Attn: California Attorneys - Are HOA's required to maintain a

a certian level of cash reserves? My HOA is saying that soon our water, electricity, trash collection, etc. will be cut off because our monthly dues do not cover our monthly expenses. What can I do?

there have been a couple of repairs, water boiler was replaced, one downstairs unit had a leak under the slab due to the pipes that connect to all the units. About $10,000 worth of repairs now they have no money. I suppose they could increase fees enough to cover expenses, but if something else big happens, there are no reserves.

on top of some increases, was a one-time payment for some major repairs.

This was done so that a huge increase in dues would not turn off any potential buyers.

You ALL should be taking a really hard look at your expenses. What I found with ours (135 units) was entrenched vendors who were so used to no one ever questioning their bills that they were taking us to the cleaners without actually doing the cleaning as it were. We ended up conducting a minor blood bath on our vendors. Firing most of them and replacing them with better priced vendors we gave us far superior service. These folks know that we will question anything unusual in our bills and we are constantly checking to see that we are getting EVERYTHING we pay for. We were able to reduce expenses almost everywhere! Garbage, utilities, insurance, management co fees, everything. We also found that no one had been getting compettive bids on repair work. The same contractors were always used and no one questioned the price. You can bet that does not happen now! We shop EVERYTHING! It's a lot of hard work but it is also paying big dividends.

with input form their community.

Take it up with your HOA. Are you involved with the governing board on any level? :hi:


PS You can petition the neighborhood, and make a presentation to the board. Look at the governance rules and by-laws to see what's required for homeowner input and action.

reserves or insurance to cover large repairs outside of monthly maintenance.

HOA's SHOULD have a reserve account with funds for ongoing and upcoming maintenence expenses like roofs, paint, etc. These are often underfunded but monthly expenses come directly from dues and if dues don't equal expenses, you have a big problem. Also, the reserve account if funded by whatever is left over from the dues after expenses. If there is no money in the reserve and a major repair needs to be done, it's special assessment time.

I know about this because I am the president of our HOA. When I was elected,just about a year ago, we had about $1,000.00 in our general operating fund and were in debt to our reserve account to the tune of about $75,000. We are now much, much healthier with about $40K in our operating account and several hundred k in reserves. It was a hurcluean task to turn us around but it can be done.

It's time for you and your neighbors to get involved. Boards are made up of your neighbors. Unpaid, often unappreciated amatures. No guarantee that they have a clue or even care about what they are doing, but if you and your neighbors arn't involved it is just as much your fault as theirs. Running a HOA is a LOT more difficult than I thought it would be and a good board is not to be taken for granted.

Studying options regarding trash removal would be a good idea. Maybe reducing expenses is possible, but nobody bothered thinking outside the box, or if they did, they were laughed out of the room or told how stupid they were, or some other tactic.

Some trash can be composted and sold, reducing the weight of what must be disposed. Some trash can be recycled and sold, but trash companies, for customer's convenience, charge for such recycling which they then sell (ain't capitalism grand?).

Perhaps rates need to increase for awhile, until reducing monthly expenses can be realized. Municipal service providers may fight you using the law.

Grey water recycling systems to water the landscape can be installed to reduce total water consumption, if such systems meet local codes. Yada yada.

All of these options involve up-front costs and changes to routine, in order to save on recurring expenses. Looks like your HOA fee is going up in the meantime.

If you don't like it, you should not have bought a place that came with a HOA. You could place it on the market and see if there are any buyers.