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