THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Saturday, March 18, 1995 TAG: 9503160285
SECTION: REAL ESTATE WEEKLY PAGE: 02 EDITION: FINAL
COLUMN: COMMON GROUND
SOURCE: G. ROBERT KIRKLAND and MICHAEL INMAN
LENGTH: Medium: 69 lines
Q. I live in a homeowners association that was established 20 years ago. I am concerned about three issues.
First, how are dues determined? Second, can renters serve on the board of directors? And, third, can a husband and wife both serve on the board at the same time?
A. Consult your association documents. Because of the variation in rules among associations, it is impossible to answer correctly for each situation. However, since you sent us a copy of your documents, we can respond.
When reviewing different condominium documents, you will rarely find any that give direction or have any restrictions on the board of directors in determining the assessment. The board simply computes what money is needed to operate the association and apportions it over 12 months and the number of units.
This is usually done by looking at the prior year's expenses and projecting any unusual expenses in the coming year. In homeowner associations, we often find that older documents will restrict increases based on either a flat percentage or computed from the Consumer Price Index from a given base year.
Your documents call for using the All City Average. This means that it is based on several categories of increase within the CPI, which have been combined in recent years by the U.S. government into the All Urban Index. This is used to compute the change in inflation and the possible increase in your dues.
All increases in the assessments after the first year are determined by the cumulative increase in the CPI since the base year. As an example, if the CPI had increased 150 percent since the base year, then your current dues could be 150 percent higher than the original dues. Any increase beyond the amount allowed would require the approval of the owners as well as the board of directors.
This sounds complicated but it is really nothing more than basic math. In addition, the board does have the authority to levy special assessments based on state law to take care of any unanticipated expenses.
As to your second question, some associations may allow non-owners to serve on the board but most require that the directors own property within the association. If this is the case, and it is the rule in your association, a renter may not serve on the board and any action taken while such an individual is serving and voting may be invalid.
Third, there are no restrictions on members of the same family serving on the board at the same time as long as both have an ownership interest in the property in the association. We have seen cases where either a husband or wife held sole title to the property and the other spouse was disqualified from serving on the board.
Your questions show how important it is to read your association documents. It is particularly important that every member of the board of directors read and understand the documents. Mistakes in settling assessments, electing directors or in making rules can have disastrous results. MEMO: G. Robert Kirkland, president of a Virginia Beach property management
consulting firm, and attorney Michael A. Inman specialize in Virginia
community association issues and are affiliated with the Southeastern
Virginia chapter of the Community Associations Institute. Send comments
and questions to them at Real Estate Weekly, 150 W. Brambleton Ave.,
Norfolk, Va. 23510. To submit questions by phone, call 446-2033; fax:
446-2531.
by CNB