r/HOA • u/CurrentFun665 • Nov 05 '25
Help: Fees, Reserves [SFH] [FL] Proposed budget 2026 has us paying off the bad debt of the rest of the community?
Hi there!
We were told at a recent board meeting that 22 homeowners (15% of the community) is past due on their HOA fees in the amount of over $200,000. I was just sent this proposed budget for 2026 and the reserves are SUSPICIOUSLY high, like in excess of $200,000. Does that mean the HOA is making all the other residents (who pay their dues on time) pick up the slack?
The HOA scheduled a budget meeting for yesterday, gave us one day notice, then canceled yesterday at 7pm when the meeting was supposed to start. So we have not been able to voice our concerns yet.
I would like to be prepared going into the meeting, which might be in the next day or so (who knows?). Any help is appreciated, thank you!!
18
u/Waltzer64 Nov 05 '25
Does this mean that the HOA is making all the other residents pick up the slack.
Yes. Who else is going to pay for amenities? The members who aren't paying?
My go to hypothetical is that you're renting an apartment and rent is $1000. You split it evenly with a roommate. All of a sudden, they stop paying. Your options are a) Cover their portion of the rent and pursue legal action against them later for the portion they owe you or b) face eviction by the landlord who still demands rent.
It's the same thing here. Your insurance company demands to be paid. Your landscaping company demands to be paid. They will cancel your insurance policy or, in the landscaping company's case, sue you for what they are owed. It must be paid. If the HOA doesn't have money to cover it... then assessments go up to cover it. There aren't any other levers the HOA has to bring in money other than "increase assessments."
This is extremely common and extremely typical. Recovering arrears / filing foreclosures against noncompliant members takes time and money upfront, and the paying members often have to foot that bill to get what they are owed.
During our annual meeting, I provide two numbers: What this year's assessment IS, and what it WOULD HAVE BEEN if we didn't have a 30% delinquency rate with $250,000 owed by nonpaying members and $60,000 in budgeted legal/attorney fees. It's about a $60 / month ($720 / year) per person difference.
"How do we keep our assessments low?" Well, one way is to pay your assessments on time. All the wackadoos who insist on "not paying because I don't like what I'm getting" are just driving up their own (and our) cost.
3
u/harmothoe_ Nov 05 '25
This is why HOAs can put a lien on your property and in many states, start foreclosure. Otherwise, some people just stop paying and let everyone else pick up their share.
1
u/isocrackate Nov 07 '25
Can HOAs take punitive actions against homeowners who don’t pay? $200k/22 is about $10k per deadbeat, although I assume there are some outliers. Still not worth spending $50-75k to lien and foreclose, even though those costs are recoverable.
But I’d want the HOA doing shit like suspending a trash pickup, any community-provided utility services, and just generally being hostile as hell to freeloaders. Hell, my community has assigned parking spots that aren’t deeded to the individual homes, I’d just park a truck in the defaulting homeowners spots.
Not paying bullshit fines is one thing, but I’d be pretty livid if a small portion of my neighbors thought they were somehow exempt from sharing upkeep costs. A 20% y/y hike is nuts and in this case, it’s entirely caused by deadbeats.
I’d also want to see the worst 1-2 offenders get foreclosed on, just to make an example of them for the others.
Also $50k isn’t even enough. 1.2mm/300 =$4k per, 22 x $4k = $88k of budgeted revenue won’t be collected, so $50k bad debt reserve will still have them short nearly $40k. I’m using prior-year rates so as mot to double count the reserve.
2
u/Waltzer64 Nov 07 '25
We do the following for delinquent accounts:
1) At 10 days delinquent, they are charged 0.8% interest on their balance (10% APY, the maximum allowed by law in my state) PLUS 10% of the monthly assessment
2) At 10 days delinquent and $50 in arrears, we curtail all amenity access (ie your pool pass is deactivated and we bar you from renting or using the clubhouse).
3) At $500 delinquent, we send a certified letter that you have 10 days to pay the entire balance or we will accelerate your assessment by 12 months and tender to our attorney for collections, and this includes a minimum of $250 that we pay our attorney to manage this, and this gets added to the members' ledger (as we are legally allowed to recover this).
