Agent2Agent in Austin>Question Details

Eric Engberg, Real Estate Pro in Cedar Park, TX

HOA question...

Asked by Eric Engberg, Cedar Park, TX Mon Jun 17, 2013

Fellow agents:
I was unable to answer the following question posed by one of my clients. Does anyone know the answer?

"Is there an annual cap on how much your HOA dues can go up?"

Much obliged,
Eric

Help the community by answering this question:

Answers

7
Hi Eric,

Normally there is no cap on Annual Dues for HOAs. HOAs are usually set up for origination and implementation within the Covenants and Restrictions of the development by the developer of the property. This may or may not be the builder of the product. Initially, the developer will maintain control of the HOA until such time as lot absorption reaches approx. 80-85% of the overall project. At such time the developer will usually create an initial board of directors for the HOA and subsequently turn the HOA over to its members (homeowners). The developer and or its’ representative will maintain a position on the board until such time as 100% of the project home sites are absorbed. They will have a vote for each owned home site so control is key. They will usually then quietly get out of the picture completely once all home sites are sold.

Developers take this position for “control purposes” as it allows them to complete their projects more readily in terms of the desired amenities without any obligation. They can add and/or delete amenities as they see fit according to the absorption rate and return on the project. If the cost of said amenities goes up they have the ability to re-coup those costs by raising the dues or forgoing the amenity completely. This helps to maintain their ROI on the project. Sometimes the amenity is postponed until a certain absorption level is reached. Never say never. Sometimes the developer may implement cost restrictions within the by-laws for the HOA but it is very rare as it restricts their control- the very thing they cherish.

Once turned over, the HOA belongs to the community, its member home owners. However, the by-laws under the CCRs are still in place unless a vote is taken to change them with all members participating. The Board will set the annual rates based on the fiscal budget and desired improvements for the upcoming fiscal year. Again, no major improvements or substantial changes usually, but not always, can be made without a participating vote of its member body. The majority usually rules.

Hope this helps.

Stephen B. McClain, Broker Owner
Cornerstone New Home Solutions
512 876-3116
smcclain@cornerstonenewhomesolutions.com
2 votes Thank Flag Link Mon Jun 17, 2013
The HOAs always can use a hand.

Better question is how well the HOA handles its finances. A good HOA board manages its money well. The records are on file. If the financials are not posted, they are available by request.

HOAs do not enjoy a good reputation, and that's a shame. I live in a Colorado community with a great HOA. The fees have not been raised in 10 years. The HOA is vigilant. Some people don't like that.

There aren't obscure rules. Everyone knows they need to keep the lawn trimmed and the carts stored away out of sight. In my business, I get to see the alternative - no HOA. It ain't pretty.
1 vote Thank Flag Link Mon Jun 17, 2013
Thank you!
Flag Thu Jun 27, 2013
Unless the By-Laws limit the increases, there is no cap. But even if there was a cap, a special assessment could overcome that limitation quite easily, thereby negating any such cap.
1 vote Thank Flag Link Mon Jun 17, 2013
Thank you, Guy!
Flag Thu Jun 27, 2013
Eric, Good question but I do not think any HOA's have a set cap, as maintenance and landscaping expenses, for example can rise year-to-year. You'd have to ask the specific HOA your client is interested in to see how they cap fees, if at all.

Joe Jarusinsky, Realtor/Master Instructor, Keller Williams Realty, Austin's #1 Real Estate Company, Ranked #1 by Buyers and Sellers (JD Power & Assoc. 2012) Call 512-261-4415
1 vote Thank Flag Link Mon Jun 17, 2013
Thank you, Joseph!
Flag Thu Jun 27, 2013
I'm not aware of any cap but I would suggest that your client ask the HOA that he is interested in.

Susie Kay, Realtor®
GRI, CHMS, SFR
Residential/Commercial/Investment
English-Indonesian-Hokkien
------------------------------------------------------------------
United Real Estate
III Lincoln Centre, 5430 LBJ Freeway #280
Dallas, TX 78240
469-371-2899
susie_k@att.net
http://www.dfwdreamhomes.net

Servicing your real estate need is my priority!
1 vote Thank Flag Link Mon Jun 17, 2013
Thank you, Susie!
Flag Thu Jun 27, 2013
It's to see that some Buyer is looking closly at the prospective HOA before buying:
The questions we get here are all about the fee, and never about the financial condition of the HOA, nor about the living conditions an opressive HOA can inflict on the residents.
I would bet that almost every Realtor in America can relate a horror story.
1 vote Thank Flag Link Mon Jun 17, 2013
Gosh Eric - In 32 years I've never seen a cap. But most associations are fairly decent on keeping the fees within a reasonable amount (depending on their amenities or repairs).
1 vote Thank Flag Link Mon Jun 17, 2013
Thank you, Kim!
Flag Thu Jun 27, 2013
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2016 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer