Paying too much for your monthly HOA dues?
A lot of homeowners think that paying a high amount for their HOA dues is bad. However, it is better to pay a higher amount rather than have low reserve funds. Every HOA has a budget and a reserve study report. Those tools determine what the monthly HOA dues shall be.
The board of directors shall exercise due diligence in setting the right amount. This amount shall be enough to cover monthly expenses, budgeted items as well as monthly reserve contribution. By doing so, the HOA will have a less likelihood to be hit with a special assessment. A special assessment is when an HOA has blown the budget and is in dire need of funds. In a case like such, every owner shall come up with a lump sum on a rush status.
Here are a few benefits of having higher monthly HOA dues:
- The HOA will have healthy reserves, hence the lenders will generally extend loans more freely.
- The board of directors will be less inclined to conduct a special assessment.
- The board of directors will be empowered to attend to preventative maintenance, which will lead to significant savings. Furthermore, having a well taken care of building, will reduce exposure to liability.
- In the extreme event your HOA needs a loan, the banks will find the HOA to be a more qualified applicant.
- By maintaining and beautifying the building, each unit market value will be preserved.
It is advisable for the board to scrutinize the HOA financials & the budget regularly. Every year, a new budget shall be created. Boards shall take into consideration, inflation, anticipated projects and other relevant facts in order to prepare an accurate budget. Once the final budget has been approved, it shall be followed as closely as possible.
Running an HOA is similar to running any other company. Just like a company needs to have reserves, so does an HOA. The board represents the membership; they shall use utmost care to protect the building and the homeowners. A good board is one that plans ahead and does what’s good for the overall building. Serving on the board is not a popularity contest, therefore the right decisions shall be made.
If you need assistance in figuring out what your monthly HOA dues shall be, please contact us.