are HOAs non-profit? (HOA, insurance, new home)

[timd2010]

Looks like I'll be buying in an area that has a HOA of about $500, with 605 residents, it looks like they take in 302,500 a year.

1st question:
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The pool is not paved in gold, and the shared areas are not extensive... Who is getting all this money?

2nd question:
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Is it typical that this amout would go up (I know this is probably in some paperwork I have yet to see, just asking generally)

Thanks!

[wolfcub]

yes, they are non-profit. I have been President of mine for two years and was Treasurer for 3 before that.

I thought the exact same thing when I first joined the Board. The money goes towards paying a property management company, paying a pool maintanence company and possible attendants/lifeguards depending on what your contract dictates, paying for landscaping contract, paying for insurance on HOA property. These are just some of the costs associates with a subdivision.

You as a resident will receive a yearly budget that outlines all the expenses and costs. Also, HOA's should always maintain enough money in there reserves to be able to replace thier largest asset. In our case that is our pool, which would cost at least 100k to replace.

[North_Raleigh_Guy]

^^ Good info. I'll add that my HOA (neighborhood of 60 homes) has a decent "reserve" which recently came in handy when one of the neighborhood stormwater BMPS needed to be repaired. Instead of everybody getting an assessment for $75 to fund the repairs the money was taken out of the reserve.

[CHTransplant]

Our HOA of less than 100 homes runs on a budget of about $90K a year. As pointed out above, that pays for our managment company; accounting and legal services; pool (biggest expense); clubhouse maintenance & cleaning; utilities; playground maintenance; common area maintenance (e.g. mowing); stormwater (rentention ponds) maintenance; insurance; capital reserves; social activities; newletter and website ....

[cry884]

Yes, they're non-profit. I manage HOAs and at every HOA annual meeting or at my first meeting with a new Board I hear about how the costs are too high. I then watch as the new board bids all the contracts and finds there is really very little money to be saved unless you cut services. Now, that's not for all HOAs, obviously. But a well-run HOA should already be bidding contracts and watching costs. It's just that your average guy who doesn't have to pay to have 1,000 acres mowed is going to be shocked at what it costs.

The real answer that will help you is to know that as an owner, you have a right to the budget and the financials. So you don't have to ask here "Who is getting all the money?" because you can go to your board and get the budget and the financials, so you can see exactly where the money is going. Then you can volunteer to help out with the board and see it all first-hand! It's really excited and fun. OK, well, that part is pretty much a lie, but you do get to spend your free time working for the HOA while your neighbors complain about your decisions and imply that you're improperly spending HOA funds. (Not saying you did that; it's just something I witness on a daily basis).

Yes, it's typical the amount will go up. The money is being used to pay repairs and maintenance contracts. Those costs go up in general (when's the last time you hired a vendor for the same price, year after year with no increase?) Your overall income for the neighborhood (assuming no new homes are being built) can't go up unless the dues go up.

[wizard-xyzzy]

Just a reminder that the term "HOA" includes organizations in older, conventional neighborhoods that are purely voluntary and have minimal membership fees. These HOAs exist mainly to provide a political voice for neighborhood concerns and to run social events.

[CSC101]

Can they become 501c3s?

[RoaminRebel]

Whether those contracts are going through a legitimate bidding process or are handed off to cronies of board members is another story, however...

[bluecomet]

Originally Posted by CSC101

Can they become 501c3s?

I do not think this is possible. Here is a link to information.
Our HOA has 700+ homes. Annual budget of $102,000. We pay $45,000/year to management company. OUR HOA Board has talked with several other management companies over the years but never made a change. Many homeowners complain that we do not get our moneys worth from management company. Our annual dues are $137. Our swimming pool, tennis courts and golf course are privately owned and operated within our property and homeowners pay membership fees for golf, swim and tennis.

[wizard-xyzzy]

North Carolina Department of the Secretary of State allows you to verify the non-profit status of any North Carolina corporation. Scroll down to "Search by Corporate Name", click, and enter the name of the HOA. If "NP" shows up under Type, it's non-profit.