In HOAs, fights over how to spend the money are common

By Deborah Goonan, Independent American Communities

While consumers may buy into a maintenance provided homeowners’ or condominium association for the convenience it promises, homeowners rarely agree on maintenance standards, and often object to what it actually costs to maintain the community.
The following report from ABC15 illustrates that point.

 

Chandler HOA community keeps increasing fees, where is the money going?

Aldo Vazquez
6:16 PM, Aug 15, 2017
6:16 PM, Aug 15, 2017

CHANDLER, AZ – Residents in one Chandler community want to know where their money is going and they’re voicing their concerns at an HOA board meeting being held Tuesday night at a Chandler library.

“The percentage that they’re hiking it, I think it’s completely unreasonable,” Janice McClellan said.

As a resident of the Sunstone community in Chandler since 2001, she says she has seen her rates increase since December 2015 by nearly $45.

“And now, they’ve put us on notice that beginning September 1st it’s going to be $220 a month,” she said.

That’s $75 dollars in two years. She and other residents want to know where their money is going? The HOA president, Toby Metzger, says it’s going to help pay a loan that was used to help improve the community.

“We just got all this remodeling done, they’re doing the grass, and rocks and plants and all this stuff, it’s a lot nicer,” said Kaylyn Poston.

Read more (Video):

http://www.abc15.com/news/region-southeast-valley/chandler/chandler-hoa-community-keeps-increasing-fees-where-is-the-money-going

 

According to homeowners speaking to ABC15 News, current assessments are rising to $220 per month, up $75 per month in two years.

That is quite an increase – a more than 50% increase from $145 per month to $220 per month.

Is the assessment increase justified? Some owners do not think so. They say that recent improvements were unnecessary. They object to the fact that the HOA board took out a loan to pay for the work.

On the other hand, some other owners appreciate the recent improvements, even if it means they are paying more money each month.

Disputes over how the HOA spends money are very common in association-governed communities.

And that is not surprising when you consider that the people who own property in an association-governed community are bound to come from very different perspectives.

For example, a household that is paying down student loans or living on social security and retirement savings needs to carefully account for every penny. A $75 per month hike in monthly expenses is painful. Owner-occupants that are more financially established and owner-investors leasing their units to tenants may view $75 per month as money well spent on their home or investment.

Rapid assessment increases can be alarming, especially if the HOA is not making any noticeable improvements to the property or not keeping up with basic maintenance. That can be a red flag indicating financial mismanagement by the HOA board.

But when owners see that maintenance and improvements are happening, a steep assessment increase probably indicates something else.

What most home buyers and homeowners do not know is that, when the community is relatively new and under the control of the developer, assessments are often kept artificially low in order to entice more buyers and sell homes more quickly. During this period of time, a developer will often subsidize maintenance expenses to keep the neighborhood looking attractive to home buyers.

But when the developer leaves, owner-controlled association boards often find that they are operating at a deficit just to maintain the same standards. And as the community begins to age and show signs of wear and tear, it requires additional maintenance and repair, not less. Assessments should – and often do – rise significantly in the years following turnover of HOA control from developer to homeowners.

But what if the homeowner board decides to keep assessments at an artificially low level? What if the board or members at large resist paying higher assessments to create or beef up a reserve account for future improvements?

After a decade or two, the common areas start to look shabby, mechanical systems begin to break down, and the community shows general signs of neglect.

Some homeowners are not bothered by these changes as long as their assessments do not go up – until conditions deteriorate to the point that residents experience health and safety hazards or damage to personal property. Then the alarm bells go off.

Other homeowners would have preferred a more proactive approach. They are often frustrated that past and current HOA boards have not been more responsible about preventive maintenance and financial planning.

And so, the stage is set for exactly the dispute you see at Sunstone community in Chandler.

Next thing you know, the accusations will start flying.

Perhaps someone on the HOA board – or the community manager – is agreeing to inflated maintenance contracts and getting kickbacks. Or the manager or Treasurer is skimming off some money for personal expenses. 

But, to be fair and reasonable, concerned homeowners need to request access to financial records and contracts to see for themselves if record keeping is accurate and expenses are reasonable. And the board ought to willingly and openly comply with those requests.

The current video coverage of Sunstone reveals a relatively attractive community. And, according to information posted on the HOA website, recent improvements include painting the exterior of all townhomes and resurfacing the parking lots.

Further details about the association, such as governing documents, current assessments and fees (and what those are intended to cover), age and number of properties, are not available on the public access website. But a homeowner portal is provided by Tru-Star Management Solutions, and it would be the perfect place for the HOA board to disclose all pertinent information to its members.

But in the end, the HOA will never make everyone happy. Some owners will object to paying higher assessments and may even default or have to sell their homes. Others will continue to complain that the HOA is moving too slowly and not doing everything it can to protect their investments.

Such are the realities of life in an association-governed community.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s