Raising assessments and recording

In general, in the documents (HOA and condominium) we have seen in Texas, the Declaration of the Association stipulates the amount by which the annual assessment may be increased by the Board, without approval of the owners. The popular amounts are 5% and 10%. We have seen some declarations which do not stipulate a cap on the amount of the increase. These increases are enforceable under the terms and conditions found in the declaration, and in the collections policy of the Association, which itself should be on file with the County Clerk.

We do not file documents with the County Clerk for assessments which are at or below the stipulated cap. We do file documents if the amount is greater than the cap, meaning it was approved by the owners, and for all special assessments which must be approved by the owners. These too are enforceable as described above.

Bill, do you really have these votes recorded in the county? So your assessment increases are public records? At a minimum it seems like an added administrative burden and expense.

(I'm often amazed by the variation in different states' procedures.)

Unless, like my current association, the amount is set in the covenants (yep, one of the things I'm trying to change).

No, you don’t record fee increases.

Approved by the owners? The board raised it from $150 annually to $2100 annually with no vote by the homeowners. Their reason was that they don’t have enough of a reserve. They originally told us it would be a special assessment but once they realized the majority would not vote in favor of it they decided to just raise the regular assessment.
Thank you all for your responses.

From what I understand in BillH's post way above, your Board may not levy such a huge increase without the vote of the Owners.. The Board may not just state a "reason."

Was this increase even on a board meeting agenda and their vote c recorded in meeting minute?

(It does seem that whether or not it's recorded has anything to do with reason assessment more than is legal)

For some reason, I seem to remember a previous conversation about huge assessment increases and the board apparently attempting to do an end run around the documents and homeowners by calling the special assessment something else, and that it was necessary because of the lack of reserves or underfunded reserves – why am I thinking that was you?

Anyway, what do your documents say – that’s where you start. Have you read your documents – that’s where you should start. The Bylaws usually dictate how the community is to be run, so that’s where you may see language about assessment increases. Note what it says about special assessments (which usually require a certain percentage of homeowners to approve) vs. regular assessments (the ones you pay every month, quarter or annually).
If that was you, I seem to recall some of us suggested you get together with your neighbors and demand answers of the board, and if they couldn’t show you where in the documents this was allowed, you might have to check your documents again to see what they say about special homeowner meetings, how to get them called – and perhaps voting out this group via recall. Maybe that was my suggestion (I’ve made that several times in the last year or so).

If my memory is correct, what did you do with the first round of suggestions? As others have indicated, assessment increases usually don’t need to be recorded with any agency, but homeowners should receive timely notice. If a special assessment is necessary, a vote is required, and if it fails, the only option for the board may be to increase assessments up to whatever’s allowed in the documents.
And that leads to another question. You said homeowners were told the $2100 would be a special assessment (meaning it should be levied only once), but when they realized it would crash in a homeowner vote, they came up with this. $150 to $2100 IS quite a hike, so my question is – what’s been going on with your budget? You need to read that to see if you do have a reserve fund, how much is in it, when was the last reserve study (and read it), then check if it’s being funded according to the study recommendations. The homeowners might not like assessment increases, but we’ve seen over and over again in previous conversations, when HOA assessments don’t keep up with inflation, rate hikes like this usually result.

No, the board shouldn’t try to twist the documents around to increase the assessments anyway, but the homeowners also need to face reality about today’s prices. Do your research and see what you can find. If you are dreadfully underfunded (and most HOAs are), you need to come up with a better approach to ensure yours can take care of major repairs and replacements to the common area at the appropriate time – because if you don’t, the next assessment increase might be a lot more than $2100 and this time, you won’t be able to prevent it.

I understand (and agree with) not wanting to pay the increase, especially if the board didn't follow the protocols listed in your documents for raising assessments, but before you wind up getting sued over this, you'll need to prepare your argument so you have a good chance of winning. To begin, I don't know why the board would be talking reserves if you don't have common areas, so you need to check your documents (you'll be poring over those carefully before this is over, so get comfy). The documents should tell you what's homeowner responsibility vs. the association - that may be in the CCRs. As a practical matter, you need to consider who's responsible for your community streets, sidewalks, streetlights, retention pond (if you have one), community sign(s), clubhouse, swimming pool, tennis and/or pickleball court(s), playground equipment and so on. That's the stuff that would be considered common area and association responsibility. To keep up with major repairs and replacement (new roof for the clubhouse, repaving of the streets, etc.) will require reserves.

As I said earlier, your documents (usually the Bylaws) should address assessment increases - can the board increase them to a certain percentage without homeowner approval? What is that percentage and what percentage of homeowners need to approve it? When should homeowners be notified of an assessment? In my community, homeowners must receive the upcoming year's budget 30 days in advance, so we have it by December 1, along with the amount of the upcoming year's assessment. Our board can increase the amount up to 5% over the current year, otherwise 75% of the homeowners have to approve. As you might guess, few people would approve anything higher than that, but this can cause another set of problems (that's a post for another day).

You then attend the next board meeting, along with several neighbors, note what the documents say (quote the appropriate section) and compel the board to explain this jump to $2100 - where in the documents is this allowed? Did they talk to the association attorney about this? If you don't have common areas, then what are the reserves supposed to cover? If the attorney sent a letter with his/her opinion, why not send all the homeowners a copy? You'll know you've struck a nerve when the board refuses to answer, tries to change the subject, stares at the floor, gives you a death stare, mumbles or just sits there with their mouths open to catch flies. When people let others know they won't accept lies and damned lies, the people who are supposed to be making the decisions won't know what to do with you, and if your neighbors are there to hear and see for themselves, they can't blow you off.

If your documents (usually the CCRs) don't have that list of association responsibility vs. the homeowner, find the documents you got at closing and see if there was a list among all that stuff. Still don't see anything, ask the property manager. You don't say how long you've lived in your community, but if it's been several years, knowing about reserves is something you should already know about. When was the last time you looked at the annual budget? If there are reserves, your budget should state how much of your assessment is deposited into that, and there should be a reserve study (preferably done every five years) Ask the property manager for a copy.

That may end the talk of an increase, but that doesn't mean there aren't serious problems with your budget. Maybe now is the time for everyone to take a deep dive - I don't know how closely you've looked at it, so have the board explain exactly what's going on. To check what they're saying, it wouldn't hurt to get copies of the last 3-5 years of the year end reports and do some digging. What line items have gone up faster than the others and why? What has the board done to control costs? Are they getting at least 3 bids for various projects? Have they spoken to the association master insurance carrier about increasing the deductible? We've had dozens of conversations on this website about insurance increases - HOAs everywhere are feeling the pinch and some have been dropped altogether (look at Florida for starters). By the way, if you have master insurance, what does that cover - those could be the common areas.

I agree with everything you said. The problem is, there are literally no common anything here. The hoa did not exist when I purchased my home. The streets are public, there are no signs or street lights. The board does as it wants. I’m not the only homeowner who refused to pay the current assessment.

The board says it’s mandatory to join and several of us have asked for proof which they have yet to provide. They threaten to sue but have no funds to do so. I don’t know what you mean by why I have I waited until now to ask questions. My question was answered so thank you.