Paying a Board Member Admin Fees

JulieW12 (New Mexico)
Posts: 8

Posted:

50 homes $90 Qtr dues, no amenities. Dues went from $30-$90 due to legal fees and not having a Justice of the peace. Our POA (DEVELOPER OWNED) fees/services has an administration fee and professional fee (office supplies reimbursement) amongst others but these 2 are the main issue). We collect around $12,000-$16,000 per year in dues. After ‘services and reimbursements’ we are left with about $7,000. With our fees include an administration fee that has gone up to $6,500. This administration fee is for and I quote:

Handle all POA invoicing and collection of dues, legal fees, and late fees.
Communicate with attorneys for pending litigation, liens, etc.
Communicate with insurer, CPA, and etc.
Negotiate with landscape and maintenance contractors
Handle all check book responsibilities
Communicate and correspond with homeowners and lot owners
Meeting with attorneys and attend all court dates.

For the past 3 years we haven’t been doing any legal action bc we can’t afford it. We don’t have a Justice of the peace and are still paying legal fees from 2016 in loans. My question here is this…

The board member the admin fees are going to in pocket is the daughter of the developer, who works at the developers company, developer has his own business besides real state. This POA developer owners association is a non profit organization! Is this Legal to pay a board member under administration fees? Please explain thoroughly.

TimB4 (Tennessee)
Posts: 21,059

Posted:

For legality, you will need to consult with an attorney.

Typically, the board may hire someone to perform administrative tasks.
Nepotism isn't always a good idea. However, I do not know of any law against it.
NOTE: I am not an attorney.

Realistically, your Association may be stuck with this issue until control of the Association is turned over to the membership.
Your governing documents should specify when that should take place.

DeanJ
Posts: 1,786

Posted:

Sounds like you believe the developer should provide service to the HOA for free.

The administration fee in other HOAs would be called a management fee. Handling the checkbook responsibilities is keeping the financial records. A family member as an employee of the developer working as the property manager is not unusual. It is also not unusual for a developer to keep HOA fees artificially low to sell homes and then increase the fees as the development is sold.

The fee is $10.83 per home a month. That value is not going to change appreciably when the development period is over and the HOA hires its own company unless the HOA self manages. Self management is when you find homeowners to work for the HOA for free to save themselves $10.83 a month.

ElleN (Idaho)
Posts: 4,420

Posted:

Quote:

Posted By JulieW12 on 02/04/2024 12:56 AM
50 homes $90 Qtr dues, no amenities. Dues went from $30-$90 due to legal fees and not having a Justice of the peace.

I do not understand. Isn't there a Justice of the Peace Court for every locale in Louisiana?

By any chance do you mean the HOA does not have an attorney?

Quote:

Posted By JulieW12 on 02/04/2024 12:56 AM
The board member the admin fees are going to in pocket is the daughter of the developer, who works at the developers company, developer has his own business besides real state.

A director can lawfully perform managerial duties like the ones you describe and lawfully be paid for the managerial duties.

Quote:

Posted By JulieW12 on 02/04/2024 12:56 AM
This POA developer owners association is a non profit organization!

Please understand that non-profit corporations pay managers all the time for their services.

JulieW12 (New Mexico)
Posts: 8

Posted:

Justice of the peace is not in our area. We had to hire an attorney for legal actions on those who were not paying their dues.

This admin fee changes every year and puts us of only hundred of dollars for profit, if that, we are always in the negative and are still trying to make do. Everything has been the same the past 7 years. Only 1 new home built. 2016 admin fee was $400.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Julie,

You say that you have no amenities.

Does the Association own the roads?
Does the Association provide services (trash/recycling)?
Does the Association maintain storm water management devices (settling ponds, drains, etc.)?
Does the Association have any common area?

JulieW12 (New Mexico)
Posts: 8

Posted:

Quote:

Posted By TimB4 on 02/04/2024 4:06 PM
Julie,

You say that you have no amenities.
- none, just 2 small ponds with fountains (one pond is over grown)

Does the Association own the roads?
- no, parish/county owned roads (our roads are terrible and I’m not exaggerating)

Does the Association provide services (trash/recycling)?
- no

Does the Association maintain storm water management devices (settling ponds, drains, etc.)?
- no, the parish handles that. And it is horrible. Every house in this neighborhood has water sitting in their back yards from terrible development drainage structure before building.

Does the Association have any common area?

- yes but it is just a lot that does not stay maintained for any use. Just trees and grass. The others are around the pond and the median at the entrance in our sub.