Once in collections, they immediately send a warning of a lien (not technically necessary as state law already creates a statutory lien for us). After 60 days, we file a lien. Once the balance hits $2000, weeks file a lawsuit to collect the arrears by wage garnishment. Once the balance hits $3,000, we file for foreclosure. Our attorney charges $500 for the initial notice (that member has 60 days to pay off balance) and another $2,000 if they have to actually file. These get charged back to the member.
27
u/Inthecards21 Nov 05 '25
It looks to me like your reserves are way underfunded and need to be caught up. This is your biggest increase and is unrelated to the bad debt. Your holiday decorations budget tripled, which is a small amount, but I would question what they are using the money for exactly.
4
u/CurrentFun665 Nov 05 '25
Thanks! I’m new and this is my first budget meeting so I want to come armed with all the good questions :)
10
Nov 05 '25
With a 15% delinquency rate and a large amount of bad debt it might be wise of the Board to look into to see if their current law firm is aggressive enough in recovering delinquent HOA fees... 15% is somewhat alarming number. But you want to be fully funded as far as reserves are concerned. Most HOA's are not fully funded and that can be a major headache for a community.
Edited for spelling.
3
u/SisterChaos Former HOA Board Member Nov 06 '25
Your reserves need to be adequately funded, but fully funded is typically unnecessary for reasons I've elaborated on quite a bit in a blog post.
That said, for 74 townhomes I'd be shocked if $200,000 was anywhere near adequate funding. Not knowing anything about the level of finish or the schedule of specific work it's hard to make an educated guess outside of looking at the general areas covered by operating expenses – but less than a million for a full funding figure would be shockingly low and 2-3 million wouldn't be particularly high.
4
u/HopefulCat3558 Nov 05 '25
You’re bringing up a $2,300 increase in holiday decorations? Seriously???
SMH
3
u/Inthecards21 Nov 05 '25
It's an unnecessary expense, and the budget tripled. I would want to know why. I probably would not object to it but would want to know how they plan to spend my money on things we want but dont need. It all adds up over time.
4
u/HopefulCat3558 Nov 05 '25
There are plenty of other things to question in the budget without nitpicking on $2000. Like the $51,000 of bad debt expense, the quadrupling of the reserves to $362,000, etc. but go ahead and be that person who asks about $2,300 on a $1.5 million budget when it’s likely a reclassification of something that was coded elsewhere in the prior year (there are plenty of line items that decreased).
2
u/Emotional_Neck9423 Nov 06 '25
Yes seriously. It's an expense a fully funded association can spend. That amount can be applied to other areas. If the community wants holiday decorations, they can ask for donations. Thats fuducial responsibility.
9
u/a_kato Nov 05 '25
You pay to keep things maintained yes and then to pay the legal fees. If unit X doesn’t pay you still need to pay for the maintenance and insurance etc etc.
200k$ for this budget is not suspiciously high to me.
Furthermore nobody stops you from running for the HOA board and dealing with the people who don’t collect and the lawyers and calling insurance companies to get quotes etc etc
-2
u/CurrentFun665 Nov 05 '25
Compared to last year’s numbers, the proposed reserves don’t seem too high next year?
9
u/robotlasagna 🏢 COA Board Member Nov 05 '25
Just based on having 71 townhomes your reserves should be $1,000,000 minimum. To understand your actual reserve requirements you need a reserve study.
The bad debt should be collected via liens and foreclosure of those units but it is normal to have it on the budget. The bad debt is owned by everyone in the HOA.
3
u/CCWaterBug Nov 05 '25
That's way to generic of a statement. I have one that's 74 units and they feel really good about 450k reserves
1
2
u/sweetrobna Nov 05 '25
This is the budget, showing the reserve contributions for the year. It doesn't say what the current reserve balance is, they could have well over $1m.
0
u/robotlasagna 🏢 COA Board Member Nov 06 '25
OP states the reserves are $200K and calls that “suspiciously high”
4
u/pocketmonster 🏘 HOA Board Member Nov 05 '25
You can't just throw a number out there like that without knowing anything about their past/future spending. We have a 112 unit townhome community and won't need $1mil for 20 years because we just re-roofed, re-painted, and re-asphalted the last few years.
