Prosecutors: HOA board members stole millions from residents...

Joes Place

HR King
Aug 28, 2003
127,539
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Well of course the PMC was part of the equation - given that the developer allowed them 100% control over the HOA, they were the entire equation.

(Refer back to my statement on "not buying" a property where a developer controlled the HOA Board - and now apparently gave some 'buddy' of his who ran a PMC the green light to "spend whatever you want"....)
 

Joes Place

HR King
Aug 28, 2003
127,539
124,922
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You have a bad habit of not arguing my point. I am telling you that LOTS of HOAs don’t have adequate reserves.
This is true.

But my recommendation to you, in a NEW HOA, is to get a FORMAL reserve study completed ASAP, before you run so far behind on long-term maintenance funds, you need a large special assessment OR you need to close/shut down facilities that were not maintained.

Not really sure how you can claim you are "an expert" here, when these basic things are not done. If the Board will not conduct a formal Reserve Study, then rally your neighbors to show up at meetings and demand it; get people elected to the Board who will do it.
 

Joes Place

HR King
Aug 28, 2003
127,539
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Thanks. So why did you feel you needed to disagree the first time I made that statement?
I did not
I disagreed that "all" or "most" are underfunded.

You've made lots of generalizations in this thread that are not consistent with how typical HOAs are managed. Your experience, with a builder being the "HOA Board" is atypical. And, again, why I would not buy in a community run by the builder; unless there were independent oversight of where my dues were going.
 

artradley

HR Legend
Apr 26, 2013
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I did not
I disagreed that "all" or "most" are underfunded.

You've made lots of generalizations in this thread that are not consistent with how typical HOAs are managed. Your experience, with a builder being the "HOA Board" is atypical. And, again, why I would not buy in a community run by the builder; unless there were independent oversight of where my dues were going.

I said a homeowner run board is “likely” to have underfunded reserves. And this is true.


And I am not making any generalizations. I am stating as a fact that if a board does something wrong, the only recourse for owners is to sue. And I have stated that your claim that a PMC could and should bypass the board and notify owners directly if the association fails to obtain required insurance is absolutely false. That is simply not how it works.
 
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noStemsnoSTICKS

HR All-American
Feb 16, 2006
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Sactown
And who would know if they did not disclose the information? If a homeowner found out, then what would happen?

Saying that all HOA’s follow every law and rule is a bit like assuming nobody ever exceeds the speed limit, because we’re not allowed to. The difference is that there are no cops looking to make sure HOAs follow the law.
I would agree, and as a point of clarity I never said all HOAs follow every law.
 

artradley

HR Legend
Apr 26, 2013
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I would agree, and as a point of clarity I never said all HOAs follow every law.

Understood, thanks. And the moral of my story is not that HOAs are bad. People just have to understand that HOAs operate with minimal direct oversight, so you can’t assume regulations are being followed.
 
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Joes Place

HR King
Aug 28, 2003
127,539
124,922
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I said a homeowner run board is “likely” to have underfunded reserves.

No, it's not.
A "homeowner run Board" MAY have underfunded reserves. Lots of HOAs are underfunded on reserves; the ones I'm part of have adequate funding, tracking out 30-50 years on the Reserve Pro-Formas.

One run by your "developer" when he's trying to sell properties, will almost CERTAINLY be underfunded for the early years, because the developer will NOT start funding reserves to keep dues artificially low.
 
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goldmom

HR Legend
Mar 29, 2002
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No, it's not.
A "homeowner run Board" MAY have underfunded reserves. Lots of HOAs are underfunded on reserves; the ones I'm part of have adequate funding, tracking out 30-50 years on the Reserve Pro-Formas.

One run by your "developer" when he's trying to sell properties, will almost CERTAINLY be underfunded for the early years, because the developer will NOT start funding reserves to keep dues artificially low.
This is correct but remember when the community transitions all of the capital assets (pool, clubhouse, tennis courts, etc. are new so if the HOA begins to fund the reserve right off the bat it should be okay.
 

