Budget question: For new neighborhood

Started by BruceD1 • 2 replies • 1133 views

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BruceD1 (Georgia)
Posts: 59

Posted:

Our neighborhood is about 4 years old and we have around 305 homeowners out of 375. Last year the budget created by our developer (while developer controlled)for 08' projected that we sell 30 new homes during the current year. Our HOA assessment is $600. What concerns me is... what if we do not sell but 15 homes?

Now that we are resident controlled (since January). My question is when you set your budget for a new neighborhood that is still under development do you project future home sales? We do not have a reserves account and our budget is set for reoccuring expenses only. Currently we are having a reserve asset study. Our budget is not due, I'm just looking ahead and concerned about the 4th quarter.

Thanks.

DeeB (Arizona)
Posts: 18

Posted:

Bruce,

The developers probably own the unsold units. It is my experience that the budgets are prepared according to full occupancy, (as some fixed costs will not change regardless of occupancy level). Sometimes and I am not sure if they are required by law to or not, the Developer, (or Owner), then will pay like 25% of the association fees of the unoccupied or unsold units. They may also be required to contribute money to the association if there is not enough funds to cover the operating expenses due to occupancy being below 100%. These things should all be spelled out in an operating agreement and or the CC&R's. Just because the association now has controllership should not mean this should change, as the developer (or other owner, if not the developer) still own the unsold units.

I would ask the developer for a copy of the operating agreement. If they say there isn't one, push for one.

GloriaM (North Carolina)
Posts: 829

Posted:

The budget should have been prepared to show Builders dues, and Developer supplements, prorations and project the number of sales for that year.

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