When does a dues increase become effective?

Started by DeeF • 8 replies • 2001 views

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DeeF (Oregon)
Posts: 2

Posted:

Our HOA voted to increase our dues effective January 1, 2010. Does the dues increase become effective at the board action, or when the minutes are approved?

Our HOA did this without having a budget meeting, forming a budget committee and without really knowing what they actually needed, so we are trying to discover when the increase really becomes effective. Thanks for help.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Dee,

Seems to me like you answered your question! You said: Our HOA voted to increase our dues effective January 1, 2010.

Forming a budget committee or having a budget meeting may not be a requirement for determining if an assessment increase is warranted. It does no good to second guess the board's actions. If you want to know why they decided to raise the assessments just ask them. Although you state the increase is effective 1/1/10, if you are unsure of the exact date, just ask them. IMO, it's much better to ask questions of the board than to second guess or assume wrong-doing.

HB (Oregon)
Posts: 143

Posted:

I would say whenever the Board voted for them to be effective (ie. 1/1/10). Unless your CC&R's call for a budget meeting, budget committee, etc. then all that stuff is not necessary.

Can you specify what you mean by "without knowing what they actually needed". Do you mean they have not had a reserve study done, or they are wanting to do some projects, but are just guessing at a cost??

DeeF (Oregon)
Posts: 2

Posted:

To try to explain: Our HOA Board had an agenda item for a $10 dues increase. During the discussion the Treas. was asked if had had a budget meeting since the new fiscal year began, was he going to reconvene the budget committee. No to both questions. When a member of the lot owners in the audience asked who was going to be on the budget committee he responded, "None of your business." The Treasurer could not share why the increase was needed or a dollar amount that was necessary. He talked about figures from $10 to $40. Several board members indicated they could not vote for a dues increase until they knew where the HOA was with the budget.

Lots of anger, etc., with the result that a dues increase of $15 was passed and the four dissenting board members resigned from the board afterwards because they didn't think the board was meeting its fiduciary responsibility. Plenty of people wanted to know why the increase was needed. The board had no answer. They are not even sure they asked for enough and probably didn't because our HOA is in financial difficulty. The reason given for the necessity of the vote was a deadline of Jan. 1. My question was does the dues increase become effective immediately when voted on or when the minutes are approved? In this case the minutes will be approved in the middle of Jan. Thanks

GlenL (Ohio)
Posts: 5,491

Posted:

Dee as others have stated it becomes effective 01/01/10 as the BOD voted. The vote is the controlling factor the minutes are just a record; the vote is what counts. In an aside, shame on the four who took their gloves and went home because they didn't get their way and how many are on your Board if four aren't the majority?

Studies show that 5 out of 4 people have problems with fractions

HB (Oregon)
Posts: 143

Posted:

Quote:

Posted By DeeF on 12/20/2009 3:47 PM
To try to explain: Our HOA Board had an agenda item for a $10 dues increase. During the discussion the Treas. was asked if had had a budget meeting since the new fiscal year began, was he going to reconvene the budget committee. No to both questions. When a member of the lot owners in the audience asked who was going to be on the budget committee he responded, "None of your business." The Treasurer could not share why the increase was needed or a dollar amount that was necessary. He talked about figures from $10 to $40. Several board members indicated they could not vote for a dues increase until they knew where the HOA was with the budget.

Lots of anger, etc., with the result that a dues increase of $15 was passed and the four dissenting board members resigned from the board afterwards because they didn't think the board was meeting its fiduciary responsibility. Plenty of people wanted to know why the increase was needed. The board had no answer. They are not even sure they asked for enough and probably didn't because our HOA is in financial difficulty. The reason given for the necessity of the vote was a deadline of Jan. 1. My question was does the dues increase become effective immediately when voted on or when the minutes are approved? In this case the minutes will be approved in the middle of Jan. Thanks

Sounds like the "none of your business" comment might have been in response to someone being pushy? The treasurer as you said above had already said no to both questions . . .

It also sounds like the Board is trying to get at least the minimum passed so you aren't in as much "financial difficutly".??
Is there a lot of homeowner apathy? Are they able to pass a larger increase if needed?

It sounds like there is more going on here. I still say that the dues increase is effective 1/1/10 though.

MaryA1 (Arizona)
Posts: 7,043

Posted:

Dee,

As for the effective date of the increase, according to what you have posted, I would say the effective date is 1/1/10. However, a close look at the CCRs may also give you your answer. Some assn's require that the members be informed of the assessment fee for the new year w/i 30 days of the start of the year. This means the new assessment rate is effective on the first day of the new year -- usually January 1st. Some assn's do not give the board the authority to increase the assessment mid-year. So, the actual date of the new assessment will be determined by what your gov docs say.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By DeeF on 12/20/2009 10:45 AM
Our HOA voted to increase our dues effective January 1, 2010. Does the dues increase become effective at the board action, or when the minutes are approved?

Our HOA did this without having a budget meeting, forming a budget committee and without really knowing what they actually needed, so we are trying to discover when the increase really becomes effective. Thanks for help.

Dee,

In general, unless your governing documents or a provision in the motion say otherwise, an action becomes effective after the votes are counted. The minutes are just a verification of what happened - not the actual approval or disapproval of the action.

As others here have said, since your motion said the increase will become effective 1/1/2010, that is when the increase will become effective. The "budget meeting", unless your governing documents say otherwise, would have happened when the motion was made, discussed and decided upon.

Hope this helps,

Tim

MicheleD (Kentucky)
Posts: 4,491

Posted:

Everyone pretty much summed it up as far as the date the increase is effective.

However, it's also important to note that MOST HOAs have the ability to increase the annual assessments a certain percentage WITHOUT ANY MEMBERSHIP INPUT at all, much less without ever convening a budget meeting.

In our HOA the increase amount we can go without a membership vote or notification is 25%.

So on a $100 annual assessment, we can raise the assessments up to $25 without any other action besides a board member vote.

$10 or $15 per year doesn't seem that big a deal to me. Apparently the board has enough members to withstand a 4-director-voting bloc against it.

The approval of the minutes is only a "formality" -- the dues are considered effective for the date indicated once the vote is passed.

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