Board members obtaining rewards for HOA purchases is not illegal


Question: My HOA hosts a number of parties and community get-togethers in a clubhouse during the year. Food and snacks with accompanying dining materials (plates, napkins, plasticware, snacks, etc.) are provided. This is procured from local big-box stores and supermarkets. Individuals use their personal credit cards for which they are reimbursed by the association. They earn “rewards” from their credit card issuer and do not repay the association or community. This seems to be abusive and stealing. If they are committing a criminal act, is there any governmental agency that would investigate and possibly proceed with punishment? — D.T.

Answer: Let’s assume, at the top end, that your community spends $5,000 on get-togethers in a given year. Assuming that every dollar was spent on a single rewards card, that’s a total of approximately $50 in rewards. And, from what you describe, multiple people are spreading these charges among themselves, and so it’s unlikely any single person is getting more than a nominal personal benefit. If you told me that an entire association budget was being charged to a personal credit card, I can appreciate that there might be a real concern — but I can’t see anyone pursuing the issue you describe, and certainly not the police or any governmental agency (perhaps it’s some kind of income tax issue, but that’s really stretching things at the amounts you are likely dealing with).

Q: Is there any type of limitation on how far my HOA can go back and demand that we remove or rectify a modification to our home? We received a letter from our HOA saying our fence in the front of our home, which we put up in 2005, didn’t have ARC approval and demanding that we remove it within 15 days. Now the HOA does regular home inspections in the community and after all of this time they are just now saying that our fence isn’t in compliance. We received a letter from them about three months ago to remove some wood siding we had installed on three of our upper windows, and that siding had been there for about six or seven years. I just don’t understand how, when you have had something up for seven or 15 years or more, and when the HOA does regular inspections of the community, that they can say after all of this time you are not in compliance and require you to remove it or face fines and penalties.

Any advice would be greatly appreciated as we wonder what will be next — we have made several improvements to the home over the 25 years we have lived here. — B.B.

A: The statute of limitations to prosecute a covenant enforcement violation is five years. That means that you could likely defeat any lawsuit filed against you with respect to the unauthorized improvement. The problem is that, if they purport to fine you or if they suspend your use rights as a penalty, there is no real mechanism to battle the association other than to file your own lawsuit asking a judge to declare your modifications to be beyond challenge. That’s going to require you to spend money on legal fees, even though you would be eligible to recover a portion of those fees if you prevail. As such, you may be better off negotiating some kind of mutually agreeable resolution with the association (for example, agreeing to remedy these modifications the next time they must be repaired or replaced).

Q: Is there any legally binding stipulation regarding how condominium HOA fees/dues are to be calculated, i.e., condo unit square footage, number of occupants, etc.?) — J.M.

A: In both an HOA and a condominium, the assessments must be charged to owners in the percentages specified in the governing documents. In an HOA, there are no other limitations on the manner of allocating such assessments per the documents — the percentages can be based on any variable, as long as they are expressly described. In a condominium, the assessments for any condominium established after April 1, 1992, must be either based upon the total square footage of each residential unit in uniform relationship to the total square footage of each other residential unit, or on an equal fractional basis.

Ryan Poliakoff is a co-author of “New Neighborhoods — The Consumer’s Guide to Condominium, Co-Op and HOA Living” and a partner at Backer Aboud Poliakoff & Foelster LLP. Email questions to condocolumn@gmail.com. Please include your hometown.



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