Retroactively Rasing Dues

I don't get it.

You mean they ADDED more to this year's dues? And those who have already paid must pay additional?

By how much?

How much do they expect to raise?

Request the minutes of the meeting where this was motioned and passed by the board to do this. I'd love to see the motion.

The homeowner will almost certainly counter-sue if this cannot be resolved. I suspect that D&O insurance may pay for defense under reservation of rights, but will not cover the claim in the end. This would allow the BoD to spin (and perhaps believe) that insurance is paying for this and delay the reality check until the big bill at the end.

What specifically should I ask for? Policies? Certificates of Coverage? Just D&O? All types of liability and other insurance?

BOD's usually have the authority to "adjust" the budget at any point during the year if they find that their original budget projections were off base. In this case, the "miscalculated" expense is legal fees. Last year, it was "unexpected" increases in fuel costs with contractors adding on fuel surcharges left and right. Even if your CC&R's state that the BOD can't put a special assessment in place without X% owner approval, I'll bet that there is a clause in those documents somewhere that addresses annual budget short falls. Usually, at the end of the year, the budget short fall is assessed to each of the owners based on their percentage of ownership in the association. Again, like with practically every other post that I've read on this site, carefully read your ENTIRE documents and then carefully read your state's condominium laws. The answer to your questions can probably be found in one or both of these references.

For those details, see my recent threads on HOA Elections and on Discharging HOA Debts and Claims (currently on the second page of the Discussion Topics list).

I believe that banks base the amount they are willing to loan an HOA on the annual dues assessment. It may be that the BoD wants to raise the official 2009 dues, not so much to collect money now, but to increase their current or potential credit lines. I don't believe our governing documents require the BoD to obtain any consent from homeowners in order to borrow.

Judy, who is "she"?

Tracie, "Danger Will Robinson" was kind of my thought as well, but most HOA's can get credit easily. Please, could you expand on your thoughts about this? Also, could you answer my questions (above) about your suggestion (also above) to ask about D&O insurance, please.

Michael - Forgive me! It's getting late and I'm getting gender-challenged when it comes to reading! But, at least I know that you're reading what I post! lol

I don't believe that can "restate" the amount of dues. More likely like my HOA, your documents require that the Board prepare a budget in advance and set the dues according to the budget. If that is the case, then they can not "backdate" this and must simply modify the budget and prepare for a special assessment.

Assuming your statements are correct I see the following major problems:
1) The board has been lying about the expense of the legal fight.
2) The board seems to have decided to lie about their budget.
3) An attempt to restate dues late after dues were collected amounts to an attempt to circumvent the rules on an assessment. What other rules are they circumventing? (Or just plain ignoring?)
4) You have at least one member lying and claiming to be an attorney when he is not. (Perhaps you should contact the Texas State Bar and let them know by the way.)

But beyond this I am trying to get a grip on the issue. I read it that the homeowners built a retaining wall (at their expense) on HOA property to allegedly protect their home and stop erosion. They did this at their expense and are not seeking to have the HOA foot the bill.

Further, this happened on a steep embankment of land that has no real use. The land is simply an area of transition and in a good case looks pretty. I notice that no mention of the job being unsightly was made.

Now the only possible benefit that I can see from this is that perhaps you protect the HOA from having to repair the wall later. But you probably could have replaced it for the expense now. I think a better course of action might have been to deed the land over to the owner with some restrictions. This would make them the owner of the wall and responsible for upkeep.

I am absolutely certain that the HOA's debt can not create a lien on your home. That would require that the HOA have some ownership interest in your home. All the same, this whole thing seems to be on a path to folly.

You correctly summarize a subset of the situation.

There is an easement innuring to the homeowner's lot over the segment of HOA land on which they built. The homeowner believes the easement gives him exclusive use to make reasonable use of this land in compliance with our Declarations of CE&Rs and also requires him to maintain the easement area (prevent erosion on the slope), apart from his right to provide lateral and subjacent support for his own property. It is his belief that the original intention of the Easement Agreement (18 years ago) was to make these responsibilities the burden of the lot owner and not the HOA; a couple of homeowners who were involved back then will bear witness to that.

