HOA fees after the builder finishes

[myNC]

I just talked to our builder and they said they don't expect a raise since they are not contributing anything other than paying HOA fees for the empty/under construction lots

[Sherifftruman]

Originally Posted by CHTransplant

Where does that 10% cap come from? I've never heard of it. (There's no such cap in my HOA's covenants; but then we've only ever had one increase in eight years, and it was less than 10%.)

It is not a state law or anything, just some associations have it written into their documents.

[dchz1]

Originally Posted by CHTransplant

Where does that 10% cap come from? I've never heard of it. (There's no such cap in my HOA's covenants; but then we've only ever had one increase in eight years, and it was less than 10%.)

Its written in are covenants, anything over 10% need a formal vote.

[saturnfan]

Builders may subsidize fees to make the area more attractive to prospective buyers.

[cry884]

Originally Posted by saturnfan

Builders may subsidize fees to make the area more attractive to prospective buyers.

The developer subsidizes fees anyway. Builders often pay assessments just like everyone else, although there is usually a reduced rate until the house is built and gets a CO.

Let's say a neighborhood is going to have 500 homes. The community manager creates a build out budget- basically an estimate of what it will cost to run that neighborhood when it's completely full. Pool, insurance, utilities, socials, management, printing, every last expense. Then they divide that number by 500. Let's say they get $600/ year. That is what they will charge the owners- right from the first one who builds a house.

But you can't run a neighborhood on $600, even if all the amenities aren't built yet. So the developer pays all the bills minus $600 and so on until the neighborhood is at a high percentage of build out. Then it's turned over to the homeowners. The $600 per year, plus a small percentage increase every year or two (to cover inflation) should keep the association going strong.

When developers set the dues too low to fulfill the build out budget (this happens mostly in townhomes and condos) they A) set an expectation that the dues will be say, $80 a month forever, even if they know it will really cost $150 a month to keep the maintenance in check and B) make it hard for the association to save the correct amount for reserves and also to convince the owners to accept the rate hike. A drama and disaster every time.