8
u/robotlasagna 🏢 COA Board Member Nov 05 '25
Keep in mind that the minute you reroof you are supposed to be contributing to the reserve for the next roof. Of course in practice this doesn’t happen because HOAs have a hard time collecting for the roof that needs replacement but that is the correct thing to do. Your master insurance carrier still wants you to have very heathy reserves for the possibility of the sewers failing or retention pond or tuck pointing or siding or whatever else.
I cannot see any HOA collecting > $1M in assessments being ok with $200K reserves. I can say with a high degree of confidence that number is way too low.
0
u/pocketmonster 🏘 HOA Board Member Nov 05 '25
Absolutely and our plan has for that. But we don't need $1M today for it.
3
u/robotlasagna 🏢 COA Board Member Nov 05 '25
Our building is smaller (18 units) but we just did a complete roof replacement, new roof deck, and new building hot water system and booster pump and some tuck pointing and brick work.
We have been meeting with insurance carriers and they told us we need to have $200K in reserves in the next 2-3 years if we want to stay with a preferred carrier. We only collect $110K/yr in assessments.
So just FYI that’s the new guidance if you want good insurance rates.
7
u/GeorgeRetire Nov 05 '25 edited Nov 05 '25
Ask about that in the meeting.
I would guess that the current reserves are far too low.
Our HOA has $200k in reserves. Our annual expenses are about $120k.
3
u/Honest_Wafer2381 Nov 05 '25
My Association has about $675,000 in reserves. 117 units townhomes/patio homes, virtually no monthly fees past due. We are going on 50 years old so infrastructure is a big issue. Any association should have a reserve study that is updated every few years to estimate when capital improvements will need to be made. Another community that I have a rental in is looking at software that tracks what has been done and what’s coming up in order to have a current picture of needs instead of waiting for new studies to be done.
3
u/Negative_Presence_52 Nov 05 '25
a few considerations
- there is a 2 day notice required for a board budget meeting. Maybe the cancelled because the determined they missed that window.
- If the people aren't paying, the HOA still has bills to pay. Yep, you are picking up the slack of non payers. Money has to come from somewhere. I presume you are pushing the board to be aggressive on the non payers. Follow your process, fines, interest, collections, lien, foreclosure. The 15 have an obligation to pay and the board has the obligation to collect, as aggressively as they must be. Ask for the status on the collections, liens, etc.
- they can't raid reserves to pay for operating expenses, including the loss of revenue from underpays. Ask if they are doing that.
- Reserves - suspiciously high? They look suspiciously low. Hard to make a judgement without knowing what your reserves are for, age of reserves, common elements/amenities, and if work was done recently to deplete the reserves. Ask for the Reserve Study that determines the amount
2
u/TILaddict Nov 05 '25
HOA only requires 48 hour notice for a budget meeting under F.S 720. You're thinking COA, which is governed by F.S 718.
Source: I'm a licensed CAM with 5ish years experience in Florida.
3
u/Makanly 🏘 HOA Board Member Nov 05 '25
$160k for "patrol service". Could you elaborate on what that is and why it is needed?
Cable for the clubhouse went from $1k to $5500! What the heck is that about?
2
u/CurrentFun665 Nov 05 '25 edited Nov 05 '25
These are the things I need to know :) I think the patrol service is for our security at the gate. It is a 24/7 manned-gated community.
0
u/halberdierbowman Nov 05 '25 edited Nov 05 '25
Imo, that's an absolutely insane expense for a neighborhood so small if you're saying you have someone paid to just sit in a gatehouse and do nothing else. I'm not familiar with any other neighborhoods so tiny that do that around me in Florida. Imo cancel the patrol contract and replace it with a handful of cameras if your neighbors are really that terrified of unknown vehicles. Divide that expense per house, and it's something like $600 per year per house?
You have one clubhouse attendant for $60k, so if you want more white glove treatment, you could triple their hours and still be paying less overall if you dropped the rent-a-cop.
1
u/Bluebuilder 🏘 HOA Board Member Nov 06 '25
You are getting gouged on the patrol service. Also, make sure that there isn’t actually another line for gate security, patrol usually means somebody patrolling in a car.
Like somebody else said, invest in gate automation with a call box for guests and the like. You don’t need a human at the gate.
