AZHOC - Arizona Homeowners Coalition
Voice for homeowner rights and justice.
azhoatruth@gmail.com
Login

Comments or Questions

 To post a comment or ask a question please either register here Click here or log in above.

Thank You

Please log in to submit content!

Unanimous Consent to re-paint?

Dennis, At our 3/29/2023, open board meeting, our board posted a slide titled “Unanimous Consent Affirmation.” There were two items, but one, in particular, struck me as odd. It stated “Guard Rail Painting Authorization: Request...
Read More

Liquor license

Hello, Dennis. I was recently elected to my HOA BOD and was just informed that my fingerprints are required for the liquor license that our community holds. This is not mentioned in our governing documents...
Read More

ARS 33-1813

Hello Dennis, Recently our Community attempted to recall 4 of 7 of our board of directors. The results were announced at the Special Meeting (via Zoom), and the tally was shown on the screen. Many...
Read More

Training

Dennis, I don’t think many of the BOD or the voting members really understand how the reserve study and operating budget work together to create the yearly assessment. They don’t understand the reserve analysis model...
Read More

Annual Meeting

Hello Dennis, Thanks for having me aboard and the important information that you pass on to people on this website. Rather than make several singular posts, I’m going to try to ask questions here and...
Read More

400% funded reserve

Dennis, I have encountered a situation in our HOA. 2 neighborhoods in our HOA are assessed a monthly assessment and a separate quarterly assessmnet tagged “LPSS (low pressure sewer system) assessment” . The money collected...
Read More
1 2 3 44
  • From Dennis Legere on 400% funded reserve

    DPK,
    it is difficult to answer without knowing the specifics of your CC&R’s but generally the association is entitled to charge assessments for whatever it needs to operate the association and for a year and to raise the money for reserves to fund long term maintenance and upgrades of common property. But the operating account must be maintained separate and distinct from the reserve accounts. While the association may borrow money from the reserves to cover short falls in the operating budget it must repay the reserves the following year. Intermingling of funds is a violation or IRS rules, and bad financial management and will result in depleting the reserve funds with expenses not intended for those reserve. The association has no right to charge assessment in excess of it’s own established predicted needs. If its expected cost considering inflation is $40,000 and they have collected $100,000 they have no right to do that. While there are many applications for reserves that is why an overall reserve account is so important it is not limited to one expenditure but to fund all the expected longterm needs of the community. While accounting for inflation is appropriate this is a mathematical analysis and not guesswork, especially in such a short term consideration. Let the association know that their practice of co-mingling funds is inappropriate and if they do not change this you will be forced to report the association to the IRS and they will be audited fined and could lose their non-profit corporation status.
    Dennis

    Go to comment
    2023/03/16 at 7:53 am
  • From Dennis Legere on Proper or Improper Process

    Rhonda,

    If the board noticed the workshops 48 hours prior and allowed any member to attend and speak at those workshops but especially prior to the vote by the board than the workshops were conducted as meeting of the board and in compliance with the open meeting laws. As for the action of the board to create a Sub association they have to be very careful. While your CC&R’s allow the concept, I doubt that they describe what and how they can do that. Creating new assessments or restrictions or new administration could all be considered to require amendments to the CC&RS approved by the members to do so. While I’m not sure why they believe that a sub association is valuable and in the best interest of the community, but they have to walk a very fine line to stay in compliance with the CC&R’s.
    If I recall correctly your community consist of a gated portion and a separate community of court homes outside of the gated community. This would make some sense but if it adds cost to either group it could be challenged.

    Dennis

    Go to comment
    2023/03/15 at 7:31 am
  • From DPK Kraul on HOA Auditors

    Thank you for your prompt reply.

    Go to comment
    2023/03/13 at 6:06 pm
  • From Dennis Legere on HOA Auditors

    DPK

    The board hires all contractors for the association, but it is most probably done by the community manager as authorized by the board. The community has no right to challenge the accountant or to question the accountant only the board does. What you can do is challenge the board on any question or concern that you may have, and ask that they find out from the accountant to answers to your questions.

    Dennis

    Go to comment
    2023/03/13 at 5:48 pm
  • From Darlene Demarest on HOA Community Income/Expense Financial Statements

    Well they did threaten and it came to going around and getting people to sign a petition of members against it and the HOA meetings were at full capcity, it was unethical to say the least, didn’t even try to approach our reserve issues from a position of working together it made me very disturbed and still does. But now they are trying to keep financial information that used to be in our financial reports from us now an that makes me very nervous as we are at the same point again with our reserve account due to their managment. This is how they think members won’t question their management and remove them.

    I think you have served on the board where you live and are kind of on the defensive which is not what I expected but I understand why it seems I have to explain my position while you explain the boards. Thank you for some points you made I knew but see I will have no choice but to continuously request documents if they don’t change the transparency. If they don’t provide the documents, I will file a complaint with the state and go from there. I already told them this issue is not just going to go away because they hem and haw around hoping I will become discouraged.