He owns the wall, and would be responsible for any repairs and completely liable. He is also willing to indemnify the HOA.

The BoD believes (yes they are of one single mind and manipulated the elections to ensure not just majority control but 100% control of the BoD by their group) that the Easement Agreement gives the homeowner only the right of passage. They believe he is enriching himself by treating his land as his own and effectively adding this 2800 sq ft to his lot. They are concerned that if he gets away with this, then other homeowners will try to take over HOA common area. No other such easement exist in the HOA.

Selling the land to the homeowner was recommended by the HOA attorney, considered by the BoD and dropped. I cannot explain this.

Of course the HOA's debt by itself cannot create a lien on the Members' homes. But does that mean that those debts can go unpaid or even discharged through bankruptcy or dissolution? Or do they eventually have to be paid? Does either the HOA (or if not, then eventually the creditor) get to assess and possibly place liens or foreclose? Not for the debt but for failure to pay the assessments needed to pay the debts? Please respond to this issue in the thread about discharge, not here. This is my greatest fear in this matter, and I would really appreciate your comments.

Michele is right. We are hearing one side.

"Winning" the lawsuit does not mean winning a settlement. (Our HOA had to pay $25,000 when it "won" its case)

All these issues should be answered by the board.

I am surprised that mediation has not been ordered by the judge. It irritates me that our courts are tied up with cases like this.

Mediation was ordered by the Judge. In fact the Judge's first reaction to the case and the photos of the wall were, "I see no harm. Where is the harm?" Made the HOA lawyer spend some time at the first hearing telling him why we are in his Court. But as a matter of law, the Court does not have leeway to throw this out as frivolous.

After a grueling 15-hour session in mediation, both sides came out with two different stories. The homeowner said they had reached an agreement to essentially walk away and eat their costs up to that point (perhaps $10,000 on each side), that it was not signed because of the late hour and the BoD lacking authority (which was a requirement of mediation), that the BoD backed out a few days later. The BoD said they got no response from the homeowner at mediation, and the details are confidential. The homeowner says the BoD insisted on confidentiality and the BoD said it is required in mediation. In spite of that, the BoD appears to have spread some rumors about what happened in mediation. I think the BoD is wrong about confidentiality and lying about what transpired and showed bad faith and bad judgment by not coming with both authority and intent to settle. But I also think that mediation usually ends up with a tentative agreement, and deciding not to settle was not actually reneging on a commitment.

The basics of the BoD's side are that they don't think the homeowner has the right under this easement to build this wall. They think letting him get away with "stealing" this land would encourage other homeowners to move their fences and use HOA land as their own.

The BoD made many statements about their position at the meeting where they announced that the expenses had blown up:

They read from the Court's letter ruling the statement that the homeowner must maintain the easement area whether or not his own home is impacted. They read slowly in ponderous tones, indicating this was a rebuke to the homeowner. They explained that this wipes out the homeowner's counterclaim that the HOA should build this wall. Of course, the homeowner has made no such counter-claim, and they did not mention that the homeowner has been arguing all along that he must build his own wall (which he already built) to maintain the easement area and his own property.

They read another Court letter, which stated this is an easement, and the HOA owns the property, and the Easement Agreement contract is not ambiguous. They explained that this defeats the homeowner's contention that he owns the property, even though the homeowner and the HOA both always said that it was HOA property. They explained that "not ambiguous" clearly means the Court agrees with the HOA's interpretation of the easement.

That's the other side. It all sounds to me like 1+1=3.

But you are right; here you only see what I have to say about it. When have you had contributors from both sides in one of these discussions? I'm not asking you to make your own judgment about who is right -- how could you do that with information from only one point of view. I am just asking for comments and suggestions, based on what I can tell you. I'll answer any questions, and I can tell you what I heard the other side say, but I'm still only one guy. Thanks for the kind words of support and for the pragmatic suggestions and caveats. It is all very helpful.

