Managing Rising HOA Costs: A Guide for Board Members in North Carolina

Managing rising costs is one of the biggest challenges facing HOA board members today. From increasing vendor expenses to higher insurance premiums, communities throughout North Carolina and the Carolinas are feeling the pressure. For many boards, the challenge isn’t just balancing the budget—it’s doing so while maintaining homeowner trust and satisfaction.

So how can HOA boards manage rising costs without upsetting homeowners?

Understanding the Reality: Costs Are Rising Everywhere

Rising costs aren’t unique to your community—they’re impacting homeowner associations nationwide.

Inflation, labor shortages, supply chain challenges, and increased service demands are all contributing to higher expenses. Vendors are adjusting pricing, insurance premiums continue to climb, and routine maintenance costs are higher than they were just a few years ago.

For HOA boards, this creates pressure from both sides:

• Financial obligations are increasing

• Homeowner expectations remain high

That tension is where strong, proactive leadership becomes essential.

The Risk of Avoiding Necessary Increases

It may feel easier in the short term to delay raising assessments or work within an unchanged budget. However, postponing necessary adjustments often leads to more significant challenges over time.

These can include:

• Deferred maintenance that results in more costly repairs

• Underfunded reserves that increase the likelihood of special assessments

• Declining service quality that impacts homeowner satisfaction

• Strain on the long-term financial stability of the association

In many cases, small, well-planned increases are far less disruptive than sudden, larger financial corrections.

Communication Builds Trust

One of the most common sources of homeowner frustration isn’t the increase itself—it’s the lack of clear communication around it.

HOA boards that communicate early and consistently often experience less resistance and greater understanding from homeowners.

This includes:

• Explaining why costs are increasing

• Outlining which expenses are impacted

• Sharing how financial decisions are made

• Reinforcing the board’s responsibility to protect the long-term financial health of the community

Transparency helps reduce confusion, minimize pushback, and build trust across the community.

Focus on Value and Accountability

Homeowners want to feel confident that their assessments are being used responsibly.

Shifting the conversation from “cost increases” to “value and accountability” can make a meaningful difference.

This can include:

• Reviewing vendor options to help identify competitive pricing

• Prioritizing projects based on necessity and long-term impact

• Maintaining common areas to support property values

• Investing in preventive maintenance to help reduce the likelihood of larger expenses later

When boards take a proactive, organized, and financially responsible approach, communities often experience fewer surprises and stronger homeowner confidence.

The Importance of Long-Term Financial Planning

Rising costs are much easier to manage when they’re anticipated—not reacted to.

Tools such as reserve studies, multi-year budgeting, and regular financial reviews support boards in:

• Planning for future expenses

• Reducing the likelihood of special assessments

• Spreading costs more evenly over time

• Making informed, data-driven decisions

This type of planning helps create stability and predictability for both the board and homeowners.

How AMG Supports HOA Boards

At Association Management Group (AMG), we understand that managing rising costs requires both structure and clear communication.

We support HOA boards throughout North Carolina and the Carolinas by helping organize and streamline key processes, including:

• Providing detailed financial reports and supporting the board through the budget preparation process

• Coordinating reserve studies and long-term planning efforts

• Assisting the board in reviewing vendor contracts and comparing options to identify potential cost savings

• Supporting consistent and transparent communication with homeowners

• Helping ensure board decisions are well-documented and aligned with industry best practices

Our role is to support—not replace—the board’s authority, providing the tools and organization needed to make informed decisions with confidence.

Finding the Right Balance

There’s no perfect way to implement cost increases without concern—but there is a more effective approach.

It comes down to three key principles:

• Be proactive, not reactive

• Communicate clearly and consistently

• Focus on long-term financial stability

Boards that follow these principles are better positioned to navigate financial challenges while maintaining homeowner trust.

The Bottom Line

Managing rising HOA costs isn’t just about numbers—it’s about leadership, communication, and planning.

Homeowners may not always welcome increases, but they are more likely to support decisions when they understand the reasoning behind them and see that their board is acting responsibly.

With the right structure and support, boards can approach these challenges with greater clarity and confidence.

Ready for Support?

Looking for support in managing your community’s budget and planning for the future?

Association Management Group (AMG) partners with HOA boards across North Carolina and the Carolinas to simplify financial planning, improve communication, and support long-term success.

Visit www.amgworld.com to learn more about how we can support your community.

Are Your HOA Fees Hiding a Tax Break?

