Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
I am on HOA Board that has recently proposed to raise monthly HOA fee from $695 to $1411. The raise was due to mismanagement by management company, late bills, and legitmate expenses. The increase will make current owners want to sell their property, scare away future prospective buyers. lower cashflows, and lower property values.
This increase was passed by the HOA Board and now needs 2/3 votes from owners. I do not believe will get 2/3 approval. However, I was informed that it is possible to override the 2/3 vote by submitting emergency request to Department of Real Estate.
Contractor · Oxford, MA · Member since 2018 · 807 posts · 745 votes
7y
Sell that thing ASAP! If there are 7 on the market, make it 8, undercut them all and get out from under it while you can. If you think a downturn is coming in less than a year, imagine how much worse it will be when people in the complex default and stop making payments and banks start selling off the units at auction
I believe there is a California state law that ban increase over 15%. The late bills and mismangement should be paid via a special assessment, so it actually comes off after a set time. Don't act like the state and put increases in that don't ever fall off.
They can't challenge special assessment, but they can certainly protest a 100% increase. If it was me, I would look to fire somebody off the board.
This is in Las Vegas, Nevada. I ran for HOA Board when I pissed off that it was HOA leadership and mismanagement that got us in this mess. Now, I am only one vote, and consistently get out voted.
I'm looking at the bills and realize that it comes to a point where you cannot dig yourself out of this hole. In my opinion, it is possible that the HOA might need to be dissolved in order to raise cashflows and hopefully market can correct itself.
I would like to sell my 4plex and get out at peak or near peak market values. Take profit, pay taxes, and build war chest for next downturn. I'm forecasting downturn in early 2020. However, there are 7 already listed for sale out of total of 23, which is 30%. I point this to Board that 30% is a bad sign and that many for sale will only drive prices down. No reaction from Board.
Got your PM. You used the word " emergency" and that is exactly what the HOA management group said to the HOA Board. The letter to the owners will go out this week asking for the increase from $795 to $1411. I anticipate will not get 2/3 vote and in the HOA meeting, they said will request "emergency" situation to override vote.
This situation at HOA has been going on for over 5 years, as I only owned since Dec'14. I think it is better to dissolve HOA, than have an increase that rivals HOA's on the Vegas Strip like Mandarian Oriental. This HOA is in a C/D type area.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
7y
What are they maintaining and how did a 75% increase sneak up on them?
If the neighborhood wouldn't suffer from those who chose not to invest in the exterior of their buildings/landscaping I'd be all for getting rid of the HOA.
I pay $11,000/year to HOA's and the most I hope for is to be left alone.
In CA, the budget is set by the board, not the homeowners unless it is over a certain percentage. It's actually quite black and white in the bylaws. If you can justify the increase, there is absolutely no f-ing way they can avoid not doing it. It would be totally irresponsible.
It is a C/D type area in east side of LV, near Boulder Station Casino. Maintaining basics, water bill, repairs, trash, ground maintenance, pool, etc. I think the management companies that were hired over the past 10 years did not do a good job. The collection of HOA fees owed by owners were not enforced. The major item is about 200k under reserves and about 20k unpaid bills.
Overall, I think it is best to let each owner take care of their own building. I don't think throwing more money at a bad situation will make things better.
Property Manager · Allentown, PA · Member since 2017 · 88 posts · 40 votes
7y
What on earth would make you're monthly HOA fee increase 100% overnight? Furthermore why is your HOA fee so high?
A few things to consider, are these temporary costs or fixed over time? For example if you were to say we have an emergency foundation issue on a lot of combined townhomes that needs to be resolved immediately due to the safety of the members of our community then sure I can wrap my head around that. Your fee would go up but would stabilize after the issue would be resolved. But how on a monthly basis would you need to double your HOA overnight for an entire community of people?
A few things to consider:
1.) If you're dealing with a large fixed expense of some kind have you considered structuring it into a payment plan so you can amortize the monthly payment and it's not such a large jump?
2.) Have you considered second opinions from other management companies or contractors doing the work?
3.) Have you considered canceling some of the services of your community? For example if you have a pool consider filling it in. If theres a security guard at the gate perhaps switch to an automated system. Reduce trash collection from twice a week to once a week.
I don't think the concern here is whether or not the legality of this is viable. I think you have an a serious expense issue on your hands that needs to be resolved by less spending (if at all possible). If I were living in that community I would feel cheated if my HOA cost $1400 and either take legal action or move.
This happened over a period of at least 5 years, maybe even 10 years. The main issue is under reserves of about 200k. There are others expenses like water bills, needed lighting, security patrol bill, etc. The recommendation came from the HOA management company. The HOA Board approved 3-1, and I was against. It still need 2/3 vote by owners which I do not foresee. However, the next step was to request emergency override request to Nevada Real Estate Division.
Contractor · Oxford, MA · Member since 2018 · 807 posts · 745 votes
7y
Sell that thing ASAP! If there are 7 on the market, make it 8, undercut them all and get out from under it while you can. If you think a downturn is coming in less than a year, imagine how much worse it will be when people in the complex default and stop making payments and banks start selling off the units at auction
Property Manager · Allentown, PA · Member since 2017 · 88 posts · 40 votes
7y
@Terry Lao I think you need to take legal action against your former management company and then cut every non essential item on the docket. Which could work...a security guard removed from a budget can scratch 50-75k off annually. Get rid of the nice to haves and only pay for the need to haves until the situation stabilizes. Furthermore start sending out notices to the tenants that aren't paying their HOA on time and let them know if you don't begin paying on top this HOA will increase to $1,400. If they don't pay technically an HOA has it within it's rights to put a lien out on the property or remove them from the association. By cutting your costs and then increasing your HOA by 25% instead of 100% you could resolve your problem without ever having to go down the path of dissolving.
