Resident demanding dues be reduced for work he did himself without HOA approval

Hello All,

I live in a Subdivision of 9 properties in North Caroline. Of these 9 properties, 4 homes are built. This Subdivision started in 2004 and the HOA was taken care of by the LLC that originally owned all of the properties. A few years ago, the HOA was just handed over to someone in the community who quite honestly didn’t care to take maintain it. Dues were never collected with the exception of dues that were due at closing.

This year, residents got together and had its first meeting where new board members were elected – President, Treasurer and Secretary. As treasurer, I was given the task to get everything up to date, including the collection of dues. I was able to determine the dues that were owned by all, and collection is underway, with the exception of amounts due older than 3 years ago due to the statute of limitation. As a small subdivision, we are responsible for maintenance of the roads, as well as 10+ acres of common land. We need funds to grate the road, mow the common areas, build the common walkways within the common area, as well as get the road up to spec as we plan on eventually starting the process of transferring the road over to the state for maintenance.

Alas, we already have one of the homeowners fighting the collection, stating that he cannot justify paying the dues. His rational is that no road maintenance was done for two of the year we are collecting. He also sent us a break down of work he did himself mowing common area close to his property, and grating the road in front of his house. This was a detailed list including what he believe the fees should be for rental of his equipment, as well as his hourly cost. There was never an agreement between him and the HOA to perform this work, nor were there any complaints from this homeowner made to the HOA asking for this work to be performed. The homeowner simply took it upon himself to do this work, and now is stating that the HOA should deduct this amount from his dues.

Does anyone have any suggestions?

Nelson,

IMO, the first thing the board needs to do is to adopt a collection policy that outlines the steps that will be taken to collect delinquent assessments and unpaid fines for CCR violations. After adoption by the board the policy should be sent to all h/o's explaining that the policy will be enforced. Then send a violatin notice to this person for all his past due assessments. Also send this person a letter informing him that there was no contract for him to perform any maint. on the common areas or the roads; therefore, the HOA is NOT obligated to pay him for his services and there will be no reduction in his assessments.

Good luck with getting the roads up to state standards! I know of many HOAs with private roads that must find ways to maintain them as they can never afford to bring them up to city/co standards. In most instances the roads are not wide enough.

The LLC had put in place a set of covenants that everyone who purchased land agreed to at the time that they closed on their property. The yearly dues are clearly marked on this document.

Based on the lot owners purchase date (public record), I can multiply the yearly dues (set per the existing covenants) by the number of year the owner has owned the property in question.

I'm assuming that you did not fully read my post. As I stated, dues are not collected for road maintenance alone. We need cash the cash reserves for our future projects. Without this, we would have to charge all homeowners a special assessment fee, which in my mind is worse. A special assessment is an unexpected collection, whereas the collection of the yearly dues that the owners agreed to when they bought the property should come as no surprise. If they did not agree with the dues, they should not have bought the property. This was not hidden in any way as he signed a paper indicating that he understood this yearly due.

I am not going to play davil's advocate, I am going to tell you why you should be glad if he will pay this year's dues.

For one thing, by not collecting dues for over three years the statute of limitations on the right to collect them has passed. In short, your organization abandoned the covenant and it is no longer enforceable. (Don't bet this wouldn't hold in a court case.)

Another issue: Your organization may not have a legal right to be recognized as an organization. If there were no officers or Board for those years, then the organization may not have a legal place to stand at all. (Were tax forms filed?)

Yet another reason. What was the budget for those years? The norm in bylaws is that the budget dictates what the dues will be. And if you didn't have a functioning Board, then you didn't have a budget. And without a budget your dues would be $0. Even if you don't have that situation you still have no motion to set the rate of dues for the years. No motion - no dues.

You did mention that he didn't get the approval of the HOA before incurring the expenses. But you also mentioned that the HOA was abandoned. So who was he supposed to ask? And why did they not provide the services that this resident did?

As I see it, this person took responsibility to maintain the road in front of his house when the organization failed. He also took responsibility for at least a portion of the common areas.

If this man is willing to pay the dues for this year and participate without a fight you should take the money and thank him.

Seems to me a lot of assumptions based on little information.

First, where does the alleged "statue of limitations" come into play?

In the state laws? Or in the governing documents?

I'd like to see them in writing in the governing documents before passing any judgment on whether there really is a statue of limitations.

Ours has no such wording -- and there is no such "statue" in Kentucky along those lines, either, for HOAs.