Most homeowners cannot deduct HOA fees on their taxes if the property is their primary residence. However, deductions may be possible if the home is used for business purposes—such as a dedicated home office for self-employed individuals—or if the property is rented out, where HOA dues can be treated as a rental expense. In cases where only part of the home is used for business or rental purposes, the deduction must be prorated based on square footage or time rented. Additionally, special HOA assessments for repairs may be deductible, while those used for improvements may increase the home’s cost basis and potentially reduce capital gains taxes when the property is sold.

Read More: Realtor.com

Short-Term vs. Long-Term Budget Planning: A Roadmap for Financially Healthy Communities

A few years ago, a volunteer board proudly shared photos of their newly renovated clubhouse. Fresh paint. Updated lighting. A beautiful space for residents to gather.

Six months later, they discovered their roofs were nearing the end of their useful life—without adequate reserves to replace them.

What went wrong?

They had a strong short-term budget. What they lacked was a long-term financial strategy.

For community associations, financial health depends on balancing both.

Whether you’re a board member trying to protect property values, a homeowner concerned about rising dues, or a developer establishing a new community, understanding how short-term and long-term budgets work together is essential

The Short-Term Budget: Your Annual Operating Plan

The short-term budget—typically annual—is what keeps the lights on and the grass cut.

It covers:

• Landscaping and routine maintenance

• Utilities

• Insurance premiums

• Management fees

• Administrative costs

• Minor repairs

This is where many boards focus most of their energy. And understandably so. Homeowners feel the impact of this budget immediately through their assessments.

But strong annual budgeting isn’t just about controlling costs—it’s about thoughtful forecasting.

Best Practices for Short-Term Budgeting

Review historical data carefully. Compare projected expenses to actual spending from prior years. Patterns matter.

Plan for inflation and vendor increases. Contracts rarely stay flat year over year.

Build in contingencies. Unexpected repairs are inevitable.

Prioritize transparent communication. Clear financial reporting builds trust, especially if assessments need to increase.

Boards often face pressure to “keep dues low.” But artificially low dues can quietly undermine long-term stability. In our experience working with Carolina communities, thoughtful budget optimization paired with transparent financial reporting reduces friction and builds homeowner confidence.

A strong management partner supports this process with vendor oversight and accountability—helping ensure communities receive value for every dollar spent.

The Long-Term Budget: Planning Beyond This Year

If the annual budget handles daily operations, the long-term budget protects the community’s future.

This is your reserve funding strategy.

Reserve funds prepare your association for major capital repairs and replacements, including:

• Roof replacements

• Road resurfacing

• Pool renovations

• Elevator modernization

• Structural repairs

These projects are not surprises. They are predictable events with measurable life cycles.

The challenge is timing and funding.

Why Reserve Studies Matter

A professional reserve study evaluates common area components, estimates remaining useful life, and recommends funding levels.

Reserve planning requirements vary significantly by state law and governing documents, so boards should always consult qualified professionals and legal counsel when needed. Organizations like the Community Associations Institute (CAI) provide valuable educational resources for board members seeking best practices.

Without accurate reserve planning, associations often face:

• Special assessments

• Deferred maintenance

• Declining property values

• Increased homeowner frustration

We’ve seen communities that delayed contributions for years to avoid raising dues. When a major project finally arrived, the financial impact was severe. The result wasn’t just higher costs—it was lost trust.

Proactive maintenance planning and properly funded reserves protect both property values and community harmony.

Bridging the Gap: Short-Term and Long-Term Working Together

One common mistake boards make is treating operating budgets and reserve planning as separate conversations.

They’re not.

Maintenance decisions today affect capital expenses tomorrow. Choosing lower-cost repairs without long-term planning can accelerate deterioration.

Strong communities use multi-year forecasting to connect:

• Operating expenses

• Reserve contributions

• Vendor contracts

• Inflation trends

• Insurance adjustments

Insurance and risk coordination deserve special attention. Premiums across the country have fluctuated dramatically in recent years. Working with qualified insurance professionals and building those projections into both annual and long-term plans is critical.

And it’s important to clarify: while associations manage common areas, safety and criminal matters belong with law enforcement. HOAs and management companies cannot guarantee security. Budgeting should support responsible risk mitigation—not unrealistic promises.

The Human Side of Budget Planning

Behind every spreadsheet is a person.

The board treasurer who loses sleep over balancing numbers.

