Mr.
My HOA CCRs state maximum 5% increase in assessment dues.
For next year they have increase by 8.2% due to the Consumer Price Index (CPI). They state this is permitted by law.
My Question is: What law specifically?
They state the CPI has exceeded 5%, the maximum annual increase allowed by law when the CPI is below that percentage, since the inception of our HOA.
If the CRs maximun increase is 5%, I do not see how they can go above that. I saw where AZ law limits it to an exorbitant 20%; The CCRs do not say 20% they say 5% which is what I agreed to.
Are other HOAs seeing this? You would think in time of inflation they would cut back and lower fees to help people.
Your thoughts? Can the legally do this? What options are available to contest this and reduce the annual fee?
Thank you,
Chas Weber
About Post Author
1 Response
Leave a Reply
You must be logged in to post a comment.
Charles,
What any HOA tells you will only be their version that suits their needs. There is no law that allows the association to raise the assessments based on the CPI. However, most CC&R’s have such a provision. Check your specific CC&R’s. The state statute is a back stop maximum without the specific approval of the members. There is no way that the state will impose any other type of limitation on the ability of the association to raise the assessment they believe they need to manage the property. Plese remember the real issue is the association has the right to raise the assessments based on what they believe they need to cover the associations expenses. Even if the CC&R’s say they can raise the assessment based on the increase in the CPI they need to show a budget and requires that assessment increase to cover the expenses. Far too many associations start by raising the assessments then creating the budget to validate that assessment which is totally backwards. It is totally unlikely that their cost will actually increase based on the CPI. The association needs to know that if they raise excess assessments, they need to either return those excesses to the homeowners at the end of the year or apply the excess to the following years assessment. If they do not that have to pay taxes on that excess income above their legitimate expenses, even if they are non-profit corporations. Those excess along with any income they earn from interest and from fees not based on assessments are taxable income.
Dennis