Does Your HOA's Method of Determining Assessments Pass Muster?
July 2, 2010
Riddle me this: Does the formula you use to calculate owners'
assessments match the method spelled out in your HOA's governing
documents? This week's tip explains that sometimes there's a
disconnect between the two—and that can spell trouble for your
homeowners association. "If we say it once, we say it a hundred times: Read your
governing documents!" says Marc Andrew Landis, a partner at
Phillips Nizer LLP in New York City who advises associations
and co-ops and is a member of the executive board of the Council
of New York Cooperatives and Condominiums. "The association has
only the powers that are set forth in the association's
governing documents and applicable law." Landis says he's seen associations veering toward an improper or
incorrect method of calculating assessments, but typically the
error is flagged by an attorney or some other knowledgeable
party before the policy is implemented. "We see this in two kinds of situations, one I'll call sloppy
and the other specific," explains Landis. "Sloppy is when
someone says, 'Let's charge one-bedroom units this much,
two-bedroom units this much, and three-bedroom units this much.'
No, that's why you have percentages of common interest in a
condo or a per-share interest in a co-op. Those sizes are
generally reflected in the interest or the percentages to begin
with, so you have to use those." The problem with mucking up owners' share of assessments is that
you may have to pay them back for overcharges, a feat some
associations simply don't have the money for in this economy.
"I think a homeowner who has overpaid would have a claim going
back to three years of overpayments, which is the statute of
limitations," says Michael S. Hunter, an attorney and partner at
Horack Talley in Charlotte, N.C., who represents more than 500
community associations. If you're now a little unsure about your association's formula
for determining assessments and you need more information, see
our new article, The Wrong Way to Calculate HOA Assessments. Best regards,
Matt Humphrey
President
| 
Free Newsletter
Communications
