HOA Keeps increasing, what are my options? Please help.

Started by FranzG1 • 5 replies • 12502 views

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FranzG1 (California)
Posts: 2

Posted:

Hello,
>
> I've been reading up your article on home owners association policies. I have a two part question. My HOA has dramatically increased the fee year after year by as much as 20%. Can the HOA increase the fee yearly by as much as 20% although it does state it in the CC&R and is that indefinitely? Their reasoning is that with the most recent foreclosures and an increase in renters most of the owners do not pay the HOA leaving the burden on the diligent on home owners. Some landlords who rent out their upside-down properties continue to collect on rent but not pay their HOAs.
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> My second question is, what are the ramifications and penalties for not paying the HOA? I am trying to lobby that if water or any major utility is tied on to the HOA, cutting off their water as an example would force landlords to pay for it. Since not paying the HOA probably only affects their credit and not experience a shut off in a particular necessity such as utilities, this gives non-payers little incentive to pay for the HOA. It is an unfair system by increasing fees on diligent home owners and leaving for them to pay for the deficit created by home owners who do not pay. Some of my neighbors have even openly said that they stopped paying their mortgage because they couldn't get a loan modification. So in essence, if they can afford to ruin their credit and not pay their mortgage, then this leaves little room to even pay for the HOA to say the least. Our home owners board has access and a list of non-paying landlords but said they cannot release this information. Can they really withhold this information? We have a community pool and a club house and if these landlords can be identified as non-payers then they shoudldn't be allowed access to these facilities.
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> Is there a much better approach regarding this situation on how to collect HOAs so that future increase in fees can be prevented? Also, would there be a chance of reducing HOAs future cost should all home owners start paying the monthly fee and catch up to its deficit?
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> Thank you in advance!

KellyM3 (North Carolina)
Posts: 2,239

Posted:

I can only speak from my service on my HOA board regarding non-paying property owners.

1. Review your covenants to see if the HOA is authorized to place liens and then foreclose on these properties. For property owners who are willingly defaulting, there isn't much you can do. While the HOA seldom wins be seizing a potentially "upside down" property, maybe an auction or sale will yield the community a dues-paying property owner. Besides, just because the property is worth less than the mortgage does not mean the property owner isn't current on his mortgage payments.

2. Ramifications for not paying HOA dues - potential foreclosure if allowed and if your board possesses the leadership ability to defend its own property interests.

3. This list of non-payers is a private matter - the board and property management will know them - though it's acceptable to know how many units are delinquent or non-paying.

4. Your covenants will dictate if delinquent dues-payers lose their amenities access. My community allows for it. But, you'd need keyless entry or some manner to lock people out. Otherwise, you have to police your amenities and that's too much for volunteers who want a life other than HOA matters.

5. The property owners who are current should be attending the HOA meetings in greater numbers. It's not to threaten the HOA board for not moving to collect payments (if foreclosure is an option in your covenants) but to show them you support them doing the "right thing." I must say the timidity to even attempt dues collections makes me wonder if you have deadbeat board members who aren't paying, but that's conspiratorial and not worth floating in a meeting.

6. HOA dues likely never go down once they go up. But, I bet your HOA has no reserve funds and your current amenities aren't being maintained due to non-payment. The extra dues you pay should build reserves so you avoid assessments when maintenance disasters strike. But, your HOA must do that and have the discipline to protect itself.

Don't forget that you are an equal property owner with any HOA board member so you DO have a voice if you can keep it "business."

JimH12 (California)
Posts: 1

Posted:

Under California law an HOA may increase assessments up to 20% each year without a vote of the homeowners and regardless of what the founding documents say.

Your sitution illustrates the importance of an active and aggressive board of director and property manager. California laws are very much in favor of the HOA when it come to collecting past due assessments but the association must move in a timely manner, send proper notifications, file proper documents etc.
Collections are tough in this environment but they must be aggressively pursued OR the owners who pay end up carrying the burden for those who don't.

Does your HOA have a formal collection policy and is it being followed?

Jim

FranzG1 (California)
Posts: 2

Posted:

I appreciate the detailed replies. It seems that all of us who live in the community will have to be more active in helping the board members.

DanielH1 (California)
Posts: 482

Posted:

Even without delinquencies, HOA fees tend to rise.

First, prices tend to go up, not down. The landscaper will ask for a little more. The management company will ask for a little more. Water and electricity rates will edge up. Nobody will ask for less.

Second, current systems will become less efficient over time. The sprinkler system will tend to use more water because the joints are as tight, minor leaks go undetected or repairs for leaks become more common. As lighting ages, it tends to take a bit more electricity.

Third, the HOA itself becomes less efficient. $100/hour electricians are hired to replace light bulbs. Homeowners respond less to the HOA so the HOA pays to mail things multiple times, possibly including extra fees for the management company. The HOA tends not to shop around enough so the cheapest insurance company a few years ago might be one of the more expensive insurance companies today.

But that's not to say that it's impossible. With some hard work and planning, fees increases can be restrained.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Daniel,

I've not consider the "expensive handyman" phenomenon that occurs but that was what was happening in our neighborhood a few years ago and is occuring with some nearby condos.

HOA service needs to be active, budget-focused and time efficient.

Active = you'll work with vendors and the attention will save $$$

Budget-focused = You'll dodge frivilous purchase which are easy to approve if not thinking.

Time Efficient = Busy people who have good smarts won't participate if it's perceived that the HOA board exists as a social club for people with nothing better to do than meddle in others' affairs.

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