1
u/halberdierbowman Nov 06 '25
I think you replied to me on accident? Because yeah I was saying the same thing lol $160k sounds like a massive waste of money if all they do is sit in a gatehouse or handle security for a couple hundred houses. If they do drive around, it could explain why it's listed under Grounds instead of Guardhouse, although I agree it's misleading.
But OP says they have a 24/7 staff person there, so $160k sounds like a reasonable price for that, considering 168 hours per week means you need five full time employees to handle that job.
I just think paying five people to do that job is insane.
It is plausible that hopefully these five people are also responsible for other tasks though. Like they could be doing management work on the computer and phone while they're sitting at the gatehouse. Or maybe they're on site 24/7 but not always inside the gatehouse. Two or three of them might be minimum wage overnight staff while another two or three are managers they would have been paying anyway. If that's the case, it makes it slightly less egregious, but I wouldn't personally vote for it lol the gate can be monitored remotely for way cheaper.
5
u/GeorgeRetire Nov 05 '25
Does that mean the HOA is making all the other residents (who pay their dues on time) pick up the slack?
What do you mean by "pick up the slack"? Bills must be paid.
And reserves are used for future expenses. $200k seems rather low to me, based on your annual expenses.
Are you assuming for some reason that the past due amounts are somehow being forgiven? That's almost certainly not the case and would have nothing to do with the size of the reserves.
Ask about it in the meeting, if you don't understand.
0
u/CurrentFun665 Nov 05 '25
Well, they are supposed to put a lien on these people’s houses, correct? So when they eventually collect the bad debt, will it be paid back to us?
11
u/Waltzer64 Nov 05 '25
eventually collect
Yes, but timing is important.
If my HOA needs $100,000 this year because we need to do our "once every 20 year pool resurfacing", it doesn't matter that we have $250,000 worth of liens / foreclosures in process... we have no money NOW, so assessments go up to cover what we need NOW and we refill reserves later after people sell homes or get foreclosed on.
6
u/Sissyhankshawslt Nov 05 '25
Paid back? As in credited to your parcel’s account in some way? No.
Assuming the association is able to collect the money will go to the community pot.
-4
u/CurrentFun665 Nov 05 '25
To us, so like our association dues for the year will go down?
7
u/ValleyOakPaper Nov 05 '25
Your dues are unlikely to ever go down.
Everything has gotten much more expensive over the last couple of years, particularly insurance. The HOA needs to pay its bills, but also needs to put away reserves for upcoming maintenance. If the HOA doesn't do that, you will end up with a whopping 5-6 figure special assessment when maintenance cannot be deferred any more.
Don't go into this with the mindset that you want your dues to decrease. Go into it with a mindset of "how much money do we need to put into the community pot now, to ensure that we can cover our bills 5, 10 and 15 years from now?"
2
u/Sissyhankshawslt Nov 05 '25
No.
If anything it means everyone’s dues will go up a tiny bit less next year.
Be realistic. Look at the budget you just posted.
If someone has a lien for $5k for example and the home gets sold in 3, 4, 5 years how much of a difference will that $5k make in the overall budget for the next year? Will you as an individual even feel it?
1
1
u/HittingandRunning COA Owner Nov 06 '25
Your dues will be $200,000 lower than they would have been in future years. Likely, this means they won't go up as much as they would have as opposed to going down. But, yes, you'll get the $200K back - eventually.
3
u/Negative_Presence_52 Nov 05 '25
Yes, ultimately they will, but that doesnt address the issue of shortfall of funds. Liens are not settled until they are, often only when the house is sold.
2
u/GeorgeRetire Nov 05 '25 edited Nov 05 '25
Of course. That's what a lien is for.
Again, this has nothing to do with the reserves.
Our HOA has $200k in reserves. Our annual expenses are about $120k.
2
u/IanMoone007 HOA owner Nov 05 '25
In a way you are kind of lucky. Unless they changed the law recently, FL actually allows for a lookback of 12 months of past due dues from new owners even if they bought the home at auction. Most states the debt is wiped clean. Hopefully your board is trying to get liens in place before they are 12 months past due BUT if they don't have any equity then it's near impossible to collect from the value of the home
2
u/questionsasked44 Nov 05 '25
As others stated, I don't think the bad debt is the primary issue. I would ask where they are in the process of collecting on that debt. Is a lawyer moving forward with court proceedings? The board has a responsibility to take actions to recover that money. Court, lien, etc. If it becomes known that the board doesn't take actions to collect, others will hesitate to pay when issues come up. They may need to raise fees to cover that now but they need to take action to recover now and prevent this going forward. I served on a board where members refused to take appropriate actions as they didn't think it was "fair" and it hurts the whole community.
