Q: It is my understanding that there are only three ways to determine monthly maintenance fees and special assessments.
Square Footage, FMV or a flat rate that everyone pays. My neighbor, who was close to the Board President, claimed that the BOD reduced our budget and cut our fees by $10 per month, per unit. Now they are claiming we don't have any money. We are getting a fee increase and an assessment to pay for 16% of the renovations to our neighboring association's pool and clubhouse. We use the clubhouse once a month for meetings and the pool is not heated. We can only swim in it 6 months out of the year. That association also increased our monthly fees to $1800/ mo. We have 74 units. Our BOD agreed to pay. I started asking questions about the maintenance fee allocation. They produced a "historic document." When I compute based on total revenue / sq. footage of each unit, I get different numbers. As of Sep '21 there was $89K in the Operating Fund. Our revenue is $336K per year. Something isn't right here. Could you tell me what I should do next, please?
Monthly assessments and special assessments are two different types of assessments and how they are calculated depends on the language in your association documents. I have never heard of monthly assessments being based on Fair Market Value. Special assessments can be passed for various purposes, such as major repairs when there is insufficient funds in reserves to cover those repairs, or to pay a judgment against the association. Depending on the language in the documents, if there is insufficient income to pay expenses, the association may be able to amend its budget to increase monthly assessments or pass a special assessment. The association has a duty to pay its expenses or it could end up in bankruptcy or receivership.
The first step is to get the information from the association rather than relying on what your neighbor is saying. Send the association a certified letter, return receipt asking to inspect the official records. The association has ten business days from the receipt of your letter to allow you to look at the records and copy any you wish to copy. Do not ask for copies to be sent to you because that is not a proper request and the association would not have to comply. At the inspection obtain copies of the budget (or budgets if you want to see more than one year). Also get a copy of the monthly financial reports and bank statements. You will also need to see and copy any documents creating an agreement between your association and the adjacent association. There may be some contractual agreement or recorded covenant between the two associations obligating your association to pay monthly fees and/or repairs and renovations to the other association.
Once you have this information you should consult with an experienced community association attorney to review the documents and advise you if there is anything that can be done. Sometimes associations get into these arrangements verbally and as time goes by and board members change people forget to ask the important questions (like are we obligated?), assuming "that's the way it has always been done."
Procedures and remedies differ among the different types of associations. For instance, condo associations have a statutory duty to answer written questions submitted by certified mail. Homeowner associations do not have that duty.
Jane Kim agrees with this answer
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