Sample hoa rate increase letter


  • Estoppel Letters for Real Estate Closings
  • How to Write an HOA Violation Letter
  • What can an owner do if he/she disagrees with the amount of an assessment?
  • 2019 HOA Annual Dues Increase
  • How to Win a Fight With Your HOA (Without Going Broke)
  • Writing a Letter “To” or “From” Your Homeowners Association
  • Estoppel Letters for Real Estate Closings

    Annual budget guide for condo and homeowners associations Date Published : Oct Written By : Phillip Livingston Towards the end of each calendar year, condo and HOA communities will direct their focus to the future and begin to prepare the annual budget for the year ahead. As with any difficult task, it helps to approach this job in different stages and take it one step at a time.

    To avoid financial uncertainty and upsetting owners, a realistic budget is necessary. The first steps An HOA or condo association budget is primarily made up of two sections; an operating section and a reserve section, as required by law.

    The operating side requires that you start at a zero-base point. Who should prepare an HOA or condo association budget? Regardless of whether the community has a property manager or not, the ultimate fiduciary duty to prepare a budget is with the board. After all, the property management company is just another vendor. That being said, property managers will often have the annual budget prepared for the board.

    Board members must still review it carefully to ensure it is realistic and accurate. So, who takes care of this task in a self-managed community? While board members are performing an essential role by volunteering to serve the community, they may not have the expertise or background needed to complete certain tasks. If that is the case, boards will often hire an accountant or book keeper for this job. Maintain a reserve Keep in mind that an association is essentially a business, and should be run as one.

    Yes, that means owners pay more in fees. But it also provides your community with a safety net. It also shows responsible governance. What is a reserve fund? State laws generally regulate how and when an association can remove funds from reserve accounts. This means the association should get a quote from a vendor, vote and approve the capital improvement first.

    Only after this process can the board proceed to move funds from the reserve fund account to the operating account to pay the vendor. This amount is usually allocated into a long-term timeframe that shows sufficient long-term planning for capital improvements. Ideally, a condo association should have a year reserve study that gives you a comprehensive view of all items.

    A lot of communities update their reserve study every five years, but a lot can change in five years. The roof could cave due to an unexpected hurricane, costing your association hundreds of thousands of dollars. Even worse, owners will be asked to foot that bill. As such, communities may want to have a reserve study completed once every 3 years, especially if the association is older, or very large.

    An extended period of severe weather could accelerate the deterioration of exterior elements. Conversely, if your association has an aggressive preventive maintenance program, you may find the components last longer than your initial projections. The economy may also impact interest and inflation rates which will change your annual income totals available. So, you need to review the financial portion of the study every year with respect to changing economic conditions.

    One of the easiest ways to figure out replacement costs in advance is to hire a reserve analyst who will determine the cost so that you can budget according to accurate figures. Some associations only use reserves for roofing, painting and other line items. Look at your documents too, because sometimes they have stricter rules than was local laws dictate. You have to be a stickler for details when managing an association and its budget. For instance, Florida law states that unit owners have to vote on adding reserves to an HOA budget.

    If you fail to involve unit owners in the process, you might find yourself with an unexpected lawsuit. Financial reporting Financial reporting is a joint effort between the board, the management company, and the accountant that the association has hired.

    But, a lot of boards would rather not get involved and may leave all financial issues for the treasurer. All of this is part of the financial reports that must be presented to residents during an annual meeting. Not everyone will attend the meeting. But owners still have the right to see these reports. The association may consider sending reports digitally. Note that it is a best practice to put these documents on the password-protected section of the website.

    Condo Control, cloud-based property management software, comes with a budget mail-out feature. Auditing Every association needs an annual audit , completed by a third party.

    This means you must involve attorneys, analyze invoices and meeting minutes to make sure everything is congruent.

    Management companies usually do the financial reports, sum it up and send it to the association. But the audits and reviews must be conducted by an outside certified accountant. Insurance Insurance is another essential when preparing an HOA or condo association budget. A lot of associations also have insurance deductibles set aside in case of emergencies. Putting a cap on fee increases can hurt an association because you never know when your expenses are going to go up, or by how much.