In addition, MOST governing documents have some sort of language in place that allows for the fact that failure to perform does not void the document.

Or some such wording to that effect.

For general giggles, here's our entire Article V, General Provisions:

ARTICLE V - GENERAL PROVISIONS

Section 1. Enforcement. Enforcement of these restrictions shall be proceeding of law or in equity, brought by an owner or by Developer against any party violating or attempting to violate any covenant or restriction, either to restrain violation, to direct restoration and/or to recover damages, failure of any owner or Developer to demand or insist upon observance of any of these restrictions, or to proceed for restraint of violations, shall not be deemed a waiver of the violation, or the right to seek enforcement of these restrictions.

Section 2. Severability. Invalidation of any one of these covenants by the judgment of court order shall in no way affect any of the other provisions, which shall remain in full force and effect.

Section 3. Restrictions Run With Land. Unless canceled, altered or amended under these provisions, these covenants and restrictions are to run with the land and shall be binding on all parties claiming under them for a period of thirty years from the date this document is recorded, after which time they shall be extended automatically for successive periods of ten years, unless an instrument signed by a majority of then owners of the front footage of all lots subject to these restriction has been recorded agreeing to change these restriction and covenants in whole or in part. These restrictions may be canceled, altered or amended at any time by the affirmative action of the owners of 75 percent of the lots subject to these restrictions with the exception of Article IV, Section I.

Section 4. Maintenance Obligation. Anything to the contrary herein notwithstanding, the XXXXXXXXXX Residents Association and the lot owners shall be responsible for the maintenance of all open space, private roads, and common areas, so long as XXXXXXXXX Subdivision is used as a residential subdivision or until properly dedicated to a unit of local government. This provision shall not be amended.

Section 5. Amendments to Articles and Bylaws. Nothing in this Declaration shall limit the right of the Residents Association to amend, from time to time, its Articles of Incorporation and Bylaws.

Section 6. Non-Liability of the Directors and Officers. Neither Developer nor the directors and officers of the Residents Association shall be personally liable to the owners of the lots for any mistake of judgment or for any other acts or omissions of any nature whatsoever while acting in their official capacity, except for any acts or omissions found by a court to constitute directors and officers and their respective heirs, executors, administrators, successors and assigns in accordance with the Bylaws of the Residents.

Section 7. Board's Determination Binding. In the event of any dispute or disagreement between any owners relating to the property subject to this Declaration, or any questions of interpretation or application of the provisions of this Declaration or the Bylaws, the determination thereof by the Board shall be final and binding on each and all such owners.

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My point is, no where does it mention a statue of limitations, and no where does it say that failure to enforce means that enforcement cannot move forward again, if and when it does.

Our DUES are specified in the restrictions, as well, and there is only ONE condition whereby a resident does not have to pay the entire assessment for the assessment period. That exception is if they did not live in the residence for the entire assessment period.

So, the board as NO authority to "pro-rate" or "offset" the assessments if someone does "work" for the enterprise, nor does it have forfeit its right to collect dues if it doesn't do the maintenance.

I applaud the new board members for stepping up to the plate to rebuild the board and get the HOA back on track.

I wish you all the luck and hope it works out.

But keep in mind, the FIRST thing you need to do is make sure you are following your governing documents to the letter.

Take care.

This is actually State law. For a written contract, an attempt to collection dues must be made within 3 years. Since the dues were not billed and 3 years expired, we cannot bill for year prior to 2005.


Ours has similar wording.

2. Duration of Covenants:

These covenants are to run with the title to the above described property and shall be binding on all parties owning said property and all persons, firms, or corporations claiming title under, by or through them until April 23, 2021, at which time these covenants shall be automatically extended for two successive and additional periods of ten years each., unless by written agreement executed by the owners of majority of the above described lots it is agreed to change or amend these covenants in whole or in part or to revoke some in their entirety; provided that these covenants may be amended at any time by written agreement by two-thirds owners of the lots.

Michele,

You are very far from the truth. Every state in the US has limits on how long an action may be taken. You simply don't know about them. I can assure you that at some point if you fail to take enforcement action for a covenant violation that eventually the court will decide that you have waited too long to start such action.

In doing a quick search if someone causes property damage, you have two years to initiate action against that person. After such time you lose all claim. (There are exceptions when you may not have had a means to know that the damage occurred.)

Thanks, that sums it up.