Question regarding raising HOA co-owner fees

Started by PeggyW3 • 12 replies • 190 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

PeggyW3 (Michigan)
Posts: 73

Posted:

Our fees are all ready very high and suddenly we find ourselves in a bind in that we need even more money to replace leaking roofs. Our reserve group says we can raise the fees on 100+ units $2000 per year for 6 years to cover our costs of replacement of roofs.

My question is a legal one. Can the Board raise the fees that much without community consent? I am not feeling that we have tried hard enough to find other solutions like possibly getting a loan covering more years, speading it out. Or looking very carefully at our budget and see what can be cut there. 6 years of $2000 on all (meaning 12,000 per unit total) seems like a terible burden being placed on the co-owners living here during that time. And what about out unit values? Down they go I would thing.

1. Legally can the board do this alone?
2. Can any of you think of any possible alternative that would help us with this problem?

Thanks so much!!

Lou

LetA (Nevada)
Posts: 2,679

Posted:

Depends on two things. FIRST, Does Michigan law allow boards to raise assessments by a small percentage or are the state
statutes silent on that and TWO, what does your governing documents say about the board raising assessments?

KerryL1 (California)
Posts: 14,550

Posted:

First and I believe you're on the Board, Lou? What DO your governing documents say about HOW MUCH dues can be increased in a fiscal year??? Our C&Rs, mirroring Calif. state statutes, limits such an increase to 5% of the annual budget.

Your documents also should say what size special assessments can be levied each fiscal year. My CC&Rs & cali,f statutes kind such increases to 20%.

So, review your documents. I do not look at Mich. statutes as I find them confusing, but you could try Mich. non-profit corporation codes.?

My guess is that since your HOA has not funded your reserves nearly as much as they should have every year to prepare for the roofs' lives ending, your Board wasn't/isn't very knowledgeable about reserves. It, imo, needs the advice of your HOA attorney.

A loan very well might be an option, but that, too, would require monthly payments by ownrs. again seek slice form your HOA general counsel. None of here are attorneys.

KerryL1 (California)
Posts: 14,550

Posted:

I meant t write I was adding on to LetA.

KerryL1 (California)
Posts: 14,550

Posted:

I meant t write I was adding on to LetA.

MarkM19 (Texas)
Posts: 1,459

Posted:

Peggy,
I agree with Kerry. The only difference between the $2000 annual special assessment and a loan is if the HOA is even able to get a short-term loan the interest rate will be very high and will add to the 2K annual payment.

You gave us very few details, so we are left to assume the rest to me that means the board has a plan that will fix roofs over 6 years as the money comes in. Is this assessment earmarked only for the roofs or is it also set to bring reserves back up to normal levels?

Sounds to me that the board and previous boards have been asleep at the wheel.

DeanJ
Posts: 1,786

Posted:

I have a legal question. Can the board not raise the fees, let the building suffer water damage, let my personal property be ruined, and maybe possible have me homeless?

CathyA3 (Ohio)
Posts: 6,299

Posted:

Dean hit the nail on the head. Does anyone seriously think that choosing not to deal with the roofs is the smarter option or that won't cost a ton more money in the not-too-distant future? Wait until banks stop lending money to buyers and the cash-in-hand investors start snapping up the distressed properties in order to turn them into rentals. Investors welcome this kind of short-sightedness on the past of owners.

To be clear, I sympathize. We're about to have similar discussions in my community about our roofs, and I expect to hear much grumbling and whining. Remember how some former board presidents crowed about keeping assessments low? Yeah, this is what it looks like.

There is no Magic Condo Money Printing Machine.

SheliaH (Indiana)
Posts: 6,964

Posted:

What everyone else said.

I know it's no fun at all to face increasing costs, but as Cathy noted, this is what happens when people (including homeowners) forget about inflation and that assessments have to keep up. Even if you get a loan, that means interest, and for the next 6 years, probably longer, you'd have to pay the loan, it's interest, your routine expenses and fund reserves (properly this time).

You think your property values will drop with increased assessments- what do you think will happen with leaky roofs?

You could determine which buildings are worse and start there, but you still have to address the others eventually, along with major repairs to the rest of the common areas, like street or parking lot repaving. Unfortunately there may not be alternatives for you, and unless you're willing to take a big loss, you can't run away by selling. If you're on the board, time to face the music, be honest with the homeowners a d work together to fix this. Good luck!

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

MarshallT (New York)
Posts: 414

Posted:

MarshallT (New York)
Posts: 414

Posted:

Hi Peggy,

This may be possible depending on your state laws ans govnering documents. Some places state that assessments can only be raised by a certain percentage annually without a vote.

The alternatives will require owners to pay one way or another. The HOA could get a loan, but owners would be responsible for paying that back, plus interest.

Perhaps there is some sort of payment plan you can work out to lessen the $2,000/year cost, but unfortunately owners might be stuck with paying $12,000 over 6 years.

CathyA3 (Ohio)
Posts: 6,299

Posted:

I remember a year or two ago we had a poster who was *desperate* to sell her condo but couldn't because there were tarps on the roofs in her community. She and the other owners in her building paid to replace their roof themselves (which wasn't legal and could result in some interesting insurance/liability issues for those owners). I can't imagine how anyone is dumb enough to buy a unit in a community with these kinds of problems, but she did sell her condo. I'd bet good money that an investor bought it. I'd bet more good money that this community is headed for deconversion to rental property, if they're not already there.

Meanwhile down in Florida, we have condo owners hollering because they're now being forced to maintain their buildings. They're literally screaming for the right to live in unsafe buildings. After the Surfside condo collapse. It boggles my mind. I understand fixed incomes and not having spare cash - but the writing has been on the wall for three years.

Speaking of leaky roofs, ask me about mold and how much that costs to deal with and what a pain in the keister it is. Ask me about stays in hotels while the work is going on. Ask me about potential health risks. Ask me about lawsuits from condo owners who blame the board for not maintaining their buildings up to standards - never mind that it was these very same owners who fought the board every step of the way over assessment increases. And ask me about getting dumped by the community's insurer afterwards and how much insurance premiums are rising.

Deal with the roofs, it's cheaper. If I were on the board and we'd been working with a reliable roofing company for years, I may want to talk to them to see if they could finance roof replacement over a few years. It may be less costly than a bank loan, but I'd want to think about possibly misaligned incentives before going this route.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Peggy

As you can see answers are all over. You have to poor over your docs to see which answer applicable to your association. Remember a Special Assessment and and a dues increase are two different issues. In my association owners must vote on any Special Assessment (such as $2k per year) per unit but our BOD could raise the dues ($166 per month, $2k per year) per unit without owner approval.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here