    Be prudent, shop your vendors, and consider different options. Tips for HOA or condo boards If you find yourself serving on a board that is grappling with debt issues, the best thing you can do is conduct a full review of the situation to figure out an efficient way forward. Of course, you have to educate yourself as a board member, and there are plenty of resources that you can use, particularly from association organizations.

    How to create condo association budgets Here are some tips on how to create a budget that will set your association up for success, based on all the information provided in this article: Make a budget — A lot of associations still fall into the trap of not creating a budget in preparation for the coming year.

    Review the history — Look at the financial history of your association. Always review the last two budget plans to fully understand where you are and where you want your association to be. Prioritize projects — All projects or future repairs should be prioritized accordingly. You must differentiate between association needs and wishes and remove any potential liability or responsibility before you explore any proposed community beautification.

    Increases in utilities — Gas, electricity and water costs are always rising. Supplier contracts — You should ensure a proper budget for all regular monthly service providers.

    Be sure to contact your property manager, pool contractor and landscaping company, to find out if they plan to increase their rates. Budget reserves — When preparing the budget, an association must ensure that a fraction of their income goes to the reserve account. The actual amount varies according to the association. The latter includes things like roof repairs, boilers, HVAC systems, etc.

    Not having budgetary reserves might force you to request major special assessments in the future, among other problems. A good rule of thumb is to prepare for at least two major equipment breakdowns at the same time. For instance, a roof replacement and elevator replacement. For best results, check your current system to see if there are any improvements that you can make to achieve better efficiency and ROI.

    Special assessments for special projects — If your association is struggling to cover expenses due to poor cash flow, then you need to increase monthly or quarterly dues.

    Keep in mind that special assessments are just that — special! Stay on course — A lot of associations struggle to stick to a yearly budget because they want to improve landscaping or introduce new and enhanced safety systems etc. Conclusion Creating an effective budget is essential to maintaining a fiscally responsible association.

    Even struggling associations can achieve financial fitness in a reasonable period of time by making minor changes. The earlier the better. If you follow the tips provided in this article and continue to evaluate and adjust over time, your community will prosper.

    How to Write an HOA Violation Letter

    Payoff Letters What is an Estoppel? An association estoppel is a legal document from a community association like an HOA or COA, or some other common interest community CIC with a break down of dues, payment schedule, special assessment levied by the association and any outstanding fees or fines.

    Estoppel is a common term used in Florida. Depending on your area, you may know it as a resale package, HOA certificate, HOA demand letter, or something similar. The best part? We share contact information for the association so you can make the request. An association estoppel report will usually include the following: Association dues amount and frequency of payment ie. If you have specific requirements for your closings, please be sure to contact a business development manager to discuss report options.

    The Association Identification is a simple but powerful report for people looking for information on how to get started on association research. The Association Identification includes: The name and contact information for all associations Instructions for ordering an estoppel Expected fees and turnaround times Association Estoppel vs.

    HOA Information: Which is the best choice for you? Deciding which is best for you depends on several factors. You work for a title company looking to increase the volume of closings You work for a real estate law firm looking to maximize other services and billable hours You would prefer not to waste time requesting a refund from a management company for a canceled deal Restricted to specific states in the US.

    Partnering with a third-party specialized in this research will help grow your business. Get a Quote New to PropLogix? Take a look at our ordering platform and request more information on our services and pricing.

    Get Pricing! Place an Order Returning PropLogix customers can log in and place an order for an estoppel today. Contact your account manager for details on cost and cancellations.

    Sign into Your Account First time ordering with us? Create a PropLogix Account to begin your first order! Register an Account! Latest From The Blog Read the latest in real estate and title industry news, watch interviews with experts in the industry, and get home buying tips to read and share here.

    What can an owner do if he/she disagrees with the amount of an assessment?

    Board members are put in a tricky situation: they want to please the membership but are also obligated to make decisions that are in the best interest of the community as a whole.

