California HOA - Financial Woes

Started by FabianV1 • 4 replies • 985 views

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FabianV1 (California)
Posts: 6

Posted:

53 Unit Towhnhome Community in Southern California hit hard by foreclosures, non-payment of dues, etc. Is there any legal issues with curtailing services i.e. cutbacks, etc. for example closing of pool, clubhouse, janitorial, management in order to reduce the monthly operating income to cover expenses. Is there a legal notice that must be sent? Reserves are not sufficient to weather a continued economic crisis that is facing the association. All foreclosed properties and owing members are in stated collection process at one point or another. Any feedback would be appreciated.

SusanW1 (Michigan)
Posts: 5,202

Posted:

The REAL legal issue is that the board can't spend more than it takes in. (Gee, why do people have such a hard time understanding this??)

Get a Finance Committee established ASAP and get the spending under control.

YES - you will have to cut, cut, cut. You can always open up the pool again, but you can't spend your way out of debt!!

Be sure your Members know what you are doing and the necessity for clsoing down amenities to keep your HOA property values protected.

KirkW1 (Texas)
Posts: 1,665

Posted:

I would say to try and get the members involved in the solution to your problems. Let them help make the choices that have to be made. Perhaps those that are left are willing to pay what it would take to open the pool.

But you probably will have to cut some services somewhere. If you can get a consensus on which to cut and to what level your life will be much easier.

FabianV1 (California)
Posts: 6

Posted:

Thanks for the replies, finance committee for spending control is not the issue or solution. Foreclosures which equate to no dues income, delinquent homeowners which equates to no dues income, and budget which is already cut to only necessities, leaves only alternative to curtail services in all aspects. Membership does not get involved no matter how much information is provided, distributed in all types of forums, letters, newsletters, flyers, web site, meetings, etc.. i.e. 10k income i.e. 53 x 200, 10,600 budget for water, gas, electric, trash, landscape, pool service, management, telephone, intercoms, insurance premiums, janitorial, etc. so without income from any number of homes creates a shortfall in any given month, not including reserve allocation or unexpected repairs and expenses.

SusanW1 (Michigan)
Posts: 5,202

Posted:

Fab - a Finance Committee could consist of treasurer, board member, 3 Members and even an outside accountant or bookkeeper. It is an advisory team to the Board and would be "fresh eyes" on the situation. This is not solely a Board problem - As Kirk said, involve the membership, but have an independent committee come up with a plan. Not only does this take the pressure off the board, it shows the membership that you are getting input from many sources to solve this problem. This diffuses the feeling that us vs. them feeling.

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