Great questions! I have an excel spread sheet I made from every year Profit/L/Balances. I’ve lived here since 2011. Nothing has changed but the higher dues.

JulieW12 (New Mexico)
Posts: 8

Posted:

Quote:

Posted By ElleN on 02/04/2024 7:57 AM

Posted By JulieW12 on 02/04/2024 12:56 AM
50 homes $90 Qtr dues, no amenities. Dues went from $30-$90 due to legal fees and not having a Justice of the peace.

I do not understand. Isn't there a Justice of the Peace Court for every locale in Louisiana?

By any chance do you mean the HOA does not have an attorney?

Quote:

Posted By JulieW12 on 02/04/2024 12:56 AM
The board member the admin fees are going to in pocket is the daughter of the developer, who works at the developers company, developer has his own business besides real state.

A director can lawfully perform managerial duties like the ones you describe and lawfully be paid for the managerial duties.

Quote:

Posted By JulieW12 on 02/04/2024 12:56 AM
This POA developer owners association is a non profit organization!

Please understand that non-profit corporations pay managers all the time for their services.

Justice of the peace is not in our area. We had to hire an attorney for legal actions on those who were not paying their dues.

This admin fee changes every year and puts us of only hundred of dollars for profit, if that, we are always in the negative and are still trying to make do. Everything has been the same the past 7 years. Only 1 new home built. 2016 admin fee was $400.

JulieW12 (New Mexico)
Posts: 8

Posted:

Quote:

Posted By DeanJ on 02/04/2024 7:13 AM
Sounds like you believe the developer should provide service to the HOA for free.

The administration fee in other HOAs would be called a management fee. Handling the checkbook responsibilities is keeping the financial records. A family member as an employee of the developer working as the property manager is not unusual. It is also not unusual for a developer to keep HOA fees artificially low to sell homes and then increase the fees as the development is sold.

The fee is $10.83 per home a month. That value is not going to change appreciably when the development period is over and the HOA hires its own company unless the HOA self manages. Self management is when you find homeowners to work for the HOA for free to save themselves $10.83 a month.

What I don’t understand is that
1. We have no amenities
2. We haven’t had any legal action for over 3 years
3. There has only been around 3 houses built since 2016

How come the fees are raised when nothing has been done? We basically only pay for maintnance and lawn care. Also we have not had a meeting since 2016.
** NOTE we flooded twice in 2016.

So you are telling me the developer can put what ever admin fee he wants? This fee has gone up tremendously and has been keeping us in the negative.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Julie,

The ponds are also likely storm water management devices. They may be expensive to maintain in the future if not properly maintained early.

My experience is that the county doesn't formally take over the roads until the development, or phase of development, is completed.
Until then the Developer/Association takes care of them.

Fair warning - Developers tend to keep assessments lower then they should be in order to encourage buyers to purchase.
Once the membership takes over the running of the Association AND a proper reserve study is completed, you will likely see a major increase in assessments.
After that, simply due to inflation, you could see an increase of up to 5% per year.

On a side note, I would encourage you to try and get on the board when you can.
This will give you access to more info then you have now.
Expecting that the Developer placed a bond with the city, if things are not completed - the Association can put a claim on the bond (you may need an attorney to assist you with that).

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Julie

While under Declarant control, the Declarant can pretty much do what they want to do. One main thing to look out out come turnover time, is there sufficient money in the reserves. Also will the local authorities accept the streets if they are not private streets.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By JulieW12 on 02/04/2024 4:55 PM

What I don’t understand is that
1. We have no amenities
2. We haven’t had any legal action for over 3 years
3. There has only been around 3 houses built since 2016

How come the fees are raised when nothing has been done? We basically only pay for maintenance and lawn care. Also we have not had a meeting since 2016.
** NOTE we flooded twice in 2016.

Well, you are aware that the price of gas, postage, etc. has increased.
Therefore, you have those increases.

Labor shortages mean that those who are willing to work can ask (and likely receive) more pay.
Therefore, those costs of increased.

I don't know if you have been following, but the cost of insurance overall has increased drastically (almost double in some areas).
Therefore, you have those increases.

That said, I do hear what you are saying.
The membership was told that the assessment increased because of legal fees.
Since there have been no legal fees over the past few years, you question why the assessments continue to rise.
It's a fair question.

Unfortunately, it's one you will have to ask your Board (the developer in this case).

