It really is important to attend HOA meetings, in particular the annual meetings

Owners may feel that it is not worth their time to attend HOA meetings. Or to study the documents prior to making a purchase, or even after making a purchase. At BLMH the first meeting I attended after purchasing had two owners in the audience. They were me and my spouse! BLMH has 336 units. Some owners never attend meetings. 

The quantity in attendance at meetings increased in 2007-8 when an resident posted a notice about "special fees for dog owners" and pet owners stormed a HOA meeting. It was "fake news". The attendance also changed when some owners decided the fee increases were "too much" and about 30 began attending the monthly meetings in 2007 to voice their opinions. But 30 is fewer than 10% of the HOA ownership!

Of course, in 2007 it was too late and that is my point and the point of many of the charts I publish here. Participating after the money has been spent or has not been saved is too late to have any meaningful influence about controlling fees. "How could this happen?" is a refrain I've heard but in fact, the numbers don't lie. Owners who argue for lower fees more often than not are merely shifting costs to future owners with the burden of fees required to pay those future costs.  Future boards will also be burned by this.

In 2008 or when about 30 owners decided it really was worth their while to attend monthly meetings the streets had been recently replaced, but some already showed stress. The roofing project was underway with 6 roofs replaced, as I recall. The HOA was committed to a course of action, and boards after 2008 discovered that they were trapped by the financial decisions of the earlier boards and owners. 

The newsletters revealed little detailed information about the 10-year financial plans by the board. Attending meetings wasn't all that helpful either. But by attending it is and was possible to ask specific questions. It is unfortunate, but when angry owners show up, rational discourse goes out the window. IMHO attending the meetings, asking the difficult questions and staying calm and non-confrontational is the best approach. We did ask some of the difficult questions and a few were answered sketchily. When owners become combative that also allows board members to avoid answering the difficult questions. I think some board members goad owners so as to shift the conversation away from the difficult or uncomfortable and to the emotional. When owners begin shouting it is easy to write them off as just an angry mob, isn't it? 

How to avoid this?  

1. Attend meetings regularly and ask pertinent questions. 
2. Do your homework.
3. Keep notes and use them to achieve board accountability.
4. Did you like what the board said on the candidates form? Then after the election ask how he or she will accomplish those promises.
5. Ask about maintenance and capital improvement budgets. 
6. Ask about fee increases over the next 5 years.
7. Does the association have a 5-, 10- and 20-year plan? Can the board articulate it to the owners? Does it do so at annual meetings? Ask questions and ask for charts, etc. to substantiate the answers.
8. Ask about delinquencies and foreclosures. What are the statistics over the last 5 years? How many owners owe more than $100 for more than 60 days? Is the number increasing?

My suggestion to potential and current owners of a HOA is to consider the following:

1. Be aware of the contents of the Declarations, Rules & Bylaws.
2. Do your due diligence and anticipate fee increases if you are considering a HOA purchase.  As an owner you should expect fee increases. Inflation cannot be avoided so the cost of things do increase year to year. 
3. Reserves are an important part of owner fees. They determine long term maintenance and must be considered. Study the reserves and ask the board what things cost. Ask about capital projects. The board should be able to provide details for the immediate 5 years.
4. I'm merely providing BLMH as an example.  What is useful is the fact that the budget situation at BLMH is today the consequence of the planning and decisions that occurred 20 or more years ago. That is true for each and every HOA. For BLMH see the chart for the most recent 18 years of fees.
5. Each HOA is unique. Newly built may experience a grace period but that infrastructure has a finite life and begins wearing out on day one. Even newly built HOAs need to consider a reserve study and then begin accumulating funds for those long term capital maintenance expenditures. 
6. Failure to consider the reserve requirements will negatively impact future fees. It could lead to special assessments. 
7. Even with good planning special assessments may occur. For example, in a high-rise condominium there may be a boiler. These can cost millions to replace. The actual life may be difficult to determine or to plan for. So how should boards deal with this? Be aware that there are choices. Should a portion be saved each year anticipating a failure date 25 or more years in the future? If so, how much? 
8. Owners may be inclined to gamble. After all, as a homeowner one might say "I'll paint the pig and flip my uit before the roof needs replacing or the refrigerator or hot water heater fails" and so on. HOA boards are comprised of owners. HOAs have boards which are required to maintain the common elements. That is in all owner's best interests and is required by statute in Illinois. However, boards are comprised of owners and they may have difficulty operating as a fiduciary. Some may operate from a personal agenda. Furthermore owners may manipulate boards because boards are elected from the ranks of owners. A board member once put it this way "But, these are my friends." 
9. The situation at each and every HOA is a combination of past events, the current situation, owner desires and board decisions. The current situation will determine your fees in the future as will any unforeseen events. We can't deal with the unknowable, but we should educate ourselves, plan and prepare. 
10. In some HOAs the preceding is far more the responsibility of owners than they are willing to admit. 
11. In some HOAs some of the owners are very irresponsible about financial matters. 

Note: In Illinois, the statute for HOAs is the Illinois Condominium Act. This is revised from time to time by the legislature. Check your state's statutes. 

Click to go to: http://www.ilga.gov/legislation/ilcs/ilcs3.asp

Not responsible for any errors or omissions. (c) N. Retzke 2018 All Rights Reserved.