Author Topic: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.  (Read 4838 times)

Late_Bloomer

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I'll keep it short as to not get into a rant over this but I really would like some advice from others that are part of an HOA.

Closed on a townhome December 13, 2016. The HOA has not reached out in regard to fees, coverage, and known issues. Luckily, the home I purchased is new construction from the foundation up so no issues need to be addressed. However, most all neighboring units are in severe disrepair. Molding and trim so rotted it's hanging from the structure, some units upstairs balcony's are drooping excessively and, appear to be unsafe. All the units are covered in wood siding and on many of the others, the planks are peeling back off the structure due to neglect and some have even fallen off exposing the underside. I say this because the HOA stipulates exterior maintenance/coverage. It also supplies blanket insurance for the units, and handles the landscaping. There are no pools, entertainment areas, or community spaces. Just the small patches of lawn in the front and back of each unit.

So I had a conversation with one of the neighbors regarding the HOA and he had some shocking things to say. He's been living there since 2014 and is active in the HOA meetings which happen 1-3 times per year. When I asked why none of these structures have been kept up to date he said, "well, we had a management company back before I  moved in that had some shady dealings and pretty much walked out and took all the dues that were being collected. He said the HOA spent a crap ton of money in lawyer fees and never did get the money back that this management company swindled. He said back when he moved in the HOA fees were 132.00 per month. Currently they are 209.00. When I asked him why such large increases his response was that The HOA was increasing the fees every year since they had no money. This of course, is why they have not did any repairs on the units. This has been going on since 2014 as far as he knows (since when he moved in). He said they are now out of debt and have pooled some money to "eventually" start repairs to the units. When? Who knows. However the HOA is still collecting dues and not addressing issues. As well as the fact that if they have gotten out of debt, the HOA fees should decline. But the trend doesn't seem to be slowing down. They just raised them again last month.

Here are some questions I have if anyone can provide information before I start a wild goose chase with the HOA:

1. Because of all I've heard, I don't believe they are appropriating funds accordingly, and I feel I have legal rights to see how the funds are being spent. Do I have a right to demand/request annual/monthly itemization reports on the collection and spending of dues?

2. As I said earlier, they just raised the HOA again from 167.00 to 209.00 sometime around December 07, 2016. My mortgage contract regarding the HOA portion states 167.00. However, I have a sickening feeling whenever they do reach out to me for dues that they are going to try to charge 209.00. Does my mortgage contract cover me, for at least 2017 before they can demand a higher amount?

3. This one is not really a question as it is more of a concern...our budget doesn't allow for these sharp increases. Yes, I knew the HOA can and most likely would go up over time, but I presumed it would be few and far between, and certainly not the maximum amount allowed by law each and every year. Granted, these increases could stop next year for all I know, but as of now, they have been doing this every year for the past 3 1/2 years. I don't know if this is unwarranted, but my lifetime maximum budget for this HOA is 400.00. That, over time, and my property tax payment (once mortgage is paid off in 15 yrs) would be hovering around 600.00 a month. It's a broad generalization, but if those two payments ever exceed that ball park figure, I will have to sell or rent out the unit because at that rate, I can rent at a cheaper price. Right now, and as far as my projections go, my mortgage is cheaper than renting where I live. I just didn't think I could potentially be "priced out" so quickly, at least not until the mortgage was paid off.




dandarc

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Why did you buy this place?  Surely you could have seen the adjoining townhomes were in disrepair before you signed the contract, right?  The time to ask these questions was then.  I mean, the place couldn't have deteriorated all that much in a month or two.

What you can do today - ask your board for the HOA documents and all the financial reports.  Perhaps, once you've seen them, you can go to a meeting and make a few suggestions on better ways to handle things going forward.  Be careful though - next thing you know, you might be on the HOA board.  I doubt you'll have a lawsuit, unless someone outright lied to you before closing.  More likely, you didn't think to ask, to which the answer is "buyer beware".  If the can't produce these reports, now there's a problem.

I don't think the HOA is held to your mortgage contract.  Did an HOA representative sign anything at your closing?  If you're talking about the HUD form, that is an estimate.  A pretty good one at that, if it was the exact amount of the fee that was in place when it was put together.

Anyway, good luck with it, and when approaching the board, remember these people are your neighbors, so try and be tactful.

Iplawyer

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Your mortgage contract is between you and the mortgage company.  It does not bind the HOA at all.  You must pay the higher dues.    As far as the other - these are things one must research when buying into a multi-unit property controlled by a HOA.

Zero Degrees

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I'm in an HOA. It has nothing to do with your mortgage. You will have to pay what the HOA charges. Mine has gone up and back down over time.

It's unfortunate  you did not inquire about the state of the buildings and outstanding issues before you bought. You are entitled to the bylaws and a grace period usually. 

Good luck.

Dave1442397

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This book will tell you everything you need to know about HOAs - https://www.amazon.com/Association-Bentley-Little/dp/0451204123/ref=sr_1_1?s=books&ie=UTF8&qid=1485823019&sr=1-1&keywords=the+association+bentley+little

Just kidding. I have no experience with HOAs, but I do know I will never buy a house that has one.