The homeowner on a fixed income worried about assessment increases.

The real estate agent reviewing reserve funding before advising a buyer.

Financial planning is not just about math—it’s about communication and leadership.

Board training and education make a measurable difference. When leaders understand reserve studies, funding models, and forecasting tools, decisions become less reactive and more strategic.

A dedicated board liaison and consistent manager longevity also matter. Communities benefit when experienced professionals guide conversations year after year, rather than restarting the learning curve with constant turnover.

Special Considerations for New Developments

Developers and newly transitioned communities face unique challenges.

Initial budgets are sometimes set artificially low to attract buyers. While understandable from a marketing perspective, this approach can create long-term instability once the association transitions to homeowner control.

A seamless transition process includes:

• Realistic operating projections

• Early reserve planning

• Clear documentation

• Education for incoming board members

Establishing financial discipline from day one prevents painful corrections later.

Financial Planning Is Community Planning

Healthy associations don’t happen by accident.

They happen when boards take a balanced approach—meeting today’s needs while preparing for tomorrow’s responsibilities.

Short-term budgeting keeps operations running smoothly.

Long-term planning protects property values and prevents financial shocks.

Communities that embrace proactive maintenance planning, transparent financial reporting, and consistent professional guidance position themselves for stability—not surprises.

Because at the end of the day, budgeting isn’t just about dollars.

It’s about protecting the place people call home.

About the Author

Paul Mengert is President and CEO of Association Management Group (AMG), a community association management firm serving communities throughout the Carolinas. With more than four decades of experience, Paul has worked alongside volunteer boards, developers, and homeowners to strengthen financial stability, operational performance, and long-term planning.

Under his leadership, AMG has built a reputation for responsiveness, manager longevity, and customized HOA and condo solutions tailored to each community’s needs. The firm emphasizes CAI-accredited management practices, dedicated board support, proactive maintenance planning, and transparent financial reporting designed to protect property values and reduce financial surprises.

Paul believes strong communities are built on collaboration, education, and responsible financial stewardship—principles that continue to guide AMG’s work with associations across the region.

To learn more, visit amgworld.com.

Reserve Studies, Long-Term Funding & Assessment Strategies

Common Area & Infrastructure Maintenance in North & South Carolina

Florida Condo Buyers Get the Full Financial Picture

New Florida condo law provisions effective January 1 require associations to increase transparency by posting financial records, structural reports, and key documents online, giving buyers clearer insight into a building’s health. The changes aim to restore confidence in Florida’s struggling condo market, which has declined following surprise assessments and safety reforms enacted after the 2021 Surfside collapse. Buyers and investors now have better tools to identify financial or structural risks early, reducing the likelihood of unexpected costs. The law also extends the buyer cancellation period from three to seven days, encouraging more thorough due diligence before purchase.

Read More

The Annual HOA/Condo Budget: A Step-by-Step Playbook for Board Success

For community association boards, the annual budget is more than numbers on a spreadsheet—it’s the financial roadmap for the year ahead. A well-built budget protects property values, funds necessary services, and helps avoid surprises that frustrate homeowners.

Here’s a simple, step-by-step process any board can follow to build a strong, transparent budget—with a few real-world lessons along the way.

Step 1: Set the Timeline Early

• Start 90–120 days before the fiscal year begins.

• Confirm adoption and notice requirements in your governing documents and state law.

• Schedule budget workshops and the adoption meeting now to avoid last-minute stress.

Why it matters: Clear timelines prevent compliance headaches and rushed decisions.

Step 2: Gather Your Inputs

Pull financial and operational data: prior-year actuals, reserve statements, contracts, insurance policies, utility histories, and your reserve study.

Step 3: Review Year-to-Date Performance

Look at where spending is over or under budget, why variances occurred, and whether certain costs are one-time or recurring. Trend three years back if possible—it helps boards avoid chasing anomalies.

Step 4: Update Contracts and Fixed Costs

Ask vendors for updated bids or confirmations, check utility rate outlooks, and request early insurance renewal information where possible.

Pro tip: Don’t automatically renew a contract that isn’t serving the community well. This is where vendor oversight and accountability matter.

Step 5: Recalibrate Reserve Funding

Reserve studies help boards plan for long-term repairs like roofing, paving, and pool equipment. Use them to determine how much should be contributed annually. Avoid the temptation to underfund reserves to keep assessments flat.

