Condo Association Budget

Our Michigan Condominium Association has in it's Documents the general words: (BOD) "shall" create a budget for the next year (2025) before the end of December(2024) and provide to the co-owners...." We have, still outstanding 2-3 Surveys/studies having to do with our roofs, drainage issues, and another one just came in and needs some research and lots of discussion. Our President is making us do a next year budget (guessing) without any of this information which affects it's content in so many ways and will determine how large an assessment we will need to enact in order to pay for needed replacement items. I suggested we either postpone making a budget until we receive those documents and do it with the proper information, OR just repeat our 2024 budget like our current one (2024) and then later vote to replace it after we have properly looked at all the information costs, etc. The President said we can't legally do either. I said I read where a BOD member could make a motion to do so and get it passsed and replacer with a new budget. But...I need some clarification on whether we could do this or not. Please provide me with some direction? There is no penalty stated in our Documents if we did not make a new budget that I can see, it does make clear that the co-owners would have to continue paying their monthly fees during the waiting period until the new 2025 budget was issued.

Please help me with this issue. It is a very stressful time for all of us. I am also wanting our Board to be transparent in this process and not suddenly "spring" a very possible large assessment on them as it is not in their interests (or ours) to act in that way. What suggestions do you have for this problem?

As always thanks so much, you all are wonderful!

Our Association has two different budgets, one for Replacement Reserves. The Operating is the day-to-day costs of running the HOA. The Board should have asked for quotes for the various tasks such as garbage, grounds, insurance etc. Those quotes should either be in front of the Board or on their way to the Board. This is what determines this budget.

Gregory and Michael bring up good points. Your homeowners should already be aware of these surveys and the possibility that they’re looking at an assessment hike, which may be significant. In fact, in light of hurricanes Helene and Milton, everyone may as well plan for increases, depending on the fallout from that.

Regarding next year's budget, you could keep the current rate, but things WILL go up and I'm not a fan of telling people mid-stream they have to cough up more money. However, budgeting of any kind - the HOA or your own - isn't an exact science. It's better to put in some sort of increase now so homeowners will adjust their budgets accordingly. It's not fun at all, but they may not have any choice. Paying a little now is better than being hit with a hike of several hundred dollars or more.

Some HOA documents have a maximum percentage that the board can increase assessments without a homeowner vote (in my community, it’s 5%) If you’re on the board (and even if you're not), you should already know what the documents say about this. Considering how basic some HOA documents are, I wouldn't be surprised if there's no mention of this. If there is a maximum percentage, use it, explain the reason for the increase to the homeowners - and that more increases are likely coming based on what the surveys tell you. Hopefully, you'll know by spring where you're at because all the surveys will be completed. Plan for some special homeowner meetings to discuss the findings and what the community options could be.

Peggy, are you saying your HOA has NO reserve study that estimates to your Owners how much is needed to replace/repair the roofs and other reserve components????? If so, WHY ae you asking Werner to pick which reserve items to fun???

Your operating budget is a different story and should easily be based what you spent this year an what items you know will increase, next year, e.g., insurance, utilities.

Only the board, not the prez alone, votes on the budget--the prez can't "make you." But the prez may be right. If your CC&Rs say you must present a budget to owners by 12/30/4, then you must! It's very possible that MI laws for non-profits or condos says the same thing.. Of course you can make a motion to violate your CC&Rs, but--to e that's a really bad idea.

You have two months. What the heck has your Board been doing ????

Peggy, are you saying your HOA has NO reserve study that estimates to your Owners how much is needed to replace/repair the roofs and other reserve components????? If so, WHY ae you asking Werner to pick which reserve items to fun???

Your operating budget is a different story and should easily be based what you spent this year an what items you know will increase, next year, e.g., insurance, utilities.

Only the board, not the prez alone, votes on the budget--the prez can't "make you." But the prez may be right. If your CC&Rs say you must present a budget to owners by 12/30/4, then you must! It's very possible that MI laws for non-profits or condos says the same thing.. Of course you can make a motion to violate your CC&Rs, but--to e that's a really bad idea.

You have two months. What the heck has your Board been doing ????

