HOA fee increase approved by Board and rejected by owners
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.
Is this correct?
Terry
I called the Nevada Real Estate Division, but I don't think this is the right department due to it not being criminal related and violating state regulation.
It still needs 2/3 votes from owners, but I do not think it will pass. Then will request emergency override of vote. Does anyone know who this request to override goes to?
#3 1031 Exchanges Contributor
- Investor
- Las Vegas, NV
Terry. If you can find the Las Vegas review journal online (LVRJ.com) there's a weekly q&a by a writer that answers HOA questions. I'll look for it in the meanwhile. or forward it to you when I see it published. (I think Saturday maybe Sunday).
In CA, reserve study is required every 3 years to prevent this from happening. If you have the CC&R, pull it up and read it. I have a good lawyer, but they will probably charge you $1000 to do this.
HOA and property in Las Vegas. Last reserve study done 2007, and currently in the red $200k, and main reason for increase.
The CCR's says increase to follow Consumer Price Index for percentage to raise each year. If need to raise higher, then need 2/3 votes of owners, which I know for fact will not get. From what I heard in last HOA quarterly meeting, if do not get 2/3 votes, then will request emergency override of owners. This is where I'm a bit unsure as who will they request override from. Also, since I was the only vote against, I want to follow the CCR's and it does not state anything about override. Also, if present for override, I want to include section that details the negative consequences like owners selling and drive down price of property values.
@ Terry Lao,
Is the HOA monthly assessment per 4-plex or per unit? If the assessment is per 4-plex, $695 is low and $1,411/month isn't alarming. If $1,411 is per unit per month (PUPM) then I'm not sure what is happening in your community. Nevada has strict Reserve Study laws which require a Reserve Study every 5 years. I'm sure that the Real Estate Division has the power to fine for non-compliance. Nevada allows the HOA membership the power to reject the budget. However, I don't believe that the membership can reject the reserve contribution that is based on a current Reserve Study. Obviously this is a problem since the community doesn't have a current Reserve Study. While it is easy to try to place blame on the Management Company, the ultimate responsibility lies with the Board, and as you have described, the situation sounds like a faulty Board. No Reserve Study and no assessment increases is a telltale sign of a faulty Board.
HOA monthly fee is $695 per building, and propose to increase to $1411. It is alarming since it is a C/D type property. Comps are at $300k. To compare a $1.3M high rise condo with Strip views has HOA fee of $1400.
The increase will be cause market value drop and negative $500 cashflows. No investor will want negative cashflows.
@ Terry Lao,
If the $695 assessment is per building which are 4-plexes, that is only $173.73 PUPM, and $1,400 per building equates to $350 PUPM. On a per unit basis, the $173.73 assessment seems low.
I have another 4plex near the strip and the HOA fee is $660 and it includes water, sewer, and trash. This $695 HOA fee does not, and we add about $180 to monthly expenses. Also, this HOA adds 7% management fee to owners. Remember, this is a C/D type property. Average in C/D type areas are tops $700. Better areas $900. A+++++ is $1400.
Hard to fix. Sell it ASAP before more headaches.