    Keeping dues as low as possible is always the goal, right? Not necessarily. Fee stagnation is a bad idea Some homeowners associations work very hard to keep dues at the same level for as long as possible until they absolutely must be raised. Doing so not only starts gradually diminishing property values, it sets up members for potentially costly emergency spending plans, called special assessments, to address unforeseen expenses beyond the original scope of a project.

    As an example, the upcoming minimum wage increases in California are going to raise costs for all hourly workers. These landscapers, janitors, security guards, painters etc. Regular assessments, often referred to as homeowners association dues, are the recurring periodic payments that owners must pay to fund the operation of the association. The regular assessments must be sufficient to cover the operating budget of the association. What is a reserve study and a reserve funding plan?

    A reserve study is a careful analysis of the future repair and replacement needs of a homeowners association based on the condition of the elements of the property it maintains, a projection of the remaining useful life of these elements and future cost to repair or replace them, and the amount of money the association has in its reserve fund.

    California requires each HOA to undertake a new reserve study, and make a new reserve funding plan, at least once every three years, unless the current replacement value of the major components the HOA maintains is less than half of the gross budget of the association. The reserve study must include a diligent visual inspection of the accessible portions of the common areas.

    Must the HOA hire an expert to perform its reserve study? The law does not explicitly state that the reserve study must be performed by a qualified expert, but does require that it be reasonably competent and diligent. Do very small associations need to have budgets, reserves and reserve studiesand HOA dues? All of the California laws relating to annual HOA budgeting, reserve studies, reserve funding, and owner assessments apply to all homeowners associations, regardless of size. What information and reports must the HOA provide to the owners?

    Each year, every HOA must prepare two major reports between 30 and 90 days before the end of its fiscal year: an annual budget report, and an annual policy statement. The major elements of the annual policy statement are: i the name and address of the person designated to receive official communications to the association; ii a statement explaining that a member may submit a request to have notices sent to up to two different?

    The association may either provide the full annual budget report and annual policy statement to each owner, or provide a general description of the content of the report along with instructions on how to request a complete copy of the report. What documents and information must the HOA provide to prospective purchasers?

    Homeowners associations are not required to provide or disclose any information directly to prospective purchasers of units or lots, but are required to provide a variety of documents to selling owners so that these owners can meet seller disclosure requirements.

    The governing documents always specify how assessments are allocated among the owners, and usually require a high percentage of the owners and the mortgage lenders to approve any change in the allocation.

    The allocation is established by the developer at the time the governing documents are prepared, and is reviewed by a governmental agency for projects consisting of five or more units or lots. There are no legal grounds for an owner to challenge the assessment allocation based upon fairness or equity. What is a special assessment, and how is the amount and payment schedule established? A special assessment is an assessment for an association expense that was under-budgeted or not budgeted.

    It can be made payable in a single installment or in multiple installments. In general, the board has the power to impose small special assessments and to determine the payment schedule, but some governing documents require owner approval for all special assessments. All owners must be notified of a new or increased special assessment days before it is due. What is a personal reimbursement assessment and how is the amount established?

    A personal reimbursement assessment is an assessment against only one owner. Another type of personal reimbursement assessment is one imposed as a fine or penalty. Fines and penalties can only be imposed if a schedule had been distributed to all owners in advance, and there has been a notice and hearing as discussed below in connection with owner discipline. Can the HOA charge for parking, use of recreational facilities, and other services, and is there an upper limit on these changes?

    The board may impose usage and service fees as long as they do not conflict with the governing documents. The amount of the charges must be reasonable. An owner may not withhold assessments owed to the association on the grounds that the owner is entitled to recover money or damages from the association for some other obligation. In a non-judicial foreclosure, there is no trial or hearing. The procedure can be handled by an attorney or by a specialized assessment collection service.

    If an owner does not pay a personal reimbursement assessment levied to reimburse the association for common area damage, non-judicial foreclosure is also possible provided the governing documents authorize it. If an owner does not pay a personal reimbursement assessment levied for any other purpose, the association must collect its funds through a judicial process. The association is required to have a written statement of policy for collecting delinquent assessments, and to distribute that statement to all owners annually.

