CAN'T WE ALL GET ALONG? - SURVIVAL Q AND A WHILE LIVING IN A CONDO/HOA

Question: Our pool and clubhouse are 15 years old. The board wants to build a larger pool and upgrade the clubhouse which would require a $200,000 special assessment and drain our reserves.

Answer: The board has no authority to expand the common area amenities. Its authority is to maintain existing amenities in good condition. However, if an appropriate majority of the members are in favor of raising and spending this money for this purpose, that is acceptable. However, the "appropriate" majority may be a super majority of two thirds or more depending on how your governing documents read. This requirement could effectively kill the proposal. 

Question: For years, our board refused to put money away for projects like roofs, fences and painting. Well, now the roofs need replacing, the paint is peeling and fences are falling down. Home values have been compromised and special assessments to pay for the projects are routinely shot down by the membership.

Answer: The concept of planning for future projects is called a "reserve study". It is a tried and proven way of dealing with these predictable expenses and events. Moreover, a fairly funded reserve study shares these costs with all members along the, usually, 30 year time line rather than nailing the unfortunate ones at special assessment time. Special assessments are the product of poor or no planning since virtually all reserve events can be anticipated many years in advance.

The board has a fiduciary duty to run business in a reasonable way. It also has a duty to protect the interests of current and future members. Any board that fails to plan for foreseeable events and expenses has failed in its duty.

Most governing documents obligate the board to budget for known (or knowable) expenses. Failure to plan for reserve events is usually indicative of a systemic problem like the operating budget being underfunded and poor maintenance. The results are plain to see: erosion of the property and home values.

The board usually has the authority to set the budget and reserves at a level to take care of HOA business without approval from the members. If your board is required to get member approval, it could easily roadblock getting things done. But often, the board simply doesn't raise the issue because naysayers won't like it and the board doesn't want to get yelled at. However, naysayers are usually few and far between because most want to protect the value of their property and know it costs money to do it.

Take this message to the board: "You have fiduciary duty to reasonably protect and maintain common assets. Reserve planning and funding is an accepted and fair way to do it."