Judy, Kirk, et. al.,

Could you suggest where I might look up reserve requirements for my state (Texas)? Would this more likely be under non-profit corp act or under special provisions for HOAs? In general, where should I look for state-specific HOA-specifc statutes? Where could I find any restriction on how much the BoD can spend on a particular matter without consent of the Membership, if there is no such provision in our governing documents?

I should also add in fairness that I have not specifically requested insurance information from my BoD. The Defendant has requested that and not received it; I have requested election-related records and not received them; and other homeowners have requested financial information and not received it.

I am sending in my fifth records request for the election stuff, today, and I am adding a request for insurance information.

I think someone suggested I should add assessment insurance to my homeowner's policy. It did not sound likely that an individual property and liability policy could cover HOA assessments, but I checked into that. My policy does contain $1000 coverage for assessment due to loss, and that is the only assessment coverage available. That means, if the HOA assess to pay for a loss on the common areas (for example, to cover their deductible or lack of insurance after a fire-related incident), then I am covered for the first $1000 assessed to me. However, it doesn't cover assessments for general budget shortfalls or various adventures of the BoD. Even if such coverage were available somewhere, I doubt an insurer would cover assessments related to a lawsuit that was in progress when coverage started, especially after the BoD announced intent to assess. I think that would apply to future (potentially larger) assessments, not just this first one.

I thought my parentheses were a good explanation of the conflict (even though no one has presented it that way). Maybe not.

An oft-repeated statement from a Director: "If the easement was intended for anything other than traversal, then there would be a period after 'privilege' [or after 'easement' -- I forget] instead of continuing with 'of passing over, across and along the Easement Area.'"

My understanding is that this is not a restriction of rights to traversal, but is part of the legal formula -- the easement contract has to specify that traversal is also a right conveyed, or else the easement (it could be argued) would grant the right to do [whatever], but not grant the rigth to actually go on the easement area, which is necessary in order to do [whatever].

Michael, are you the homeowner in question?

Here is a photo of the wall in question, if anyone is interested. This is obviously a despicable, brazen incident of landscaping and house-not-falling. Just so you can recognize it, in case your neighborhood is thus afflicted.

This is hard.

I don't know the answer, but even though it looks nice, it also clearly looks like they illegally encroached and are now in possession of square-footage to which they were not entitled. You claim it's not "usable," but it is not only usable now, it is housing landscaping/garden items that they would not have had access to or a right to use there previously.

The "retaining wall" now makes usable area that would not have been. Nor does it look like it was in any immediate danger of causing any damage to property WITHOUT the wall.

Who put the fencing up?

The point of picture and the snark was sort of an end-of-thread joke. It was not intended as the substance of this thread. And I thought some people might enjoy a visual reference to go with all my verbage.

Yes, it does look nice.

I should have mentioned -- in addition to the BoD not wanting to sell the land, our Declarations of CE&Rs do not allow it. Amending the CE&Rs requires assent of a 90% super-majority of homeowners.

The homeowner being sued (he's a lawyer, remember?) suggested that the BoD and he agree on such a sale as an in-Court settlement. That would get us all a Court order that would override the CE&Rs. The BoD didn't want to do that either.

An interesting thing about the easement: if the homeowner's (and your) interpretation is correct, is that the HOA (meaning the BoD and Committee people) has an easement to traverse any homeowner's lot (for the purpose of verifying compliance with the CE&Rs). This exclusive-use easement excludes the owner of the land, so this would be the one place in the neighborhood from which they could technically be denied access. If they managed to transfer title and make it part of the homeowner's lot, that problem also goes away. I think it's a silly technicality to worry about.

I would personally be inclined to see if I could get a list of motions made in the case. Someone is lying through their teeth as this case should not take the kind of money you are mentioning. In fact, I can't imagine why a motion hasn't been made for a summary judgment.