LuteHawk

HR Legend
Nov 30, 2011
28,381
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Here in the Midwest our HOA helps with the basic needs
of the residents. We pay a monthly fee which gives us
grass cutting, fertilizer applications, snow removal from
sidewalks and driveways, and raking of leaves. We do not
have a pool, tennis courts, etc. All the homes in our sub-
division are brick and have only one floor and basement
with double door garage. The trees and landscaping are
first class.
 

Joes Place

HR King
Aug 28, 2003
127,539
124,922
113
This is correct but remember when the community transitions all of the capital assets (pool, clubhouse, tennis courts, etc. are new so if the HOA begins to fund the reserve right off the bat it should be okay.

Sure; but they should identify what the upkeep/replacement costs will be and it's simple math to figure out how much you need to place in reserves over the lifespan of the item.

E.g. Fencing: 20-25 yr lifespan; $30,000 replacement cost (est w/ inflation); that means you need to be putting in around $1200-1500/yr to have that "fully funded" when its expected lifespan is reached.

And my HOA doesn't just randomly replace something because the "expected lifespan" is reached; if it's still serviceable, we'll delay fixes until it's really necessary and put the extra reserve funds toward other "buckets". It's not hard to work these things through, but it does require some time and effort to really lay out a clear and reasonably accurate plan. You're not going to hit every item on the nose for costs and when it needs replacing, but if you are close, it is very easy to shift reserve budgets around from other things a long way off from repairing, and you have ample time to recover those costs if you end up overbudget.

The place where HOAs run into problems is NOT funding things that are significant cost items. And not realizing that until they're basically at the end of usable life, and either an amenity is shut down, or you have something (like roofs for condo complexes) which can/will result in substantially higher risk of damage to individual owner properties.

Once people learn how this works, and IMPLEMENT a reserve plan, it's really quite easy to maintain one; the problem is they never actually do the upfront work and end up in trouble.
 

Joes Place

HR King
Aug 28, 2003
127,539
124,922
113
Here in the Midwest our HOA helps with the basic needs
of the residents. We pay a monthly fee which gives us
grass cutting, fertilizer applications, snow removal from
sidewalks and driveways, and raking of leaves. We do not
have a pool, tennis courts, etc. All the homes in our sub-
division are brick and have only one floor and basement
with double door garage. The trees and landscaping are
first class.
Some places have little/no capital items that require upkeep.

Most do, though, with things like fences or sidewalks or center cul-de-sac island curbs that aren't maintained by the city.

We had main driveways thru the complex in San Diego that the HOA needed to occasionally chip-seal and they had a fund set aside for future full replacement if needed.
 

artradley

HR Legend
Apr 26, 2013
30,847
55,147
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No, it's not.
A "homeowner run Board" MAY have underfunded reserves. Lots of HOAs are underfunded on reserves; the ones I'm part of have adequate funding, tracking out 30-50 years on the Reserve Pro-Formas.

One run by your "developer" when he's trying to sell properties, will almost CERTAINLY be underfunded for the early years, because the developer will NOT start funding reserves to keep dues artificially low.

Sure, Joe, few HOAs have underfunded their reserves. It’s an unlikely scenario. Lol.
 

Joes Place

HR King
Aug 28, 2003
127,539
124,922
113
Sure, Joe, few HOAs have underfunded their reserves. It’s an unlikely scenario. Lol.
Not what I'd posted.

I've stated for you that ones run by the developers w/o owner oversight on the Board are more likely to have problems. LIKE YOURS, which doesn't have any official Reserve Study conducted.

I find it very strange how you claim to be an "expert" here, but you now own a property in a community where the developer "lets" the management company spend $9k on a golf cart and won't conduct a reserve study. As I'd noted for you, that is a deal I'd have walked away from, even if I got a house "next to the pool", because it's a bad business risk which you are now learning about.