HOAleader.com - Tip of the Week - September 16, 2022
Published: Fri, 09/16/22
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HOAleader.com - Tip of the Week - September 16, 2022
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Fair warning: When it comes to inflation, condos and HOAs are in a bit of a jam. But the news isn't all disappointing.
In this week's tip, we answer a reader's question from our recent "Ask Us Anything" webinar: What actions can an HOA board take to preserve the purchasing power of the association's reserve fund, given the current 8.5% rate of inflation?
One of our experts says that in some ways, there's not much you can do to combat rising costs. "It's really difficult to get vendors today," reports Christopher J. Shields, a partner at Pavese Law Firm in Ft. Myers, Fla., who has represented associations for close to 40 years. "So as much as boards would like to irritate regular vendors by pushing back on increases or seeking reductions, as a practical matter, they're unable to do this."
In fact, Harry Styron, a community association attorney at Styron & Shilling in Ozark, Mo., who represents roughly 40 association clients at any given time, says some of the condos and HOAs he sees aren't very wise money-managers in the first place, so their ability to be nimble with their finances is limited.
"While more associations are cognizant of the necessity of amassing reserves in proportion to their needs, many still aren't doing that," he explains. "They might say to me, 'We've got $125,000 in reserves.' My response is, 'How does that compare to your needs?' And they don't know.
"At least in this part of the country, there are a lot of associations, but there aren't many doing reserve studies," adds Styron. "It's pretty much only the ones with 200-plus units that are having reserve studies done."
Alex Noland, CCAL, founder of Noland Law PC in San Francisco, which represents 200-plus community associations throughout California, has definitely had clients ask if they can get out of or renegotiate costly contracts in the past few weeks and months.
Before you try to renegotiate, be sure you know the ground rules you're operating under. "Boards in California need to look at their bylaws, CC&Rs, and declaration because a lot of them have limitations on board power, and contract terms is sometimes one thing in there," he explains. "California's department of real estate has guidelines for developer documents, and one guideline states that boards can't enter into contracts of more than one year. So boards need to always be asking themselves: Can we even sign a contract that's five years long? Maybe no, not without an owner vote."
As for whether your community can exit a contract that's getting more expensive, it depends. Find out more, plus find out one concrete idea you may be able to adopt to bring more revenue in the door, in new article: https://www.hoaleader.com/members/4580.cfm
Best regards,
Matt Humphrey
President
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Recent articles posted at HOAleader.com:
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The Most-Violated Rules Driving Condo/HOA Boards Around the Bend
Let's have some fun, shall we? We asked our experts to name the HOA rules that were getting trampled on so often that boards were losing their patience. We also asked for solutions that finally ended the rule breaking and stress. Did the board change the rule to give it more teeth? Undo the rule? Impose a huge fine as an example?
Click here for more:
https://www.hoaleader.com/members/Most-Violated-Rules-Driving-Condo-HOA-Boards-Around-Bend.cfm
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Trend Watch: Are Condos/HOAs Under Attack?
An ecologist advocating for homeowners to get over their green lawns recently asserted: "There is a national movement to reduce the power of homeowner associations," he said. He cited such examples as the recently passed Maryland legislation that bans HOA rules against so-called low-impact landscaping like pollinator or rain gardens...
Click here for more:
https://www.hoaleader.com/members/Trend-Watch-Are-Condos-HOAs-Under-Attack.cfm
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Can Your Condo/HOA Board Be an Advocate in Votes on Amendments? Elections?
An HOAleader reader asks if it's OK for a board, after its first attempt to pass an amendment failed, to set up a committee to advocate for the amendment. Here, we ask our experts when a board can push for owners to vote certain ways (example two: could it ever advocate for a candidate or against a candidate in a board election?)...
Click here for more:
https://www.hoaleader.com/members/Can-Your-CondoHOA-Board-Be-Advocate-in-Votes-on-Amendments-Elections.cfm
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HOA Reinvestment Fees and Transfer Fees: What's the Difference (and $2,200?!)?
A Utah real estate agent reports that a buyer she was working with on a home purchase in an HOA got smacked with a $2,000 "reinvestment fee" apparently set by the HOA. And that's in addition to a $100 transfer fee.
Click here for more:
https://www.hoaleader.com/members/HOA-Reinvestment-Fees-Transfer-Fees-Whats-Difference-and-2200.cfm
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HOA Could Raise Assessments to Keep Nearby (Privately Owned) Golf Course in Business
Salem, Ore., HOA owners are being asked to help fund a neighboring but separately operated golf course, whose owners appear to be being helped in getting the proposed plan by the HOA's board...
Click here for more:
https://www.hoaleader.com/members/HOA-Could-Raise-Assessments-Keep-Nearby-Privately-Owned-Golf-Course-in-Business.cfm
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