Property Management Professionals (PMP)

Incompetent managers and due hikes without a vote

Dr. HOA,
I began attending my association’s board meetings earlier this year after learning that our dues were going up 20 percent.

I am shocked and outraged by the incompetency of our manager, as well as the president of the board, neither of whom bothered to attend the last board meeting following the dues increase.

When I asked the reason behind the increase, no one was able to provide me a clear answer. I do not trust our manager or our board.

Is it legal to raise dues without a vote of the homeowners, and wouldn’t the board be required to explain to homeowners their justification behind raising dues? Also, as a homeowner, what can I do to change out the manager and certain board members? — Colleen R.

Hello Colleen,
I understand your frustration regarding your recent dues increase, compounded by the fact that you feel your association’s leadership lacks competency.

The good news is, that homeowners associations function as a democracy, so if you disapprove of the way your current board handles business, you can vote them out or run against them for a position on the board.

Legally, an association’s board of directors is permitted to raise dues a maximum of 20 percent in any given fiscal year without a vote of the membership.

That said, I always recommend that the board proactively engage the membership when contemplating whether a dues increase is necessary.

Additionally, the scheduled board vote to increase dues must be included in a general session board-meeting agenda, and voted on during the open session.

Following an affirmative board vote to increase dues, I recommend that the board distribute a formal announcement regarding the dues increase, including a detailed explanation of the reasoning for the increase, as well as a summary of the due diligence performed prior to making the decision to raise dues.

Most associations are reluctant to increase assessments, so I would think that your current board studied your association’s financial position and determined an increase in revenue was necessary.

Ask your board for a copy of the most recent financials for a better understanding of your association’s fiscal position. As a member of the association, you are legally entitled to review most association documents, including budgets and financials, and pursuant to civil code, they are due to you within 10 days of a homeowner’s written request.

If you feel your community manager is ineffective, you can request that your board consider going out to bid, thereby vetting other professional management firms to service your association. If you are aware of fellow homeowners who share your sentiments, ask that they accompany you to the next board meeting to address their concerns.

As stated previously, an association should function as a democracy, holding annual board member elections. These elected board member positions are typically limited to either one- or two-year terms.

As homeowners, you are their constituency. If you do not like the direction the board is taking the association, vote them out. I encourage you to empower yourself by running for a position on the board of directors or supporting candidates who share your views for how the association should be run.

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