HOAleader.com - Tip of the Week - February 17, 2012
Published: Wed, 02/08/12
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Your HOA Has Too Much Extra Money--Seriously?
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In this week's tip, we help you with an enviable problem: Your
HOA is too flush, and you're actually considering slashing the
assessments you charge owners. The move is riskier than you might
think. "I've seen this done well, and I've seen this done badly,"
says Justin D. Park, an attorney at Romero Park & Wiggins PS in
Bellevue, Wash., who advises homeowners associations. "I've seen
it done badly when board members lower assessments just because
they don't personally want to pay those assessments. They lower
them beyond what's reasonable, and suddenly, there's not enough
money coming in to do things that need to be done. A few years
down the road, you have a new board that has to pick up the
pieces by raising assessments, which creates a mass revolt."
Lisa A. Magill agrees that it's shortsighted to undercharge on
assessments. "That's obviously inadvisable," says the shareholder
and association attorney at Becker & Poliakoff PA in Fort
Lauderdale, Fla. "Artificially keeping your assessments low so
that your association is unable to meet its obligations is a
violation of your fiduciary duties. I strongly discourage that
action. Instead, sit down with a financial person and work out a
budget that's reasonable and appropriate."
No matter what the reason for dropping your HOA's assessment
levels, Chris Yergensen, senior vice president and corporate
counsel of RMI Management LLC, a Las Vegas-based company that
manages about 300 condo association and HOAs, isn't in favor.
"Raising assessments is always problematic," he says, turning
the issue around. "So I'd first lean toward not lowering
assessments--period. The financial facts presented have to be so
overwhelming that lowering the assessments would make sense. But
in almost every case I'm familiar with, lowering assessments
isn't something you should do lightly. While everybody may
applaud it, if you miscalculate, raising assessments is like a
death knell."
How do you determine when lowering assessments isn't risky but
is a safe and fair move? Find out by reading our new article:
http://www.hoaleader.com/members/682.cfm
Best regards,
Matt Humphrey
President
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Should You Study How Your Homeowners Association Stacks Up to
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Bedbugs in Your HOA? Really? Yes, Really!
This week's tip may make your skin crawl. I apologize in
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