Real-World Example: The “No Increase” Board

At Pine Ridge Townhomes, the board proudly kept dues flat for five years. Homeowners cheered at every annual meeting—until the pool pump failed and roofs leaked in the same summer. Reserves were depleted, and the board had no choice but to levy a $1,200 special assessment. Owners were furious. The following year, the board tied reserve funding to their reserve study and raised dues modestly. It wasn’t celebrated, but over time, trust returned as projects were completed without special assessments.

Lesson Learned (Homeowner voice): “I’d rather pay a little more each month than get hit with a huge special assessment I can’t afford.”

Step 6: Plan for the Unexpected

Add a contingency line item for emergencies, storm cleanup, legal fees, or unexpected spikes. This is separate from reserves and helps keep operations stable.

Step 7: Prioritize Maintenance Proactively

Rank projects by urgency: safety, asset protection, and community impact. Fund preventive care so you spend less on emergencies. Align maintenance plans with your reserve study.

Step 8: Build the Draft Budget

Start with last year’s numbers, update with current contracts and reserve contributions, add contingency, and document your assumptions for each line.

Real-World Example: The Forward-Thinking Developer Transition

When Summerfield Condos transitioned to homeowner control, the new board was shocked: “We’re responsible for a multi-million-dollar building?” The developer’s budget covered only cleaning and utilities—no reserves. Owners pushed back hard when dues jumped 12%. Twenty years later, when the roof was replaced without a special assessment, the skeptics admitted, “I didn’t like it at the time—but now I get it.”

Lesson Learned (Homeowner voice): “That first increase stung, but now I see it was about protecting all of us long-term.”

Step 9: Model Assessment Scenarios

Prepare 2–3 versions showing the impact of different funding levels. Make it clear how each scenario affects reserves, maintenance, and assessments. Transparency builds trust.

Step 10: Workshop It—Then Decide

Hold an open meeting, present the draft, answer questions, and then adopt the budget per your documents. Document the decision in the minutes.

Real-World Example: The Communicator vs. the Calculator

At Willow Creek HOA, the treasurer’s detailed spreadsheets left homeowners confused and restless. The secretary suggested a one-page summary with pie charts and simple explanations. The next meeting felt completely different—owners nodded instead of frowning. “This is the first time I’ve understood where my money’s going,” one said. The numbers didn’t change, but the communication did.

Lesson Learned (Homeowner voice): “When the board explains things in plain language, it feels less like numbers on a page and more like a plan we’re all part of.”

Pro Tip: Instead of saying, “The water bill is $250,000 per year,” explain, “Of your monthly fee, about $25 goes to water.” Add a “Per-Unit, Per-Month” column for all line items to make each costs more relatable.

Step 11: Notify Owners and Implement

Send notices within the required timeframe, update payment systems, and brief vendors on approved scopes and timelines.

Step 12: Monitor Monthly and Adjust Early

Review financials monthly, track reserve transfers, and schedule a mid-year check-in to ensure the budget is still on track.

A Note on Investing Association Funds

Some boards ask about investing association funds beyond a standard checking account. AMG is not an investment advisor, nor do we give investment guidance. It is always the association’s responsibility to instruct AMG on whether and how funds should be invested, but we are certainly here to help administratively and act on your decisions.

Most governing documents and best practices do not allow for aggressive investments. However, there are federally insured options boards may consider, such as money market accounts and certificates of deposit (CDs) with varying terms. AMG does not require you to use any particular bank, other than to receive your monthly assessments.

Final Takeaway

A well-planned budget protects the community today and prepares it for tomorrow. Homeowners want stability, boards want predictability, and everyone wants to avoid unpleasant surprises. With a step-by-step process, transparent communication, and proper reserve funding, annual budgeting becomes less about crunching numbers and more about building trust.

For over 40 years, AMG has supported Carolina communities with transparent financial reporting, board training, proactive maintenance planning, and proven results. Your board leads the way—we provide the tools, expertise, and support to make the process smoother.

For a printable version that includes a checklist visit our Board Member Resources Page or Click Here.

North Carolina Closing Costs: Big Savings on Home Sales

Buying or selling a home is one of the biggest financial transactions most people make, and closing costs add important expenses to the process. In North Carolina, closing costs are relatively low compared to many states, averaging about 0.56% of the sale price — around $2,214 on a median-priced $395,400 home. Both buyers and sellers share these costs, with buyers typically paying for items like loan origination fees, title insurance, and inspections, while sellers usually cover real estate commissions, excise taxes, and prorated property taxes. Many of these costs are negotiable, and programs like the NC Home Advantage Mortgage can help first-time buyers reduce expenses, making it essential to work with a knowledgeable local real estate agent.

