Can dues be raised each year?

Q: Is there a law pertaining to how much homeowners associations can raise the dues each year? Is there a cap or is this determined by the individual HOA?

A: There is no state law that places a cap on the amount of assessments that can be increased each year by an association. By law, the homeowners either ratify or reject a budget. The law is based upon the rejection of a budget, not the approval of it. To reject a budget, a minimum of 51 percent would have to vote in favor of rejection at a homeowners ratification budget meeting (that percentage can be more depending upon your governing documents). Many increases are specifically related to the reserve study.

The state law is explicit that the association shall fund the reserves based upon the reserve study, consequently that proposed increase would almost be impossible to change unless legal action is initiated by the homeowner or homeowners.

Q: I own a condo that has an HOA assessment from refurbishing. I believe the HOA has put a lien on the property because I cannot pay. What happens if I short sale or go into foreclosure and the proceeds are not enough to pay the mortgage lender and the HOA assessment?

A: If the refurbishing work was done by the association after Oct. 1, 2009, and assuming all due process procedures were in place and if the association placed a lien on the property for the work, the cost to refurbish becomes a super lien.

If you, as the current owner, do not pay the assessment, then it will have to be paid by either the bank if it forecloses on your home or by the buyer in a short sale transaction.

Barbara Holland, CPM, and Supervisory CAM, is president of H&L Realty and Management Co. To ask her a question, e-mail support@hlrealty.com. To view a power point presentation of the new laws that were recently passed affecting HOAs, visit hlrealty.com, click on press release button on the left side, then click on article title, "The 2009 Legislation for common interest communities."