Those on this site can tell you the common reasons for assessment increases (which I have done in this post).
However, we can not really answer your question directly.
We simply do not have the information to answer it.
Your board has this information.

DeanJ
Posts: 1,786

Posted:

Quote:

Posted By JulieW12 on 02/04/2024 4:55 PM

Posted By DeanJ on 02/04/2024 7:13 AM
Sounds like you believe the developer should provide service to the HOA for free.

The administration fee in other HOAs would be called a management fee. Handling the checkbook responsibilities is keeping the financial records. A family member as an employee of the developer working as the property manager is not unusual. It is also not unusual for a developer to keep HOA fees artificially low to sell homes and then increase the fees as the development is sold.

The fee is $10.83 per home a month. That value is not going to change appreciably when the development period is over and the HOA hires its own company unless the HOA self manages. Self management is when you find homeowners to work for the HOA for free to save themselves $10.83 a month.

What I don’t understand is that
1. We have no amenities
2. We haven’t had any legal action for over 3 years
3. There has only been around 3 houses built since 2016

How come the fees are raised when nothing has been done? We basically only pay for maintnance and lawn care. Also we have not had a meeting since 2016.
** NOTE we flooded twice in 2016.

So you are telling me the developer can put what ever admin fee he wants? This fee has gone up tremendously and has been keeping us in the negative.

Yes, we are telling you under the development period the developer has the majority voted and can do what ever he wants. Also you are going to be paying a management fee to a management company after the development period unless the HOA self manages and your neighbors do the job for you for free.

Unless Louisiana law is different than most states, attorney fees used to collect unpaid HOA fees are not paid by the HOA. The fees should have been collected from the dead beats.

JulieW12 (New Mexico)
Posts: 8

Posted:

Quote:

Posted By TimB4 on 02/04/2024 11:05 PM
Julie,

The ponds are also likely storm water management devices. They may be expensive to maintain in the future if not properly maintained early.

My experience is that the county doesn't formally take over the roads until the development, or phase of development, is completed.
Until then the Developer/Association takes care of them. (The Parish already paved one main road into our subdivision, bc the budget would only let them pave so many miles. (I’m not from Louisiana and shows to tell you how I laughed in their face when they told me that) that said the developer is not responsible. He still has phase 2 to build on the the lots, therefore our development is not complete.

Fair warning - Developers tend to keep assessments lower then they should be in order to encourage buyers to purchase.
Once the membership takes over the running of the Association AND a proper reserve study is completed, you will likely see a major increase in assessments.
After that, simply due to inflation, you could see an increase of up to 5% per year.
We were paying $30 Qtrly before 2016, the only reason the fees went up is bc of legal fees, not bc of anything else. Which I do understand about the legal aspect, what I don’t understand is how we haven’t taken any legal action since 2019. Yet, the admin fee has gone up $4000. The maintnance/service in our area is budgeted annually with contracts. Lawn care, taxes and insurance are all around $1,200-2,800 per year each, those being the only high services we pay.

On a side note, I would encourage you to try and get on the board when you can.
I am the president.
This will give you access to more info then you have now.
The only info I don’t receive is the admin fees, which is a thrown out number for us to pay.
Expecting that the Developer placed a bond with the city, if things are not completed - the Association can put a claim on the bond (you may need an attorney to assist you with that).

Bond? I’m confused?

JulieW12 (New Mexico)
Posts: 8

Posted:

Quote:

Posted By TimB4 on 02/05/2024 3:10 AM

Posted By JulieW12 on 02/04/2024 4:55 PM

What I don’t understand is that
1. We have no amenities
2. We haven’t had any legal action for over 3 years
3. There has only been around 3 houses built since 2016

How come the fees are raised when nothing has been done? We basically only pay for maintenance and lawn care. Also we have not had a meeting since 2016.
** NOTE we flooded twice in 2016.

Well, you are aware that the price of gas, postage, etc. has increased.
Therefore, you have those increases.

Labor shortages mean that those who are willing to work can ask (and likely receive) more pay.
Therefore, those costs of increased.

I don't know if you have been following, but the cost of insurance overall has increased drastically (almost double in some areas).
Therefore, you have those increases.

That said, I do hear what you are saying.
The membership was told that the assessment increased because of legal fees.
Since there have been no legal fees over the past few years, you question why the assessments continue to rise.
It's a fair question.

Unfortunately, it's one you will have to ask your Board (the developer in this case).

