The fastest growing form of housing in the United States today is common-interest development (CID), a category that includes planned unit developments of single-family homes, condominiums, and cooperative apartments.
Membership in a homeowner association by a residential buyer is typically a condition of purchase; a buyer isn’t given an option to reject it. Most homeowner associations are incorporated, and they are subject to state statutes that govern non-profit corporations and homeowner associations. State oversight of homeowner associations in California is governed by a large body of homeowner association laws, just like Florida. Other states, such as Massachusetts, have virtually no homeowner association laws.
Each year, your HOA Board of Directors (BOD) prepares a community budget. That budget includes what the BOD will set as the total HOA fee per month, per unit, for the upcoming year. The HOA collects fees from each unit to pay for current year operations such as landscaping, water, insurance, and vendor contracts.
The HOA also has to save money over time for longterm repairs and replacements, such as roofs, roads and parking lots. To understand how much your BOD has to save, they have an outside expert do a “reserve study.” The reserve study expert makes a 30-year schedule of when HOA assets will need to be repaired and how much they will cost. The reserve expert calculates an annual amount needed for those long-term repairs.
Therefore, through the HOA fee, owners are putting money away each year to pay for those repairs. This money accumulates into “reserves” so that the HOA can pay cash for large-item repairs/replacements when they come due. This helps avoid special assessments because the HOA has the money on hand to pay for these repairs/replacement items.
Currently, $39 of your $217 assessment fee is placed into the reserve fund to cover future repair/replacement costs for HOA assets. Earlier this year your BOD hired a reservist to evaluate your current reserve study and produce a new study for operating year 2017. We will soon find out if this monthly funding of $39 will need to be increased or stay the same.
Ceasar