Read More: Bankrate

HOA fees are becoming more common — and costly

More homes for sale in 2024 came with homeowners association (HOA) fees, and those dues increased from 2023, according to a Realtor.com report. HOA fees, which cover maintenance and amenities, can be a financial hurdle for buyers in an already expensive market. Nationwide, 40.5% of homes listed had HOA dues, with the median monthly fee rising from $110 to $125. Experts advise buyers to check an HOA’s reserve funds to avoid unexpected fee hikes, and those looking to avoid HOA fees may have better luck in Charleston, South Carolina.

Source: Axios

Pickleball Court Costs & HOA Considerations: What Association Leaders Need to Know

By Paul Mengert, CEO of Association Management Group

Thinking of adding a pickleball court to your HOA? Learn about costs, legal considerations, and community impact in this guide for association leaders.

Introduction: The Growing Demand for Pickleball in HOAs

Pickleball is one of the fastest-growing sports in the U.S., and many homeowners’ associations (HOAs) are being asked whether to add courts to their communities. While new amenities can enhance property values and resident engagement, they also require careful financial planning, legal review, and member support analysis.

As the CEO of Association Management Group (AMG)—one of the Carolinas’ leading community association management firms—I frequently advise HOA boards on new amenity projects, including pickleball court construction. This blog provides a general cost breakdown, discusses court construction challenges, and highlights legal and financial considerations for association leaders.

Important Note: Pickleball court costs vary widely by location, surface material, and site conditions. This guide is intended as a starting point—HOA boards should consult legal, financial, and real estate experts before proceeding.

How Much Does It Cost to Build a Pickleball Court?

The cost of constructing a dedicated pickleball court ranges from $35,000 to $80,000. Several factors impact the final price:

1. Court Size & Layout

- Standard court (30' x 60'): $35,000–$50,000

- Larger court (34' x 64'): $40,000–$80,000

- Multi-court complexes save on per-court costs due to shared site preparation.

2. Surface Materials

- Post-Tension Concrete (Best Option) → $20,000+

- Rebar-Reinforced Concrete (Good Option) → $15,000+

- Asphalt (Budget Option) → $10,000+, but higher maintenance costs

- Acrylic Surfacing (Required for Playability) → $5,000–$15,000

3. Fencing & Lighting

- Chain-link fencing (4ft high) → $35 per linear foot

- Vinyl-coated fencing (10ft high) → $125 per linear foot

- Basic LED lighting → $2,500

- Tournament-quality lighting → $12,500

4. Site Preparation & Drainage

- Flat land → Lower costs

- Hilly terrain or poor soil → Adds $10,000+ in grading and drainage solutions

Converting a Tennis Court into Pickleball Courts

A cost-effective alternative is converting an existing tennis court into pickleball courts.

Multi-Use Court Benefits

- A single tennis court (78’ x 36’) can accommodate up to four pickleball courts.

- Dual-use lines allow tennis and pickleball play on the same surface.

- Portable pickleball nets enable easy switching between sports.

**Conversion Cost Estimate:**

- Painting pickleball lines → $1,000–$3,000

- Adjustable net systems → $150–$500 per court

- Total cost: Much lower than building a new court from scratch

Challenges & Considerations for HOA Pickleball Courts

1. Noise Concerns

Pickleball courts generate more noise than tennis due to the hard paddle-and-ball impact. This has led to complaints in some communities.

Mitigation Strategies:

- Locate courts away from homes

- Install noise-reducing barriers

- Restrict play hours

2. Legal & Liability Issues

HOA boards must review governing documents to ensure they can add a pickleball court without violating existing rules.

Consult legal counsel to determine:

- Whether a membership vote is required

- If insurance policies need coverage adjustments

- Any zoning restrictions that apply

3. Impact on Property Values

While amenities generally increase property values, a poorly planned court could do the opposite.

Best Practices:

- Consult real estate professionals for property value impact analysis.

- Survey homeowners to ensure broad support.

- Plan for long-term maintenance costs.

Assessing Community Support for Pickleball Courts

A common challenge HOA leaders face is vocal minority influence—a small but passionate group may push for a pickleball court, while the majority may not actually want or use it.

