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Increased HOA dues for corporate owned homes

Started by TorinR • 13 replies • 231 views

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TorinR (South Carolina)
Posts: 7
Posted:
Hello, Im a board member with a community of about 500 homes. Our rentals within the community are normally the ones with landscaping and appearance issues. I had the idea to increase the yearly HOA fees for the corporate owned homes. It looks like we have at least 22 homes in the community owned by corporations normally outside of the state. We only have about 7 that are individuals that are renting their second home out, I'm not interested in raising their fees. I was hoping too that this would decrease the number of homes being purchased by corporations in our community. Would there be any "discrimination" if we initiated increased yearly fees for corporate owned homes? I was going to get thoughts here before I contact our management company for their thoughts.
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By TorinR on 06/27/2024 6:42 AM
Would there be any "discrimination" if we initiated increased yearly fees for corporate owned homes?
The only lawful way to do this is if the covenants (CC&Rs) authorized a higher assessment for corporate-owned homes.

I can guarantee you that your HOA's covenants do not authorize this. Furthermore if an amendment to the covenants were passed that would impose a higher assessment for corporate-owned homes, then a court would throw it out.

Enforcement of covenants pertaining to appearance is your HOA's best option.
SheliaH (Indiana)
Posts: 6,964
Posted:
First, a disclosure: generally, I give homeowner-landlords a side eye because they often have issues with trashy looking homes and even worse tenants, so I feel your pain. Thecowners are hard to contact and worse at responding because they're mainly interested in the rent check clearing.

As a practical matter, I don't think you'd get away with increasing fees for the corporate homes only. Individual homeowners who rent their units can be just as bad and you don't need a lawsuit alleging discrimination.

When our community tried (and failed) to amend our documents to establish a rental cap, one of our now former board members (also a landlord, but one of the responsible ones!) suggested assessing a move in-move out fee every time tenants changed to cover the additional work nexessary to communicate with landlords, as well as the additional expenses incurred for things like increased trash. We didn't get that either, but it did seem to put the landlords on notice, so we did see some of the awful ones go away.

Your management company works at the board's direction, so you need to start with a talk with your attorney see what you can do. You probably need to lean on homeowners with tacky yards, so if you don't have any standards, you need to establish them. Check your documents to see what's already there (as a board member, you should already know that) and if the board has the authority to enact additional rules as long as they don't override the documents (not allowed).

If you change the rule enforcement policy it should apply to EVERYONE, so publish the proposals to see what homeowners think and get suggestions on what could be done. You could even ask what issues they think are the bigger problems, and that's where you might want to emphasize in enforcement as a start.

Meanwhile take time and date stamped photos of the problem homes and send copies to the owners with a violation notice and give them 30 days or so to clean up their act. If they blow you off, you need to be willing to take the next steps, up to and including legal action. When people see the board is serious, they might pipe down.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
WendyM5 (North Carolina)
Posts: 1,522
Posted:
no way.
you should amend your documents so that any buyers must live in the home for 2 years before they can get it out, that will make corporate buyers go away.
vis ta vie
TorinR (South Carolina)
Posts: 7
Posted:
Yes our CC&Rs are over 20 years old so we will be updating them, it currently is not authorized. After years of minimal management and only one or two board members keeping things going, we now have a full board and me with a lot of time and energy to put into it. We just started this year with stronger enforcement and focusing on the bigger items like parking on grass, fences and landscaping, next year will focus on other issues like mailboxes.
TorinR (South Carolina)
Posts: 7
Posted:
Yes our CC&Rs are over 20 years old so we will be updating them, it currently is not authorized. After years of minimal management and only one or two board members keeping things going, we now have a full board and me with a lot of time and energy to put into it. We just started this year with stronger enforcement and focusing on the bigger items like parking on grass, fences and landscaping, next year will focus on other issues like mailboxes.
TorinR (South Carolina)
Posts: 7
Posted:
I guess that would be another option and would work better to keep out corporations. I guess the current ones would have to be grandfathered in. What would you do if a normal homeowner needed to sell before 2 years? We are a military community as well so someone could get orders within two years.
TorinR (South Carolina)
Posts: 7
Posted:
Our prior board the last couple years was usually undermanned and had full time jobs so they really just tried to keep things going. Im retired military and no longer work, so I made this my part time job and have been learning a lot. We started stronger enforcement this year focusing on major things like parking on grass (counted close to 50 violations), fences and overgrown landscaping. Next year we will focus on other items like mailboxes and missing shutters ect. We do plan on updating our CC&Rs but finding out that could be 10k for legal fees. The board does desire more "freedoms" and less HOA oversight and Im sure the community would be for that. I'm still getting more involvement from the community, we barely get 25 homeowners to come to the yearly meeting, we never reach the quorum level. The fines will be going out shortly, so I'm waiting for many unhappy homeowners to start complaining. Its a slow process for improvements
NA1 (Massachusetts)
Posts: 190
Posted:
We charge a move fee to cover our expenses, including increased wear on the building walls that lead us to repaint them more regularly, and carpets. It happens that renters move much more frequently than owners living in units. They are also less careful when moving and less likely to use a moving service (that has insurance)
WendyM5 (North Carolina)
Posts: 1,522
Posted:
Quote:
Posted By TorinR on 06/27/2024 9:44 AM
Our prior board the last couple years was usually undermanned and had full time jobs so they really just tried to keep things going. Im retired military and no longer work, so I made this my part time job and have been learning a lot. We started stronger enforcement this year focusing on major things like parking on grass (counted close to 50 violations), fences and overgrown landscaping. Next year we will focus on other items like mailboxes and missing shutters ect. We do plan on updating our CC&Rs but finding out that could be 10k for legal fees. The board does desire more "freedoms" and less HOA oversight and Im sure the community would be for that. I'm still getting more involvement from the community, we barely get 25 homeowners to come to the yearly meeting, we never reach the quorum level. The fines will be going out shortly, so I'm waiting for many unhappy homeowners to start complaining. Its a slow process for improvements