You can always pass a budget and, if the board determines it doesn’t need all the money, place money in reserves or credit homeowner accounts as a rebate.

Peggy's Board MUST approve a budget. the question is: what legal method/processe must they use to increase owner's annual contribution. Do ownrs vote if over a certain amount? How many days' notice ae required, etc.

Our Documents have no set amounts or percentages of how much we can increase fees.

I'm still confused about these "surveys. are they about reserve items?? Or operating budget items?Or Both? What are these surveys supposed to tell you.

I'm also trying to say to part of your question that your state laws or even your own CC&rR will tell you HOW--by what method(s) to increase owner assessments in the middle of the year. Mich. has condo legislation. Read it.

Meanwhile and even tho'I don't understand the questions, I and I think many believe an open should. be held to explain the need for increasing assessment. Go over the operating budget Item by item.

The board,NOT the president decides how many meetings to have on the budget. And you as a director can make any motion you want at Board meetings. I'm concerned s why you think you may niot??? Unless your HOA is tiny, I'd say best to have at least two open meetings on the budget. If need be,i nite your reserves specialist to attend an explain your reserves and the need to bolster them.Our reserve specialist over time have l done this without cost.

Our Board (complicated HOA) had its first budget meeting last month when it ent over every line item in the operating budget. It made decisions on most based on the data provided by the PM. Based it, it gave a preliminary, first touch increase of .6.9%

Today, the board held an open meeting on the draft on-aite reserve study. Our reserve specialist attended by Zoom an fielded questions from the Board and later, in Open Forum, from Owners. The study was on a screen se we all could see the individual components being discussed.

The Board will have a 3rd special meeting on the budget in a couple of weeks to combine the results of the two meetings (and changes made to the reserve study) at a final Budget meeting in Nov.

In my state owens do not vote on or ratify the proposed budget.

A very good question. Because some Board members want to keep everything a secret!

Gregory T1, New Jersey. Sorry....

I'm still confused about what your. question is, Peggy.

And, also, why does the ores get thier say. Are others afraid to vote against the prez????

I am thankful every board meeting for Ohio Revised Code Section 5312.04(F). No owner other than a director may attend or participate in any discussion or deliberation of a meeting of the board of directors unless the board expressly authorizes that owner to attend or participate.

For new readers, in many "open meeting" states, e.g., Calif. not only may owners attend and observe, state statutes require that there be an "Owners open forum" when owners certainly may ask questions, make comments etc.

I think Gregory goes too far sometimes in his assertions and also speculations about executive session.

In at least two states, AZ, and, I think, FL, owners may even comment on each agenda item.

The boards determine how much time owners may use, etc. Many have Open Forum at the beginning of the open Board meeting and others, at the end. Our Board provides two open forum--at the beginning and the end.

With reasonable rules about Open Forum distributed at each meeting, there are no problems--none in mine in 16 years. Since Dean's Board has closed meetings--as permitted in Ohio-- I don't see how he can judge owner contribution during board meetings.

By definition, Gregory, "Meetings of the Members" or of the Association are by definition for all owners to attend. Usually the Bylaws require an annual meeting of the members to elect directors.

I believe non-profit corps codes in all states require that there be an annual meeting of the members. I also think that nonprofit codes request that minutes be taken of all members and board meetings. That is the evidence of Board decisions in a court. In all states these meeting minutes must be available to owners upon request. These minutes are how owners know what decisions the Board makes. Isn't any of this in your HOA's Bylaws, Gregory?

In addition, most if not all states allow ownrs to have access to the HOA's documents, e.g., invoices, contracts, etc, via reticular request protocol.

It seems you might start a new thread, Gregory. Your notion that " big well run outfits" do something different than small HOAs is startling.

ALL should should simply follow their bylaws and state Corporations and/or HOA-Condo legislation. Just read few.

Meanwhile you've written no one take minutes at your Board meetings. I think the might not be legal at worst, or wise.

What is discussed at annual meetings, I've seen on this board, varies a lot by HOA and by state, too. The point is it's a meeting of the members/owners. So they vote on every agenda item.

I agree with you, Gregory.