Josiecat

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Sorry.  You messed up.  You should d have questioned the HOA funds BEFORE closing.  HOA feels are completely separate from your mortgage.

Lake161

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I don't know how much this varies by state, but in CA there is a requirement that HOA minutes/budgets/reserve reports are part of the documents that you receive at closing. If you didn't get required documents this might be cause for action. More likely you did get them along with a slew of other documents that nobody ever reads.

In CA, HOAs have to do a "reserve report" that shows funds vs obligations and includes covering things that are expected to need replacement over time. Ours actually detailed the cost of replacing the slide in the children's playground every 10 years. Looking at this report could show you how under water the HOA is, and help you predict future raises in fees.

JoJo

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If the HOA is responsible to fix the exteriors you better get ready for Assessments.  I just paid one for $7,000 and not totally convinced that they won't come back for more before our big exterior project gets completed.


Eurotexan

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I am the President of our HOA. It's only 4 units and it's a little bit of work but I know I can manage the funds and will run it properly. My advice to you is get on the board so you have some control of the situation. Most folks on these boards shy away from HOA and with good reason but I believe being in charge is the way to do it.

Laura33

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1.  You have to pay the new HOA fee.  Sorry.
2.  It's not their job to "reach out" to you and ask.  It's your job to pay.
3.  You are entitled to see the books.  Ask nicely. 
4.  Are things run by a management company or by a board filled with homeowners?  If the latter, remember that HOA = you and your neighbors, who are paying the same dues as you and probably donating their time for free to get the association back on track.  When you are busting your ass, for free, to try to clean up someone else's mess that you inherited, there is nothing that is more offputting than someone who wasn't there through the hard stuff coming in and assuming he knows better than you -- especially if that comes through with a hint that the board is lying/cheating/incompetent and he shouldn't have to pay.*
5.  If the association lost everything to fraud, they need to build a bunch of things back up, including:
- currrent operating expenses/immediate maintenance.
- a reserve fund to cover emergency expenses.
- money to cover the deferred maintenance that should have been done with what was stolen.
- legal fees - they likely are on a payment plan until the lawyer is paid.
6.  Also, if this is a new development that is or has until recently been controlled by the developer, developers are sort of infamous for setting assessments really low until all of the units are sold so as to sell out as quickly as possible.  Frequently, once the developer moves on and the owners take over, they discover that the old fees were not sufficient to cover the necessary costs and a sufficient reserve, and they have to raise fees.  I have bought into two condo associations in my life, and this happened both times.

Without knowing how long this was going on or what the real situation is, it is impossible to know whether your association is operating properly.  So get informed -- read the condo documents, get the budgets, talk to the current board members, learn about the litigation and development plans.  But please try to approach it from the assumption that the board is a bunch of volunteers who are doing their best to fix a bad situation they inherited, at least until you have evidence otherwise. 

And if you don't like what you see, the best solution is to run for the board yourself.

*Spoken as current volunteer board member who has donated 2+ years of free legal services to try to get the developer to pay what he owes -- yes, our fees have doubled since I moved in, to make up for the developer's undercharging and to pay for the litigation, but I am paying the same damn fees and am just as unhappy about it as everyone else, which is precisely why I have donated so much of my own time to keep the costs down as much as I can. 

Reynolds531

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #10 on: January 30, 2017, 08:44:30 PM »
Here your real estate lawyer closing the transaction would have flagged the issue. Is it different where you live?


Iplawyer

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #11 on: January 31, 2017, 06:30:35 AM »
Here your real estate lawyer closing the transaction would have flagged the issue. Is it different where you live?

What "issue" would the real estate lawyer flag?

NoStacheOhio

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #12 on: January 31, 2017, 06:33:07 AM »
Reach out to the board and attend the meetings. If it seems like a shitshow, consider nominating yourself for the board to try to make it better.

I just started as an officer in my HOA, and it's been enlightening. Our neighborhood never got to the point that yours did, but ~10 years ago was (apparently) in a pretty bad place financially. Now we're debating how much of the reserve fund to hold back for future needs, and how much to contribute to this year's wood staining project (capital expense, once every seven years). Most of the debate is focused on stewardship and trying to avoid any surprises for our neighbors. It's a pretty good feeling.

researcher1

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #13 on: January 31, 2017, 07:05:33 AM »
However, most all neighboring units are in severe disrepair.
Why would you buy a new condo where all of the units surrounding you are in "severe disrepair"? 
This should have immediately caused you to remove this unit & development from consideration.

Quote
I have a sickening feeling whenever they do reach out to me for dues that they are going to try to charge 209.00. Does my mortgage contract cover me, for at least 2017 before they can demand a higher amount?
Did you read the HOA contract you signed at closing, including all of the laws/covenants/ect?
If you did, you'd know that are absolutely on the hook for the new $209 monthly fee.