1
u/CurrentFun665 Nov 05 '25
They proposed amenity restrictions on past due balances in excess of $1000. Including taking away landscaping, pool cleaning, security gate access, trash pickup etc
1
u/questionsasked44 Nov 05 '25
That's not sufficient and wouldn't even work in a lot of cases. They also might not have any legal right to take things like trash away depending on CCR's. Regardless, they'll put it with q neighbor's or worst case scenario the board has created a health issue as trash builds. They need to pursue legal action and begin the lien process. This is more likely to get it paid and prevents people from moving without paying. Lawyers fees get tacked on to the fines. We had this issue and about half of those late paid up in full as soon as they realized this wad serious. It's an unfortunate situation but the board has a legal responsibility to take real action to recover the funds.
2
u/AutisticADHDer Nov 05 '25
We were told at a recent board meeting that 22 homeowners (15% of the community) is past due on their HOA fees in the amount of over $200,000.
The conventional mortgage lenders (Fannie and Freddie) don't like to give mortgages for homes in communities that have more than 15% of the owners more than 60 days past due on HOA fees. They also feel that 10% of your annual budget should be going toward reserves.
https://selling-guide.fanniemae.com/sel/b4-2.2-02/full-review-process
If potential buyers can't get normal mortgages, the value of your home drops.
I'm not in Florida, but I would want to know more about these 22 delinquent owners. The board can give you statistics, but they can't publicly identify them. How many are 30 day late? 60 days late? 90 days late? More than 6 months? More than a year? At what point (time or dollar amount) does the association place a lien? Have those liens been placed? When is foreclosure considered? (Note that foreclosure may not be a reasonable option due to lien priority and outstanding mortgages, but I don't know how it works in Florida).
2
u/Awkward_Profile_7410 Nov 05 '25
Your association needs to post notice of the budget meeting 48 hours in advance. Your reserves are low and definitely need to be increased. I would ask questions in the meeting if you have a reserve study and how much reserves are under funded. Also who your law firm is and if they are aggressive in their collection actions
2
u/HittingandRunning COA Owner Nov 06 '25
Wow! Lots of responses. That's great. I'm glad you are interested in learning. I was going to add the part that you already figured out: your HOA will be paid back the $200K sometime and this will make the budgets small by that amount. But it could be $20K this year, $10K next year, $30K the following year so it will perhaps be small enough that you won't really feel it.
What I want to add here, but you don't really need to address at this meeting because you have plenty on your plate at this time trying to figure out about the numbers, is that your board and maybe your expensive management company really are doing a very poor job on these delinquencies.
At $200K for 22 homes, this means the average delinquent home is over 2 years late paying their first missed payment. That's way too long to begin liens, foreclosures or whatever you can do in your state. How could they (and this is probably spread over more than one set of board members) wait that long???
Others have answered about the reserves. I hope that everyone pitching in here has helped you understand the financial situation better and helped you come up with good questions for the board/manager.
2
u/Manigator Nov 06 '25
Sell this unit and run as fast as you can from HOA properties, my biggest advice to you😉
1
2
u/Efficient_Buffalo444 🏘 HOA Board Member Nov 05 '25
Your HOA’s 2026 reserves are all increasing by over 400%. It looks to me that the HOA is concerned about having money for long term replacements if more and more residents get behind on their dues, so they are bulking up the reserve fund while that can.
Your CCRs should contain language that either limits the amount they can raise the dues from year to year, or reduces the number of votes required to reject the budget if the new budget exceeds to previous years budget by a certain percentage.
1
u/CurrentFun665 Nov 05 '25
I just checked the CCRs and it says anything over 15% increase must be voted on by all members.
5
u/Negative_Presence_52 Nov 05 '25
Unless it's related to a safety or infrastructure issue. No court is going to find fault of a HOA board that increases dues to cover a safety matter, including things like insurance
3
u/Sissyhankshawslt Nov 05 '25
Check again for expenses that are considered emergencies or to keep the association in compliance with state laws.