to reach quorum you just need to do this:
Make an electronic ballot so people can more easily vote online.
Make one of the questions about raising dues or some other financial matter that impacts them a lot, in other words $100 or more.
give them at least 50 days to fill it out with one post card reminder half way through.
We didt get quorum for 22 years, last 2 years we got quorum using above method.
vis ta vie
DouglasK1 (Florida)
Posts: 2,046
Posted:
Quote:
Posted By WendyM5 on 06/27/2024 8:04 AM
no way.
you should amend your documents so that any buyers must live in the home for 2 years before they can get it out, that will make corporate buyers go away.

Quote:
Posted By TorinR on 06/27/2024 9:30 AM
I guess that would be another option and would work better to keep out corporations. I guess the current ones would have to be grandfathered in. What would you do if a normal homeowner needed to sell before 2 years? We are a military community as well so someone could get orders within two years.

I assume Wendy meant a two year waiting period before allowing a rental, not before selling.
Escaped former treasurer and director of a self managed association.
SheliaH (Indiana)
Posts: 6,964
Posted:
Amending documents and revitalizing rule enforcement are both huge projects, so your board may want to decide what the bigger issue is and focus on that. I know it's expensive to have attorneys come in to help with CCR amendments, but I always recommend them because it's NOT a DIY project. You want the revisions to stand up in court (because someone will challenge them), and you don't want something shut down because some words are missing or misused.

Personally, I'd start with rule enforcement. Start with what you have, if anything, in your documents and publish an article in the newsletter or website (both if you have them) and tell homeowners the board will be working on this throughout the next year because (1) the documents do have standards regarding upkeep of homes (2) every homeowner agreed to comply with community rules when they purchased a home in this community and is legally obligated to do so and (3) well kept homes can ultimately help with property values because no one wants to live next door to or across from unkempt homes, and it's a quick way to run off potential buyers. List the citations in the documents addressing appearance of the homes so they can read them and ask questions, if necessary (and they'll know you're not just making things up).

You could then provide the results of a recent walk through and then ask homeowners to participate in a poll asking what they think are significant problems right now that the board should address (e.g. overgrown lawns). Opinions on what a rule enforcement policy should entail and a fining schedule are also welcome. By the way, PS - a fining schedule is why you need to talk to your attorney first. State law may or may not allow it or there could be a cap on how much they can be.

You may not get a ton of responses (20% is a good start), but you may get enough to identify some patterns. Use that to begin establishing some rules or use what you have right now. Give everyone 30-45 days or so to clean up their homes - after that, violation letters will be sent out. For those people, include time and date stamped photos of the violations, and the procedure for an appeals process.

All of this may take up much of the remainder of the year, but you'll be able to see how everything went and then advise homeowners of the results, and what the board will do next, perhaps revise some rules and the appeal process. Set a date for next year when the revised rule enforcement policy will take effect and how it will operate. This should include how anonymous complaints will be handled, the fine schedule, what happens if a homeowner fails or refuses to comply, etc. Remember, homeowners and the board can't have it both ways - freedoms come with responsibility, so if the documents need updating, that's fine, but there are pros and cons, so everyone needs to be willing to live with all of it. You also need an enforcement policy that's workable - no one wants to spend all day bickering over this person's yard and the hoopties in that person's driveway

There are a lot of older conversations on this website about rule enforcement, so read a few to pick up tips on what to do and avoid. Bring your questions back to this conversation to get updated information because something from, say two years ago may be outdated. Good luck!
If it is not right do not do it; if it is not true do not say it. Marcus Aurelius
KerryL1 (California)
Posts: 14,550
Posted:
Kudos to you for your willingness to serve your community, Torin. I served for many years and found the work to be highly satisfying and challenging.

You wrote you've been learning a lot and one good source if you haven't seen it yet is CAIonline.org. When I first became a board member long ago, I read their Toolkit for Board Members or some such title and it was very useful. there is a way to get at it for free, but I don't remember how.

Its section on Rules, imo, is very good. Also see a post by Meg of SC of "Violation for Regulation" (to which I relied recently) to see a fine citation of SC Corp. Code on rules.

Enforcing the rules you do have is, I think, a fine start. If your your already published fines and other forms of discipline need to be updated, your Board should be able to do that at a Board meeting. It also should be able to met new rules.

It's possible with previous Boards being so lax that a lot of enforcement all at once will upset some, even many, owners. So I think your Board should proceed with some caution and keep owners informed about what your Board is doing.

I really like Shelia's idea to do a quick survey of owners to see what matters to them.

Are you willing to tell us more about your HOA? Do you have a property. manager? How many directors? What sorts of amenities are there? Is there a good meeting room for board meetings?

LetA (Nevada)
Posts: 2,679
Posted:
How do you determine what a corporate owned home is?? because the county recorder has is listed under an LLC?
What about family trust under an LLC??

Just raise assessments across the board and make one on one rulings when the owner requests a hearing or the owner responds
in kind to the warning or fine letters. Typically the corporate rentals DGAF and will ignore letters unless it is something more serious
like a pending foreclosure etc.

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