Those on this site can tell you the common reasons for assessment increases (which I have done in this post).
However, we can not really answer your question directly.
We simply do not have the information to answer it.
Your board has this information.

I do understand your point and have an excel spreadsheet that I created to show all expenses which is given access to my neighbors. .
Would there be any reason for them (developer) to keep our balance at the very minimum? When we do make profit, that profit is taken by the admin fees and our balance is less than $1,000.
And NOTE our subdivision was developed in 2009, admin fees were not provided until 2015.

JulieW12 (New Mexico)
Posts: 8

Posted:

Quote:

Posted By DeanJ on 02/05/2024 4:29 AM

Posted By JulieW12 on 02/04/2024 4:55 PM

Posted By DeanJ on 02/04/2024 7:13 AM
Sounds like you believe the developer should provide service to the HOA for free.

The administration fee in other HOAs would be called a management fee. Handling the checkbook responsibilities is keeping the financial records. A family member as an employee of the developer working as the property manager is not unusual. It is also not unusual for a developer to keep HOA fees artificially low to sell homes and then increase the fees as the development is sold.

The fee is $10.83 per home a month. That value is not going to change appreciably when the development period is over and the HOA hires its own company unless the HOA self manages. Self management is when you find homeowners to work for the HOA for free to save themselves $10.83 a month.

What I don’t understand is that
1. We have no amenities
2. We haven’t had any legal action for over 3 years
3. There has only been around 3 houses built since 2016

How come the fees are raised when nothing has been done? We basically only pay for maintnance and lawn care. Also we have not had a meeting since 2016.
** NOTE we flooded twice in 2016.

So you are telling me the developer can put what ever admin fee he wants? This fee has gone up tremendously and has been keeping us in the negative.

We collected the dues, no fines or penalties and possibly the legal fees, which is not the attorney fee that we have to pay as a sub. So neighbors are getting penalized for other neighbors not paying their dues. We are stuck with paying for the lawyer. Again we don’t have a Justice of the peace. But does that sound at all right?

Yes, we are telling you under the development period the developer has the majority voted and can do what ever he wants. Also you are going to be paying a management fee to a management company after the development period unless the HOA self manages and your neighbors do the job for you for free.

Unless Louisiana law is different than most states, attorney fees used to collect unpaid HOA fees are not paid by the HOA. The fees should have been collected from the dead beats.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Julie

Typically fees to collect from "deadbeats" are paid up front to the attorney by the association and then collected back from the attorney when the deadbeat pays.

Being under declarant control, you are at their mercy.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Julie

Typically fees to collect from "deadbeats" are paid up front to the attorney by the association and then collected back from the attorney when the deadbeat pays.

Being under declarant control, you are at their mercy.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By JulieW12 on 02/05/2024 10:27 PM

Posted By TimB4 on 02/04/2024 11:05 PM

Expecting that the Developer placed a bond with the city, if things are not completed - the Association can put a claim on the bond (you may need an attorney to assist you with that).

Bond? I’m confused?

Some municipalities or Counties/Parishes require a developer to put up a performance bond, also known as a surety bond.

This is done in case the developer fails to do what they said they would do.
If the developer does everything they say, they get the bond money back (although, now one simply purchases a bond from a company - like buying insurance).

An HOA may be able to put a claim in against that bond if development amenities are not completed.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By JulieW12 on 02/05/2024 10:27 PM

I am the president.

The only info I don’t receive is the admin fees, which is a thrown out number for us to pay.

Who is in control of the Association (votes on the board), the membership or the developer?

The board should have a copy of the contract for the person doing the admin fees.
If you do not, ask (more flies with honey) the developer for a copy of that contract.

Another question:

How are assessments paid, tracked and deposited?

a) paid to the Association, the association collects the mail, tracks the payments and deposits the checks into the Association account.
b) paid to the Association, the developer (or administrator individual) collects the mail, tracks the payments and deposits the checks.
c) paid to the developer

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By TimB4 on 02/06/2024 7:16 AM

Another question:

How are assessments paid, tracked and deposited?

a) paid to the Association, the association collects the mail, tracks the payments and deposits the checks into the Association account.
b) paid to the Association, the developer (or administrator individual) collects the mail, tracks the payments and deposits the checks.
c) paid to the developer

I just re-read your initial posting. You had already provided this information.
Sorry for asking.

With the expectation that the membership controls the votes on the board, I think the President (or someone the board appoints) should be the one speaking with the attorney AND they would be doing that as a Director - therefore, they should not be paid for that task.