How to Gauge True Community Interest:

✔ Conduct surveys to measure overall resident support.

✔ Hold town hall meetings to discuss the pros, cons, and costs.

✔ Weigh input from real estate professionals, appraisers, and financial advisors.

Final Thoughts: Proceeding with Expert Guidance

Adding a pickleball court can be a valuable investment for a community, enhancing recreation, social engagement, and property appeal. However, it’s critical to:

✔ Consult an attorney for legal compliance.

✔ Engage real estate and valuation experts to assess impact on property values.

✔ Survey homeowners to ensure broad support for the investment.

✔ Plan for long-term maintenance and costs to protect the association’s financial health.

By taking a thoughtful, well-researched approach, community associations can make informed decisions that best serve their members both now and in the future.

For more insights on association management, amenities, and budgeting, visit www.AMGworld.com.

HOA, condo association group weighs in on foreclosures over unpaid assessments, fines

Recent headlines have highlighted controversial HOA and condo association foreclosures, prompting legislative action in several states to impose stricter foreclosure procedures. In response, the Community Association Institute (CAI) updated its foreclosure policy, emphasizing fairness, reasonable payment plans, and foreclosure as a last resort. The policy ensures homeowners have opportunities to resolve delinquencies while preserving associations' ability to collect dues and secure financing. These changes aim to balance homeowner protections with the financial stability of community associations.

Source: MSN

Florida condo owners face hefty fees under new structural reserve laws

A new Florida law requires condo associations to maintain reserve funds for structural repairs, leading to hefty assessment fees for residents, including a $21 million charge at 1060 Brickell. Some owners argue the repairs are not urgent, but the law was enacted after the Champlain Towers collapse to prioritize safety. A hearing is set for January 24 as residents seek to delay or reduce costs, while concerns grow over affordability and the financial strain on homeowners.

Source: CBSNews

The Importance of Reserve Studies for HOA Management: Lessons from Surfside Beach

As an HOA management company executive, I urge all community leaders to prioritize long-term maintenance and the proactive identification of structural needs within their properties. Recent events have highlighted the critical importance of regular inspections and reserve studies in safeguarding our communities. The closure of the Sandfiddler condo building in Surfside Beach due to severe structural deficiencies underscores this necessity.

On July 1, Surfside Beach officials deemed the Sandfiddler at 813 S. Ocean Blvd. unsafe after identifying "inadequate means of egress and structural deficiencies." Fire Marshal Keith Williams, the town building inspector, and an outside engineer concluded that the building posed a fire hazard and was otherwise dangerous to human life or public welfare. This decision came after the fire marshal first noticed problems during a routine inspection, leading to a thorough assessment that revealed significant issues with the front walkway posts, railings, and balconies.

This incident is not isolated. Similar closures have occurred along the Grand Strand, including the Kingfisher Inn and the Renaissance Tower, both of which faced structural problems that necessitated evacuations. These events serve as stark reminders of the vulnerability of coastal buildings to structural decay, particularly from the corrosive effects of the sea and salty oceanfront climate.

A comprehensive 2023 investigation by Florida newspaper, The Post and Courier, revealed that many aging coastal high-rises are at risk of structural decay. The study identified over 500 tall structures near the coast, vulnerable to storm surge flooding during hurricanes, with about 230 of these buildings being at least 30 years old. The slow-motion destruction caused by saltwater corrosion is a hidden threat to buildings along the East Coast, from Maryland to Florida. The tragic collapse of the Champlain Towers near Miami in 2021, which killed 98 people, highlighted the long-overlooked risk posed by saltwater to these coastal structures.

Given these alarming trends, it is imperative for HOA and condominium community leaders to adopt proactive measures to ensure the safety and longevity of their buildings. One of the most effective ways to do this is through regular reserve studies.

What is a Reserve Study?

A reserve study is a comprehensive analysis of a community’s physical assets and their expected lifespan. It assesses the condition of key components such as roofs, plumbing, electrical systems, and structural elements, estimating the remaining useful life of each. The study then provides a funding plan to ensure that sufficient reserves are set aside to cover future repairs and replacements.

Why Reserve Studies are Crucial

1. Preventing Catastrophic Failures: Regular reserve studies help identify potential issues before they become critical. In the case of the Sandfiddler, a proactive reserve study might have detected the structural deficiencies earlier, allowing for timely repairs and avoiding the need for an abrupt closure.