I can say that your HOA is quite different then my own if the HOA has an easement to ensure compliance with the CC&Rs. Ours doesn't have any such easement. For that matter, I wouldn't belong to an HOA with such an easement. There is no way that I am going to give any organization a right to invade my privacy.

Michael, you say the homeowner in question is an attorney?

I read all of it.

And I still laughed.

You are being played and you fell for it.

And the board members are do-doo-heads.

Give me a break.

Glad the homeowner has such a loyal cheerleader.

My only other (and last question) is this:

If these two are so capable, why do they need you roaming the internet looking for moral support?

Look, I've already said that, based on the pictures, this isn't as clear cut as one would like to see.

For one thing, the homeowner's foundation hardly looks at risk from whatever minor erosion was going on. The "slope" is very shallow and an entire backyard's length away.

And I think there's something fishy about the timeline as well.

But all that aside, these people are clearly your new BFFs. You stop short of deifying them, but barely.

These aren't some naive homeowners who bumbled into the wrong side of the board. They clearly know exactly what they are doing.

Which goes back to my point. If this was as clear-cut as you and they are making this out to be, it would already be over.

And the board is not a pack of do-doo heads. The board's attorney must feel there is some merit to their position, or, again, it would have already been over by now.

It rarely helps to demonize one side and glorify the other.

And that goes back to my statement that we are only hearing one side. And clearly from that side's lead cheerleader.

I hope this resolves soon, for the sake of everyone involved. But the homeowner attorneys aren't innocent bystanders to this.

A reasonable question to ask is, were they to have to pay for THEIR representation, would something have resolved already?

How did the post get convoluted...? The dues increase would be because the HOA has to pay enormous attorney fees related to the very lovely looking retaining wall/easement issue.

Michele,

Your sarcasm was so indecipherable we had to go through several iterations of posts before I figured out you are saying (I think) that you meant I was played by the Defendant homeowner. Whatever. I should have stopped responding when you started, but since you wrote something straightforward above, I'll respond to that.

I can only speak to specifics. I'm not a cheerleader, so I can't control (nor care) if you've got a warm fuzzy. For example, "something fishy about the timeline" is fairly meaningless. If you have specific questions that you think will help to clarify my description or perhaps reveal a problem, then by all means point it out. We may figure out something I missed.

I stipulated (I'm not a lawyer, so am I allowed to say 'stipulated'?) that I can only present one side (which happens to be mine, not the Defendant's). I copped to that the first time you brought that up, and you keep insisting, "No, it IS one-sided" as if to pretend that I'm arguing the point. Are you playing me?

"Taking a poke at Mike Tyson", etc., was obviously a joke with some hyperbole, not deification. I believe the Defendant is very capable, but that does not make him right -- it just increases the cost and risk to the HOA. The Court rulings in his favor tend to indicate he was right. As you said, he doesn't need my help, he doesn't need moral support, and I don't see how he could benefit from me educating myself and asking others for review. (And with the time I spend on HOAtalk on top of my job, family and talking to neighbors, I certainly don't have time left for "roaming the internet."

I don't think I've made him out to be a hapless victim. (The Mike Tyson shot certainly doesn't promote that picture, not does it even suggest a nice guy, which is also roughly accurate.) I also don't think his hands are clean. I think our BoD has put us in a very bad position and is spending our money frivolously, and that's my concern. I have no problem with Mike Tyson and the idiots slugging it out, if my money and my home are not on the line. You are right – the defendant is not an innocent bystander, but I never said he was. I am the innocent bystander.

I am not looking for validation. I am looking for advice about protecting myself and getting us out of this mess. I find validation in my research and my reasoning, and I welcome anyone to point out specific problems that may help me see the situation more clearly. I am not the Defendant, nor am I one of his enemies -- I am caught in the middle of this. I want all my neighbors to see that they are caught in the middle of this. I want to understand the potential risk, and I want the rest of the HOA to understand that risk.