The problem with dissolving an HOA is I have never once seen it go alright. It's just too messy and the organizations you owe money to will not care what your status is they'll just want to get paid.
If it helps I would be happy to consult for you pro bono if you want to send the financials my way in a DM. Sounds like you're in a tough spot right now.
Financials are not in good shape, but my recommendation was to cut to bare bones. No swimming pool. No gardener and let grass die. Maybe replace with dessert landscape........rocks. Part of the issue is owners not paying in a timely manner due to not getting statements.
The main issue is getting out voted by other HOA Board members who want to increase from $795 to $1411 without thinking or even after thinking about consequences still going forward.
If there was mismanagement for 5 years, then heads should role. Find out what your local laws are. Where my condo was in BC, we could vote down an increase in fees or a special levy. A special levy is the better option for the reasons others mentioned, it is a one off (and perhaps can be paid in installments). Be prepared to explain to the owners what went wrong, why it wasn't noticed for so long and what the HOA is going to do to make it right. Many of the HOA board members who were there during this time should be prepared to step down. If they want to stand for re-election that's fine, but the owners would be stupid to vote for them.
Part of the issue is owners not paying in a timely manner due to not getting statements.
For owner's who are in arrears, can you not file a lien against their property? There is no reason not to pay the monthly HOA fees. You know how much they are and when they are due.
Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
7y
@Account Closed
A new property management company and HOA management was put in place Mar'19. There is one HOA member who is now president that was there for about 10 years, and rest are under one year, including myself. However, the other four normally vote in a block and my one vote does not do anything.
The new HOA management recommended the raise from $695 to $1411. There are many needs. My point is the raise will make owners want to sell. There already 7 4plexs out of 23 for sale, which is 30%. Also, no future buyer would be interested due to the negative cashflow. AGAIN, negative cashflow, which I mentioned to other HOA Board members.
@Terry Lao A place that I had (again not in California) kept raising the condo fees (like HOA fees). The board liked to spend money in addition to things that did need to be done. They ended up taking out a massive loan. The head of the condo board was in conflict of interest, made a huge commission off the loan and then sold his place. We had the same issue where one person and their 'minions' controlled it. I sold my place just before this happened, but my point is, there were still a lot of units that sold after the massive loan (tens of millions of dollars). It depends on what the market is like and what price point the units are at. In my case, they were on the lower end pricewise for the area and the market was really hot, so they still sold for a lot of money.
Investor · Hyattsville, MD · Member since 2012 · 822 posts · 441 votes
7y
I agree with @Nick Ferrari in that you need to take a look at the existing services and do some belt tightening. I think there is a psychological barrier with your HOA ownership of $1000 you may not want to cross at this time. Maybe you do this over 2 years, but I would more seriously consider over a period of time. Owners just can't do doubling of the HOA fee just like taxpayers won't vote for politicians who ask to double the tax rate in one year. You mentioned there is 20k in unpaid bills. You have problems paying your regular bills and this means its a financial emergency, not just deferred maintenance or unfunded reserve concerns. The HOA should not have the luxury of keeping all existing amenities if they can't pay immediate bills and won't increase the fee to help keep finances in order. You can consider closing the pool (put the pool cover on) and discontinue regular pool maintenance as a temporary measure (for the season or maybe even the entire year) to show how much of an emergency it is at the HOA. This could also allow you to use the extra cashflow to catch up on the 20k in unpaid bills so you are justified in closing it. Owners will see more clearly that there is a serious financial situation affecting the HOA and not just a management issue. Also, I would present more options to the HOA membership if the new fee doesnt pass. You can offer $1400 and all amenities are kept, or $995 and pool gets closed down for the year and pairing down landscaping and security so HOA can catch up on unpaid bills. Can you put all of your contracts out for bid and see if you can get better contract rates? Is your new management company doubling down on collection efforts? You need to lower your expenses or you'll never get out of the hole. I dont think just throwing more money at it is the answer. Looking at the entire situation and improving collection, expenses, contract management, pairing down makes the most sense. This way you can explain all you did to lower expenses before coming to the membership to ask for more money. This reasoning would work well on the other board members too.
Real Estate Broker · Nashville, TN · Member since 2013 · 54 posts · 29 votes
7y
Man. I feel your pain.
I joined our HOA, was President - solid building, 21 units. Previous Prez was on Board for 12 years...aged
85. Didn't want to spend $ on anything, dues had not gone up in 9 years, one assessment for $3K 3+ years ago.
New Board: changed management co., secured solid service vendors, recovered $7K in unpaid dues from one resident, updated lobby, made some general repairs, and upped dues $18.00 per month...the wrath I endured for 6 months was incredible - after severe harassment I resigned. Not worth the hassle.
Have my eye on 2 units to fix/flip and have great relationships with those owners. Statistically, I've got longevity on my side vs. several of the nasty residents --
My suggestion is to make an assessment vs dues increase if it won't go through. Dues need to be reasonable for current owners and resale - budget needs to work and the overall care of facility is vital. Take a hard look at management. Good luck to you --