    Go to comment
    2023/03/10 at 10:10 pm
    • From Dennis Legere on HOA Community Income/Expense Financial Statements

      Darlene,

      I’m sorry that you believe that I’m not giving you the answers that you want, but I’m not an attorney and have to obligation to tell you what you want to hear. I have committed to inform both homeowners and board members of the truth irrespective of what you want to hear. There have been dozens of court cased on records request as the most litigated aspect of all common interest communities’ statutes and I’ve read every one of those cases. What I relayed to you is the reality relative to reasonable request for records and what courts have rules relative to those cases. If you want record request honored, you need to stay focussed and specific in your request and not give the association a reason to deny your request. You are free to take my advice or not but if you chose not to head my warnings, then you will get what you sow with the association. If you enjoy throwing money away on frivolous litigation then you are free to do that, but you will not only be hurting yourself but also every other homeowner in your community.

      Dennis

      Go to comment
      2023/03/13 at 6:00 pm
  • From Dennis Legere on Requirements of a HOA planned commnity

    DPK,

    You have a lot in this question. Technically the operating account is used to fund the anticipated financial needs of the association and to contribute to the necessary reserves for long term maintenance and capital expenditures. The long-term reserves can be retained in one fund or in several specific funds. If you have a street fund then you would need either one or more funds to deal with the long-term maintenance and upgrade of any other common property in the community. No reserve funds can ever be used to fund annual operating expenses. and no reserve funds can ever be used to fund any other long-term maintenance other than what the fund is designated too. You cannot use road funds to pay for repairs to other common areas.
    If you have a onetime short fall in operating funds, then the board can authorize a supplemental assessment to cover the shortfall. If you end the year with a surplus in the operating account, it must either be returned to the members or used to offset assessments in the following year. All of this is in IRS regulation for these communities.

    Financial records should be retained permanently as should all community documents and board meeting minutes.

    The association is authorized to raise whatever money they need to run the association for a year no more and no less.

    Relative to reserve funding that issue is very complicated but can best be explained in a very simple concept. You need to know what and when long term maintenance will be needed and then make sure that your raised enough money so that maintenance can be done when planned. You want to factor in inflation and interest earned on any money raised in prior years. Just in time funding is all you really need. Professional reserve study companies will draw a lot of grafts and pictures and convoluted reports and talk in terms of % funded all of which is totally meaningless and a total waste of time and money.

    The association has a fiduciary responsibility to the community to preserve and protect the financial assets of the association and to have the discipline not to spend money on stuff that it was not intended to pay for. When an association board has no discipline in its spending habits is breeching its duty to the association and can be held personally liable for those actions. Liability indemnification does not extend to breach of duty by board members.

    Dennis

    Go to comment
    2023/03/10 at 9:39 pm
  • From Darlene Demarest on HOA Community Income/Expense Financial Statements

    I do understand our CC&R’s I wouldn’t questions their actions if i didn’t, but didn’t think it appropriate to disseminate online. CC&r’s are really pretty standard documents developers use to incorporate an HOA when they sell off the community. As far as the specially assessment that was done in nafarious way too, threatened to not fund our bulk cable contract to use the money for Reserve which was nothing more than holding it hostage to get us to agree to the special assessment, but they didn’t state a sunset date which I beleive is 1 year and has to be voted on again, but they call it perpetrul now and say they will threaten our cable again if necessary! I don’t beleive they get several bids for things either, they just find who they want could be a friend or involve kickbacks, but I know I was on the ACC committee and witnessed how they operate. These politician type board members go rouge and derail the HOA.

    Go to comment
    2023/03/10 at 3:58 pm
    • From Dennis Legere on HOA Community Income/Expense Financial Statements

      Board’s can get away with idle threats if homeowners allow them to. There is no legal way for the association to cut off your cable service if you fail to approve a special assessment. Anyone that believes that is simply blind. Just say no and call their total bluff. If they take away one homeowner’s cable service, they could be sued for everything they have and then some.

      Go to comment
      2023/03/10 at 9:48 pm
  • From Darlene Demarest on HOA Community Income/Expense Financial Statements

    I get you represent the Board of the HOA for however they last ( because the HOA is the community the shareholders). Have a good day!

    Go to comment
    2023/03/10 at 3:48 pm
  • From Dennis Legere on HOA Community Income/Expense Financial Statements

    Darlene,
    While the accounting practice is amateurish the real issue is are they transferring reserve account money to the operating account to pay for operating expenses or are they doing this transfer to pay for approved reserve account work like long term maintenance projects outside of the normal operating account.
    If the latter is happening all is good but if they are using reserve account to pay for operating expenses because they overspent their budget than they are violating IRS rules for account separation for these communities. They could be fines and could lose their non-profit corporation status for violating and failing to report income to the IRS for taxation purposes. A simple letter to the IRS could generate an audit of the association for the last three years by the IRS.

    Dennis

    Go to comment
    2023/03/10 at 2:02 pm
  • From Dennis Legere on SB-1049 Betsy Ross Flag

    Tracy;

    This question was actually raised in the Senate committee review of this bill and the conclusion was that the Confederate flag was never and is not now an American flag. The Confederate flag represented a group of states that declared separation from the United States of America.
    Dennis

    Go to comment
    2023/03/04 at 3:04 pm