individuals and get them elected to the board to correct this mess.

Having said all of that, Does your CC&Rs allow waivers?
If they do, then what was done might not be a conflict (depends on what the waiver section says).

ElleN (Idaho)
Posts: 4,420

Posted:

-- Remind the neighbor that the courts view covenants as contractual terms that are enforceable like any other contractual terms.

-- I would not bring this up at a membership meeting. Why? Because I do not have all the facts. For all I know the owner who had his assessment waived has some kind of signed settlement with the HOA because the HOA did something wrong to him; everyone lawyered up; and rather than go to court, the HOA agreed to pay the owner xyz amount. Not having all the facts, the risk of defamation is too great.

-- The best HOA attorneys in my experience advise that the quickest way to resolve these situations is often replacing the board at the next annual election, like TimB4 said.

-- The neighbor should keep in mind that Maryland has a three year time limit on filing suit to collect past debt. Hence if the lawsuit were filed tomorrow, only the last three years of assessments are collectable.

KerryL1 (California)
Posts: 14,550

Posted:

I misread & thought a manager had granted the reduction.. But, still, the manager has no authority to "fix" the issue. How your. f friend knows the amount is also a mystery as thee types of matters are usually confidential. There's way too much information missing, e.g., WHEN was this reduction granted? Allegedly for what purpose? Etc.

RichardM29 (Virginia)
Posts: 43

Posted:

Actually, not a lot of information is missing. The CC&R's specifically prohibit differential assessments. Need I post a quote?

Yes, a manager granted the exception. That action was in violation of the CC&R's.

After posting two questions on this board, and having an interchange with a number of members, it's pretty clear people who are members of a hundred unit condo association (or larger) have little understanding of what real life is like in a 16 residence HOA. Example: how no one would know about a differential assessment handshake deal because that information is "confidential." LOL, people TALK.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Richard,

My question appears to have been overlooked.

Does your CC&Rs allow for waivers?

RichardM29 (Virginia)
Posts: 43

Posted:

No.

TimB4 (Tennessee)
Posts: 21,061

Posted:

Richard,

Thank you for the answer.

My advice, don't try to collect from the past.
Inform the owner that the agreement was a violation of the CC&Rs and that the board will apply the same assessment as all others going forward (starting with this year).

Trying to collect from the past may cost more then you want.
Admit the mistake, fix it and move forward.

RichardM29 (Virginia)
Posts: 43

Posted:

Using "manager" in a generic way, the exemption was granted by one: the President at the time.

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