Should Our Assessments Increase?

Should Our Assessments Increase?

Hello Mr. Richardson, Our board is against raising our fees which have been the same for at least 10 years! Obviously we are not keeping up with inflation. According to our reserve study we are over $1000 per unit underfunded. We have [decades old] buildings. My concerns are falling on deaf ears despite the encouragement of our management company to raise fees. I would deeply appreciate your opinion. J.E., Irvine Dear J.E., Association boards are responsible to budget and spend association funds wisely. If a board decides in advance that it will not increase the budget, it is quite likely such a board has placed as its first priority the artificial preservation of assessments and that the upkeep of the property (and the association’s long-term financial health) is a lower priority. Properly caring for the common property and keeping vendor expenses flat for over ten years is unbelievable (and not in a good way). Because of the fact of inflation, cost increases should be factored into the healthy HOA budget. Otherwise, the association is probably deferring maintenance, hiring cheap (instead of the most competent and appropriate) vendors, and is not properly funding its reserve account. Such association are not financially healthy and are akin to people who live on credit cards. Such an association eventually has to face a day of unhappy reckoning when the deferred bills all come due and the association is forced to borrow. Qualified and certified managers are trained to prepare budgets and should be heeded in this regard. Maintaining property, keeping up with inflation, and depositing faithfully in reserves are all actions preserving the...
Recording Meetings, Secret Budget Talks, and a Dictator President

Recording Meetings, Secret Budget Talks, and a Dictator President

Hello Mr. Richardson, Our board announced that audio recordings of meetings would no longer be allowed. What are your thoughts on this? Does this action by the board violate the Brown Act, the Davis-Stirling or some other statute?  Thank you, N.D., Rancho Santa Fe Dear N.D., As private organizations, common interest development associations (aka “HOAs”) are not controlled by the Brown Act (which applies to public bodies). The Davis-Stirling Act contains the “Open Meeting Act,” found at Civil Code 4900-4955. The Open Meeting Act does not require that HOA meetings be recorded electronically, but only that draft minutes of meetings be available no later than 30 days after the meeting. I generally recommend against audio or video recording of board proceedings, except in the rare occasion the association has the proper facilities to record and broadcast meetings (typically only in very large HOAs). Recording meetings often creates two negative problems – it intimidates some, and invites others to grandstand. So long as the policy is clearly stated, association boards can take either policy direction. Best,Kelly To Kelly G. Richardson, We have a question concerning our HOA president. The president is running a construction company that controls all maintenance and repairs throughout the community. She runs the community as a dictatorship and no one on the board is allowed to even speak. We have requested financial records – it won’t work. She told us this could no longer be discussed. M.L., Lake Forest Dear M.L., Some HOA presidents simply let the position get to their head. HOA presidents have very little power in most HOAs, aside from calling and chairing meetings. They have one...
How is the HOA Doing?

How is the HOA Doing?

If you read this, you probably either live in a common interest development (“CID” or “HOA”) or are considering it. How does one determine whether a CID residence is a good investment, or if your HOA is healthy? Is it simply price and “location, location, location”? A well-run association in a poor location may be more desirable than a poorly run association in a great location. Consider these factors: Maintenance Is the property well-maintained? Peeling paint, dead plants strewn in the walkway, and laundry hanging from balcony rails are not good signs. Some associations pinch pennies, deferring maintenance so to artificially hold the line on assessments – never a good idea. Board meetings HOA boards must by law meet at least quarterly, and most boards in all but the smallest associations meet at least monthly. Boards that meet infrequently (or too frequently) may be disorganized. Can you observe a meeting? The conduct at the meeting speaks volumes about the way the CID actually operates. Board minutes Board minutes must by law be made available to members within 30 days, and are a very informative resource. Are there minutes? Do they reflect regular meetings? What do they tell you about what the Board is addressing? Rainy day money – reserves The law requires HOAs to have very detailed reserve funding disclosures, so read those disclosures! A short-sighted HOA skimps on reserve fund saving to artificially avoid assessments increases, but that is actually a form of growing indebtedness. Some day that association will need to get a loan or impose a special assessment because it is not ready for major repairs....