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Location: Stuck on the East Coast, hoping to head West
4,641 posts, read 11,941,823 times
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The rumor is that the HOA had a major expense related to a pool and the current assessments won't cover the related expenses. One of the board members let slip that the HOA is expected to go bankrupt in 2 years. Our bylaws limit assessment increases to 15%/year and that still won't cover it.
That's all info I have.
So......can the HOA create a "special assessment" to avoid bankruptcy?
If the HOA does goe bankrupt, can the lender sue for a special assessment against the homeowner?
I'm finding a lot of conflicting info and wondered if anyone has ever dealt with this.
From a practical standpoint, it will be problematic for the home owners. Example, if there is no money to pay for utilities to common areas, then street lights go out, pools will have to close, clubhouses close, etc.
If it's a gated association, then the gates won't work, any security people will quit.
If there's no money to pay workers, grass doesn't get cut, landscaping in common areas get ignored, trash doesn't get removed, in northern states, snow and ice don't get removed.
From a practical standpoint, it will be problematic for the home owners. Example, if there is no money to pay for utilities to common areas, then street lights go out, pools will have to close, clubhouses close, etc.
If it's a gated association, then the gates won't work, any security people will quit.
If there's no money to pay workers, grass doesn't get cut, landscaping in common areas get ignored, trash doesn't get removed, in northern states, snow and ice don't get removed.
Thanks. Obviously, then, my property value drop. This is just so annoying b/c many of the things are happening behind closed-door meetings and I, and the rest of the homeowners, are having a tough time getting information.
I am just really hoping that individual homeowners will not be held personally responsible.
2 years is a long ways off and sounds alarmist. It does sound like they don't have enough reserves to cover it, so there will most likely be a special assessment issued to cover it. Covenants allow for special assessments.
100 units, 100,000 assessment, 1,000 per unit due on demand.
It is difficult for it to go "bankrupt" unless they have taken out significant debt, owe tons in utilities, and generally are crappy managers.
Thanks. Obviously, then, my property value drop. This is just so annoying b/c many of the things are happening behind closed-door meetings and I, and the rest of the homeowners, are having a tough time getting information.
I am just really hoping that individual homeowners will not be held personally responsible.
You need to get a group of homeowners together and demand that the board open the books and provide information. As a group, you might also talk to an attorney and discuss your options, including withholding monthly fees. The key word here is "owners." You have a stake in the property. Don't let someone else take that away. And, yes, as an owner, you can be held personally responsible for the fate of the community . . . along with everyone else who has shares. Finally, you need to determine whether some criminal act has taken place in the disbursement of funds.
I wonder if anyone has ever done a psychological study on what happens to people when they become HOA board members. I'm guessing that, because they work for the community for free, they think they are owed so much that they can simply choose to act as they please.
The HOA can order a special assessment to to cover a major expense, like repairing the pool, if their reserve fund won't cover it.
They can also order a special assessment to build up the reserve fund. However, I'm not sure if they can combine both into one special assessment or if they have to levy them separately.
More problematic, is why is this happening in your complex? Are there lots of people not paying their HOA fees? Is the association just poorly run by idiots ? Is someone absconding with fees?
Yes, you home values will drop if this goes to bankruptcy. Attempting refinancing or selling will be a horror.
Actually, it's going to be a mess now as it becomes known that reserves are inadequate to fund the common amenities.
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You lose