    The policy should require immediate and aggressive action every dog blog write for us an assessment is delinquent. This approach avoids the awkwardness of responding to owners who request additional time to pay, and creating a perception of leniency or inconsistent treatment.

    Sample association notices relating to delinquent assessments are provided in The Condominium Bluebook. The law requires that a homeowners association segregate its reserve funds from its operating funds and perform a quarterly financial review. Some governing documents increase the scope or frequency of this review. Reserve funds can be used only for repair, restoration, replacement or maintenance of the portions of the property that the association is obligated to maintain, or litigation involving these items.

    In some circumstances, the association can borrow reserve funds to cover operating expenses, but the reserve funds must generally be replenished within one year. Does an HOA need to pay income tax? The only non-assessment income most associations generate is interest on association funds. Maintenance and Alterations What portions of the property are individual owners obligated to maintain? In condominium projects and planned developments, maintenance obligations are not necessarily determined by ownership.

    In other words, the fact that a particular element or area is individually owned does not necessarily mean that it is individually maintained. To determine whether an element or area is individually maintained, begin by reading the sections of the governing documents that specifically discuss maintenance obligations.

    The maintenance sections may or may not refer back the ownership sections such as the definition of the condominium unit. If the documents provide no clues as to the authors intended allocation of responsibility, determine ownership of the element or area and allocate responsibility based on ownership.

    Where exterior areas such as decks, patios or yards are included as part of a condominium unit or assigned as exclusive use or restricted common area, individual maintenance obligations vary widely, and no generalizations are possible. In most planned developments, individual owners are obligated to maintain the following elements of the property: All interior elements and areas of the homes; All portions of the plumbing, electrical, heating and air conditioning systems serving the homes; All foundations and structural elements of the homes but not roofing and siding ; All glass, screens, moving frame, and hardware of windows; and All doors, door frames, and door hardware; and All patios and decks except exterior paint on decks.

    As discussed below, owner maintenance obligations change when an element or area is damaged by negligence, or as a consequence of the malfunction of an element the owner is not responsible to maintain. What standards apply to owner maintenance, and what happens if an owner fails to meet them? It is advisable and required by some governing documents that the association provide a written warning, an opportunity to correct the problem, and a board hearing, before undertaking a repair for an owner.

    Who maintains things that are on the border of two or more lots?

    2019 HOA Annual Dues Increase

    Any of the bordering lot owners can undertake necessary maintenance, and recover the appropriate share of the costs from the other bordering lot owners. What portions of the property is the HOA obligated to maintain? The allocation of maintenance responsibilities between the individual owners and the association is usually determined by the governing documents, and varies widely from project to project.

    Where exterior areas such as decks, patios or yards are included as part of a condominium unit or assigned as exclusive use or restricted common area, association maintenance obligations vary widely, and no generalizations are possible. In most planned developments, the association is obligated to maintain the following elements of the property: All common area; All exterior surfaces of homes, including roofing, siding, trim, decks, balconies, exterior stairs, railings, window frames, and door frames; All fences and exterior, nonstructural walls; All landscaping on each lot; and All fire protection alarms and equipment except smoke detectors within homes.

    As discussed below, association maintenance obligations change when an element or area is damaged by negligence, or as a consequence of the malfunction of an element that an owner is responsible to maintain. Is the HOA required to perform regular inspections of the portions of the property it maintains? A homeowners association is required to regularly inspect the portions of the property it maintains as part of the reserve study process. Who is responsible for damage caused by a negligent or intentional action or inaction?

    The association is responsible for maintenance necessitated by the negligent or intentional action or inaction of its employees and contractors.

    The point of origin of the maintenance need determines responsibility for its cost. For example, if the bathtub of a condominium unit overflows, the owner is responsible for all resulting damage to other units and to the common area. Improvements and Alterations Under what circumstances does an owner need HOA approval for an improvement or alteration?