2. Financial Planning: Reserve studies provide a roadmap for financial planning, ensuring that funds are available when major repairs or replacements are needed. This prevents the sudden imposition of special assessments on homeowners, which can be financially burdensome.

3. Maintaining Property Values: Well-maintained properties retain their value better than those that are neglected. By ensuring that buildings are kept in good condition through regular reserve studies and subsequent maintenance, community leaders can protect and enhance property values.

4. Legal Compliance: In some states and governing documents, including those with high coastal populations, there are legal requirements for reserve studies. Adhering to these regulations not only ensures compliance but also enhances the safety and well-being of residents.

5. Enhancing Safety: The primary goal of reserve studies is to ensure the safety of residents. By identifying and addressing potential hazards, community leaders can prevent accidents and tragedies, fostering a secure living environment.

Implementing Regular Reserve Studies

To implement regular reserve studies, community leaders should:

1. Schedule Regular Inspections: Conduct inspections at least every three to five years, or more frequently for older buildings. Engage qualified professionals to carry out these inspections comprehensively.

2. Review and Update Reserve Studies: Ensure that reserve studies are updated regularly to reflect the current condition of the building and any changes in the estimated lifespan of key components.

3. Establish a Reserve Fund: Create a dedicated reserve fund based on the recommendations of the reserve study. Ensure that adequate contributions are made to this fund annually to cover future maintenance needs.

4. Communicate with Homeowners: Keep homeowners informed about the findings of reserve studies and the importance of maintaining adequate reserves. Transparency helps build trust and support for necessary assessments.

5. Act on Recommendations: Promptly address any issues identified in reserve studies. Delaying repairs can exacerbate problems and increase costs in the long run.

In conclusion, the closure of the Sandfiddler and other similar incidents serve as powerful reminders of the importance of proactive maintenance and reserve studies. As community leaders, it is our responsibility to ensure the safety, financial stability, and long-term viability of our properties. By prioritizing regular reserve studies and acting on their findings, we can prevent catastrophic failures, maintain property values, and, most importantly, protect the lives of our residents. Let's commit to making proactive maintenance a cornerstone of our management practices, ensuring the well-being of our communities for generations to come.

Paul K. Mengert, CEO

Association Management Group, Inc.

Budget Ratification: Understanding the Ghost of Budgets PAST When Preparing for the Future

Annually, community associations tackle the responsibility of crafting a budget for the upcoming year, mandated by the North Carolina Planned Community Act and the North Carolina Condominium Act. Boards of Directors are required to formulate, adopt, and present the proposed annual budget to the membership for ratification. This article outlines the distinctions between community associations and a step-by-step process for budget ratification.

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FLORIDA’S ONGOING PROPERTY INSURANCE CRISIS LEADING TO SPIKES IN HOA FEES

Residents of Baldwin Park, Florida, are voicing concern over a substantial increase in property insurance costs within their HOA, which have tripled from $109 to over $400 per month. Taken aback by the sudden changes, one resident highlights the significant financial impact, noting she is now paying close to $6,000 for townhome insurance alone. What are your thoughts on the rise of property-related costs? Click the link below to read the whole story.

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Are High HOA Fees Scaring Homeowners Away?

To answer the question: Are HOAs worth it? The staff at Todays Homeowner researched geographical trends in the U.S for cost, home value, and popularity by state. Do you believe homeowners association are necessary?

Read more

NC Bill to Restrict HOA/Condo Collections Would Harm Associations & Owners

NC Bill to Restrict HOA/Condo Collections Would Harm Associations & Owners

Posted on April 26, 2023 by Jim Slaughter

https://blog.lawfirmcarolinas.com/bill-to-restrict-hoa-condo-collections-would-harm-associations-homeowners/

As described in my recent NC Community Association Legislative Update, one bill moving through the NC General Assembly is HB 542 “Protect Homeowners’ Rights.” In addition to placing further requirements on associations as to the collection of past due assessments, the proposal would prohibit the filing of a lien against an owner who fails to pay obligatory association assessments unless the amount is $2,500 “or one year of unit owners’ association assessments, whichever is lesser.”

The bill’s attempts to add protections to owners not paying obligatory dues may be well intentioned, but such a dollar cap before a lien can be filed will almost certainly harm all other owners in the association. The association’s expenses do not stop, even if assessments can’t be obtained from certain owners.

NOTE: This is not a bill to prevent foreclosure unless the owner owes $2,500 or one year of assessments–it prevents all even the filing of a lien on the non-paying owner’s property.