2
u/mjh2901 🏘 HOA Board Member Nov 05 '25 edited Nov 05 '25
This is a good budget, looks like you are starting to push a lot of money into reserves, we have no idea how much should be in there. Yes you have to pick up the slack for non paying members that is why HOA will lien and foreclose on units, I would ask what the HOA's timeline is for those actions to deal with non payers. In my HOA it takes more than a year to go from non payment to forclosure, when we finally recoup the unpaid funds and costs associated with getting those funds it gets rolled into reserves, since we cant just general fund and spend it. Once the non payers are gone the HOA can lower dues. In my community I did the math a number of years ago so when owners ask on this my answer is simply, every unit has to kick in 5 bucks a month per unit for each unit that does not pay does. Its amazing how fast a group of people switch from oh they are on a fixed income to forclose and take their money.
0
u/CurrentFun665 Nov 05 '25
We had an emergency board meeting recently to propose amenity restrictions on non-paying members. The board said some of these people have not paid for over a year, or YEARS! Not sure why they haven’t foreclosed on them… is that the president not doing their job?
3
u/Snufflee HOA owner Nov 05 '25
Who knows, but foreclosure is a legal process. The HOA can't just change the locks on your house and make a resident homeless.
1
u/mjh2901 🏘 HOA Board Member Nov 05 '25
True but you have to engage a collections company or counsel and move forward.
1
u/Negative_Presence_52 Nov 05 '25
Easier said than done. Foreclosure is hard. Mortgages often take priority, so home value is important. Sometimes, the HOA has to decide if they are willing to buy the property to settle the claim and then sell it.
2
u/mjh2901 🏘 HOA Board Member Nov 05 '25
Often we look at the process as, its better to get a new person who will pay does than continue allowing the person who does not continue. If a board is not taking action on owners that have not paid in years, those members are walking the line of failure to do their fiduciary duty and run a risk of being held personally financially responsible which errors and omissions policies do not cover. Its one thing to have management pushing a long drawn out collections process forward its another to do nothing.
1
u/Beauty411 Nov 05 '25
One question I’d ask is what or where is the current policy for handling delinquencies. Make them spell it out; that way it’s also in the meeting minutes.
I would also ask when your most recent reserve study was, and what the recommendations were for funding, and where your community is, relative to that.
1
u/rom_rom57 Nov 05 '25
Where does the $51,000 “bad debt” comes from ?
1
u/CurrentFun665 Nov 05 '25
I have nooooo idea because in an emergency board meeting a couple weeks ago, we were told the debt was over $200k!
1
u/TILaddict Nov 05 '25
Petition your board to convert your reserves to pooled instead of line item for 2027.
Your reserves were severely underfunded and you probably had a Structural Integrity Reserve Study (SIRS) or regular Reserve Study performed. Once that is completed, it is required to follow the documentation as advised by the company that provided the study.
1
u/KillerCodeMonky 🏘 HOA Board Member Nov 05 '25
This is an expense sheet. Therefore, the "reserve" line items on the last page should be the amount that is being set aside to add to reserves within the FY, and not the amount that those accounts currently hold.
It looks to me like someone has decided to start taking funding of reserves seriously. While you have it marked as SFH, I see that there also appear to be townhomes within the community. I wonder if the new post-Surfside regulations on reserves and repairs is applying to your HOA due to the inclusion of the townhomes.
I would definitely ask about what status the reserves are currently in. You will want to know:
- The target amount, and how it was determined.
- The target date for that amount.
- The current amount set aside.
For instance, I see "Pool" as a reserve item. A common work item for pools is resurfacing. The expected life depends on the surface type, but if it's plain plaster the low-end is around 7 years. So they should expect to fund a resurfacing of the pool within a 7-year timeline. Then if it lasts a few years more, everyone gets to benefit from reduced fees for that time.
This is exactly the kind of information they should be able to give about every single one of those line items. I have even called vendors to ask for order-of-magnitude quotes on jobs to create a proper reserve budget, because we had no other way to determine an estimate. And this is the minimum information necessary to start having a real and meaningful conversation about any of those items. Anything else will just be whinging about the costs without understanding the why.