    Condominium governing documents usually require association approval for improvements and alterations which: Change the appearance of any exterior area; Change any interior common area except entirely separated exclusive use common areas such as storage closets ; Impair structural integrity; or Interfere with plumbing, electrical, heating, or air conditioning service to other units or the common area. Planned development governing documents usually require association approval for improvements and alterations which: Change any common area; Involve the construction of new structures or additions, including fences, walls, pools, spas, balconies, patios, patio enclosures, screens, tents, awnings, window air conditioners, exterior shutters, exterior antennas, or exterior wiring; Change the appearance of the exterior elements of existing structures including paint, siding and roofing; Change the appearance of existing landscaping visible from the common area or other lots; Obstruct the view from another lot or from the common area; or Interfere with the water supply, sewage or drainage systems.

    Can the HOA legally restrict the intricate text checker of a sign by an owner? However, an association may prohibit displays made of lights, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component, or that include the painting of architectural surfaces.

    An association can also limit signs and posters that are more than nine square feet in size and flags or banners that are more than 15 square feet in size. What is the procedure for obtaining HOA approval for an improvement or alteration? Most governing documents contain detailed procedures for the submittal, consideration, and approval of proposed alterations and improvements. Where the governing documents do not contain these procedures, or where the procedures are incomplete, the board should develop new or supplemental procedures and express them in a written resolution or Rule.

    If formal approval procedures are not established, or if they are not strictly followed, the association may be prohibited from enforcing its architectural guidelines.

    How to Win a Fight With Your HOA (Without Going Broke)

    Alteration approval is a responsibility of the board, but it may delegate this responsibility to an officer, committee, or professional manager provided it retains final authority. The procedure shall provide for prompt deadlines. The procedure shall state the maximum time for response to an application or a request for reconsideration by the board of directors. A decision on a proposed change shall be made in good faith and may not be unreasonable, arbitrary, or capricious.

    A decision on a proposed change shall be consistent with any governing provision of law, including, but not limited to, the Fair Employment and Housing Act.

    A decision on a proposed change shall be in writing. If a proposed change is disapproved, the written decision shall include both an explanation of why the proposed change is disapproved and a description of the procedure for reconsideration of the decision by the board of directors.

    If a proposed change is disapproved, the applicant is entitled to reconsideration by the board of directors of the association that made the decision, at an open meeting of the board.

    This paragraph does not require reconsideration of a decision that is made by the board of directors or a body that has the same membership as the board of directors.

    Writing a Letter “To” or “From” Your Homeowners Association

    The association shall annually provide its members with notice of any requirements for association approval of physical changes to property. The notice shall describe the types of changes that require association approval and shall include a copy of the procedure used to review and approve or disapprove a proposed change. What standards and principles must the HOA follow in approving or disapproving an alteration or improvement? Homeowners associations are granted the same wide latitude ordinarily given government agencies in their decision making.

    The fact that the association has permitted or approved a certain activity or alteration by a particular owner at one time does not mean that the association must permit or approve that same activity by the same or a different owner at a later time.

    What happens if owner makes alterations or improvements without required HOA approval? At a minimum, the association can order the owner to immediately cease all work and restore any altered areas to their original state. If the owner does not comply, the association can perform the restoration and assess the costs against the owner. The board has the power to undertake these actions, but may delegate responsibility to an officer, committee, or professional manager provided the board retains final authority.

    If the association does not act, it may find it more difficult to enforce similar restrictions in the future. Each association should have written policies for discovering and responding to violations of alteration restrictions. These should include: The right to enter any unit or lot, following reasonable notice, to inspect all construction, whether or not approval was required or granted; A requirement that the association notify the owner of the violation in writing, and order the owner to cease work and restore the altered area within a prescribed time period; A procedure for the owner to obtain a hearing before the board if the owner wishes to argue that approval was not required, or that the work complies with an approval that the owner obtained; and A requirement that if the owner fails to remedy the situation by the deadline, the association must undertake the work and assess the costs against the owner.

    Defects and Disclosures What can an individual owner do about construction defects? The association is obligated to repair the damage under the governing documents, regardless of whether the developer is ultimately responsible.


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