Quote
our budget doesn't allow for these sharp increases.  I will have to sell or rent out the unit because at that rate, I can rent at a cheaper price
As a previous poster mentioned, what you should really be worried about are the "special assessments" that are likely to be coming. 
This is a required payment that could be anywhere between $5,000 - $25,000 to cover the severe disrepair you mentioned.

Reynolds531

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #14 on: January 31, 2017, 08:44:26 AM »
Here your real estate lawyer closing the transaction would have flagged the issue. Is it different where you live?

They review the estoppel (sp) certificate which the condo board issues. It's basically a financial statement and summary of physical condition.

What "issue" would the real estate lawyer flag?

Reynolds531

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #15 on: January 31, 2017, 08:45:32 AM »
Well apparently I can't quote.....

Dulcimina

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #16 on: January 31, 2017, 09:01:43 AM »
Do you have a condominium ownership (only own the interior) or a townhouse (own the structure and land)? It seems odd that that the HOA would be responsible for the upkeep of the townhouses' exteriors.  For example, when I owned my townhouse, the HOA regulated the colors of the doors and fences.  But the homeowners were the ones who were required to paint and upkeep those things.  My fence was part-wood, part-brick.  I needed their approval to close (!), and they required me to powerwash the brick (which was looking green) before they approved.  When a tree outside the fence fell on my house, they took responsibility for removing the tree, but I had to go through my insurance to deal with the damage to the roof.

Now that I live in a condo, the association responsibilities are similar to what you describe.

Someone mentioned a reserve fund. There are laws in my state about how much reserve an association must have.  It's possible that they are building up the reserve before embarking on any major repairs.  They could also be trying to avoid special assessments.  But you should absolutely be able to see how funds are spent.  You probably received the last year's budget from the seller when you signed the contract.  And they probably disclose proposed budgets before their annual meeting (so residents can weigh in at the meeting). At least, that's how it has always worked for me.

SKL-HOU

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #17 on: January 31, 2017, 11:09:50 AM »
You will be required to pay the latest HOA fee. I would think the higher fee (if known at the time of closing) should have been disclosed. You also should have received HOA rules, etc.
If the HOA doesn't have the money and these units need to be fixed, they can ask all units to chip in an extra amount on top of the HOA fee.

Syonyk

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #18 on: January 31, 2017, 02:41:31 PM »
If the HOA doesn't have the money and these units need to be fixed, they can ask all units to chip in an extra amount on top of the HOA fee.

"Ask" implies you can say no.

"Demand" is a better word.


And a functioning HOA is bad enough.  You bought into an apparently dysfunctional one.  Sorry.  Sucks, but that's what you're under now, so make sure you can pay the fees.

SKL-HOU

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #19 on: January 31, 2017, 02:55:16 PM »
If the HOA doesn't have the money and these units need to be fixed, they can ask all units to chip in an extra amount on top of the HOA fee.

"Ask" implies you can say no.

"Demand" is a better word.


And a functioning HOA is bad enough.  You bought into an apparently dysfunctional one.  Sorry.  Sucks, but that's what you're under now, so make sure you can pay the fees.

You are so right! Demand is definitely the right word. If you don't pay, they can put a lien on your house.

Syonyk

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #20 on: January 31, 2017, 03:37:13 PM »
You are so right! Demand is definitely the right word. If you don't pay, they can put a lien on your house.

Yup.  People have lost their house (foreclosure) over HOA fees.  It's not that common, but it happens, and some HOAs are nasty about things like that.

"Oh, you don't have the money to pay the assessment?  Too bad, we'll just take your home instead."

MayDay

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #21 on: January 31, 2017, 06:16:47 PM »
You are so right! Demand is definitely the right word. If you don't pay, they can put a lien on your house.

Yup.  People have lost their house (foreclosure) over HOA fees.  It's not that common, but it happens, and some HOAs are nasty about things like that.

"Oh, you don't have the money to pay the assessment?  Too bad, we'll just take your home instead."

I was on the board of our HOA and we filed for closure paperwork on people all the time. We had super low dues and I guess some people felt like they were optional? The only legal avenue we had was to foreclose.   I don't know if we ever actually completed one-time getting the paperwork in the mail seemed to magically convince people to give us our ~5000$*

*Of which probably 4000 was legal fees and only 1000$ was the dues they couldn't be bothered to pay.


Ocinfo

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Re: New to HOA and hearing some shady s**t from the neighbor. I have some Q's.
« Reply #22 on: January 31, 2017, 07:33:39 PM »
As a public service announcement: Do not buy any property with an HOA that is not fully squared away. It's just not worth the future headaches and potential financial challenges. I say this as someone that owns a condo with a dysfunctional HOA (fraud issues a few years ago, general ineptness, 7 years of a temporary $125 per month special assessment, etc...). I've kept the unit as a rental because it cash flows and I'm hoping the assessment gets lifted and that allows the unit value to increase.

To recap: Ask for all financials before you buy. Ask for percentage of units that are delinquent. Ask for records of prior special assessments. If the HOA can't or won't produce the documents or they are out of date then run away.



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