While a $2,500 or one-year minimum threshold before assessments can be collected might seem reasonable and charitable to owners, it would almost certainly harm associations and other owners due to the following:

1. Given varying costs of living, assessments tend to be lower in North Carolina than in bigger, more expensive states or northern cities. We have associations with few amenities and limited common area or possibly just insurance on common elements or an entrance sign to maintain. It would take YEARS for owners to accrue $2,500 in assessments. North Carolina is not a super lien state (many states have a provision that if a mortgage is foreclosed, the bank must pay the association so many months of assessments). As a result, in North Carolina the lot could be sold or the property foreclosed upon long before the association could go after the funds.

2. To not even be able to file a lien will mean that owner’s assessments will likely be lost. The property will get sold free and clear or a mortgage will foreclose and all assessments will be lost (as happens in states without a super lien statute). The sometimes-suggested alternative of bringing an actual lawsuit in the courts costing many thousands of dollars and at least a year in litigation to recover $1,000 in assessments is impractical.

3. From a fairness standpoint, putting in such a cap basically means that more affluent associations can go after owners, but less affluent associations will have a deficit. As an example, a downtown condominium that charges $2,500 monthly assessments would reach the limit immediately. On the other hand, we have associations where it would take five years to reach the threshold and would have to get more money from existing owners. The legislators introducing the bill may think it is pro-homeowner, but it is only pro-nonpaying homeowner, as it will certainly be negative for the 95% of owners who are paying timely and must pay more.

4. Dues are not less significant to smaller, less affluent associations. An association is a zero-sum game. There is no means of making up lost funds other than paying owners paying more, which may not be practical. Since the assessments may pay for items such as electricity or insurance on the common elements, those services will get cancelled.

5. Both the obligation for the assessments and the right to lien and foreclose are part of the contract that every owner agreed to when buying into the community.

6. At the end of the day, a lien for nonpayment of property assessments is much like other real estate liens, including materialman’s or mechanic’s liens. We don’t have state laws that prohibit a plumber or contractor from going after an owner for non-payment of work on the property unless it reaches a certain dollar amount. Associations should not be treated differently.

7. If you put a cap, such as $2,500, below which you cannot effectively pursue collections, won’t owners go into arrears just less than that? There would be nothing to do as to the owners who keep their balance at $2,499, but that expected money which is part of the budget will be lost to the association.

8. I’m don’t practice constitutional law, but the proposal as worded when applied to existing associations (versus future ones) seems to run afoul of the Contracts Clause  of the US Constitution (“No state shall pass any Law impairing the obligation of contracts.”). Here, the State would be interfering with the existing contract of the declaration. Rather than protecting private contract rights, this proposal would void them.

HB 542 may be well intended but would have very negative unintended consequences. An overwhelming number of NC community associations have low assessments. To those owners, though, it is significant money, and they should not be forced to pick up the deficit from other owners who fail or refuse to abide by their contractual obligations.

The bill and its current status can be found at https://www.ncleg.gov/BillLookUp/2023/H542.

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Know Your Real Estate Terms. What is an HOA Fee or Assessment?

Definition time! Today’s lexicon is “HOA Fee.”

HOA Fee stands for Homeowners Association Fee and it’s an obligatory monthly fee paid by homeowners in certain types of residential properties.

You may see this at closing as part of your buyer’s expenses and or a proration. Your cloning agent or Title Company will order an “Estoppel Letter” from the HOA management company. This document will show what HOA fees have been paid and if any assessments are due or past due. Your closing company will prorate annual fees between the buyer and seller. You may see this proration on your closing statement if the property is in an HOA community.

AMG offers services to assist with resales and documentation required by some attorneys or lenders. We're here to assist professionals representing buyers or mortgage companies requiring essential real estate data and documentation for association real estate transactions.

The Homeowners Association (HOA) collects the fee and uses it to improve the community. Condominium association fees generally pay for maintenance of the grounds and common areas, the exterior of the building, insurance, swimming pool, clubhouse, and/or other amenities. In many instances, the condo fee includes services such as garbage and water.

From the smallest condominium to the largest lifestyle community, resident amenities are a fundamental advantage to living in a community Association. These amenities may be as grand as golf courses, lakes, and pools or as humble as a unique sitting area. No matter how large or small the amenities, prompt, proper, and cost-effective operations are vital to that community.