=-=-=

As to the case particulars that you asked about:

The slope in back is indeed very steep (31 degrees), but of course we are looking at that head-on in the photo, so it's not clearly discernable. It's much steeper on the side, which is easy to see, but that's (literally) peripheral to the point at issue. (The purpose of the photo was not to prove any one point, but to provide a visual reference, show what a "wall of planters" looks like, and show that it looks fairly nice and fits in.)

The BoD's own engineer determined that the wall is necessary to prevent erosion, as did the Defendant's experts. Facts like that do make this rather one-sided. The BoD's engineer also said (as you pointed out) that the distance from the house to the foundation is over 50 feet and the gradient and shifting are definitely NOT the cause of foundation problems. (Also the direction of tension related to the foundation problems was left-to-right, not front-to-back.) The swimming pool is closer and some cracks in the lining might be related, but I don't see that as a big issue. Keeping his "house from falling down" was obvious hyperbole, but he does have a right to keep the tail end of his back yard from sliding into the pond, and he has a contractual obligation to preserve the easement area (the slope).

You would probably like to know what I meant, when I said above that the Defendant homeowner's hands are not clean:
• He really should have asked permission first, even if he can show that the rules don't require it and many others never did.
• (In his favor, he did cheerfully submit a request when asked to do so, even though he felt it was not required.)
• When the BoD told him to stop building (when the wall was 90% complete), he could have just left the 10% unfinished to show good faith until they worked it out.
• He could have approached the HOA with hat in hand and asked nicely for retroactive permission, instead of pointing out all the reasons why the way he did things was correct according to the rules.
• In summary, he could have assuaged many egos by showing some humility and respect for the BoD's authority, rather than showing why he thought he was right.

=-=-=

You saying this would be over if things were really as I presented them, is like saying the BoD must be right to keep it going, or they would do the right thing and settle. You assume their decisions are right, just because they made those decisions, so of course you circle around to the conclusion with which you started. I prefer to examine their decisions first and then determine if they are right based on the merits.

You have no further information about our current BoD. It may be reasonable to give current Directors some benefit of the doubt, but it is not reasonable to start with the assumption that whatever they do must be right and then applaud their actions based on that. If you just think you don't know enough about them and you don't consider me a reliable source, that's not completely unreasonable, but you could say that about anything posted in this forum.

Similar with the BoD's attorney. In my opinion, he must feel he can get more of our money, or it would have already been over by now. You could turn it around, too -- the Defendant must feel he will prevail, or it would have already been over by now. It's all circular reasoning.

Our BoD's attorney is a friend of the Defendant's neighbor (who has publicly said he will not stop until he makes the guy move) and used to work with him in City government. That could mean that our BoD had fortunate access to a good reference. That could mean this is all a conspiracy to use the HOA to promote a personal vendetta. It could be that a bad lawyer (on either side) is creating a problem in order to take us for all he can get. I think the negative are all real possibilities, but I'd rather stick to substantive facts and see where that gets me.

It's a fact that the homeowner we are suing is an attorney. That doesn't make him more right or more wrong, although it does raise the stakes when we sue him. It's a fact that he says he is right, and it's a fact that the BoD says they are right. I believe that when the BoD says why they are right, they show a very poor basis for it. It makes no sense; it doesn't add up; it's almost as if they are saying 1+1=3 and have become used to people just going along with whatever they say. That's not hyperbole, and it's not funny.

I know the Directors individually. They are mostly nice, reasonable people. Several are highly intelligent. However, they are indeed acting like a pack of doo-doo heads in handling this matter. I don't know if it's from ego or spite or political/social affiliation or gang mentality. Or if I am wrong; that's always possible. I have often seen intelligent individuals say and do stupid things in the context of a group, and history is replete with example of unruly, amoral mobs composed of many otherwise reasonable and upright individuals.

I can't ask for help judging individuals -- our Directors or the guy they are suing or myself. I don't see any way to present the kind of information you would need in writing; it would be a foolish and unproductive effort. All I can do is present the facts as I see them and ask what you think about that.