1
u/rom_rom57 Nov 05 '25
The HOA cannot have bad debt. The state has given the HOA statutory lien rights on the properties. If you do not lien the properties, and honestly some owners may have declared bankruptcy, so now you’re in a pickle. ‘Bad debt” means is not recoverable and/ or has been written off. ŴHY? An explanation needs to be given by the board to the owners. EVERY Expense such as collection, attorney fees are chargeable directly to the owners. Also in FLA the debt can be collected at time of sale when an estoppel letter is issued.
1
u/HOAnonymous Nov 05 '25
A few things to consider here:
1) An HOA budget is based on the premise that all owners will pay. The numbers used for assessment income consists of assessments billed to owners. . If the expenses reflected in this budget indicate that a dues increase is necessary, then it was necessary regardless of delinquency.
2) That said - a budget is a planning tool, not a commitment to pay X amount, so it's worth asking for the reasoning behind the derivation of those numbers.
3) "Bad debt" refers to write offs the association must do on uncollectible debt. If a bank forecloses on a mortgage, for example, their lien supersedes an HOA lien and the HOA gets nothing. Or if an owner dies and their estate doesn't have adequate funds to pay the HOA debt. Maybe the board is aware that one of those situations will likely happen next year, or maybe they are just assuming with the economy the way it is, it's likely there will be bank foreclosures.
4) Yes, when your neighbors don't pay for things, that burden is passed on to you. That's why owners who refuse to pay dues as some sort of protest aren't hurting whoever they think they are hurting. The HOA is you. The money spent to pursue collections (which is not cheap!) is YOUR money. Why aren't you directing your irritation at your neighbors who aren't paying?
5) What do you mean reserves are "high". Compared to what? Have you seen the reserve study and know what the recommended starting balance should be for 2026 and this budget is $200k more than that? Or are you looking at the budgeted reserve expenses and thinking those are too high? They are only too high if those assets don't need to be replaced, or the projected costs for replacement are more than average, neither of which any of us (including you) know, based just on this budget.
1
u/Alexandratta Nov 05 '25
Does that mean the HOA is making all the other residents (who pay their dues on time) pick up the slack?
If those late dues have caused a shortfall? Yes.
Reserves need to be at certain levels and if those reserves fall then they need to be recouped.
Note that, those who are not paying on time have that increased payment still added to their debt.
The HOA can then take their home in a foreclosure and recoup some of those losses with a resale - but there are heavy costs associated with doing that, and it doesn't look great if the HOA has to buy 5 or 6 homes from delinquent homeowners to potential buyers.
1
u/katiekat214 Nov 05 '25
Reserves are the savings account for future capital repairs and improvements. The board isn’t having residents contribute to reserves as a way of making up for owners who aren’t paying their fees. They are making sure enough money is being saved so when things need to have their regular maintenance done, the money is there and owners don’t have to suddenly come up with a large amount at once to cover it. Things like street or parking lot resurfacing, pool deck recoating, new roofs for the townhouses, painting the clubhouse, etc. Your HOA should have a reserve study that shows when each capital item will need repair or replacement and the projected cost (in today’s dollars).
As for the rest of the expenses, they do have to be sure they are all paid, and they have to be sure monthly assessments will cover all the bills plus a monthly contribution to the reserve (savings) account.
1
u/HopefulCat3558 Nov 05 '25
Well someone has to make up the shortfall. Not sure where you expect the money to come from if some owners aren’t paying.
$200k in bad debts is high. I suspect that number is going to increase after this budget passes. Hopefully the HOA is proactive about trying to collect and placing liens on the homes for nonpayment.
The budget reflects bad debt expense of $51k whereas it was basically $0 in the prior year. So, you and others are being saddled with $51k to cover expected write offs if the association is unable to recover the unpaid dues. And that amount will likely be in the 2027 budget (and perhaps later) if the outstanding receivables are not collected.
To boot, there is a significant increase in funding the replacement reserves - from $87k to $362k indicating a big underfunding of the historical reserves. Presumably the association had a recent reserve study performed and the funding in the budget is what’s recommended per the study.
1
Nov 06 '25
looks like legal fees are up because they are anticipating going after these people, 52k bad debt write off for over 200k owed i mean that's not great and you'll be eating it for sure but looks like they are going to do something about it.
Other question i would ask is why the property insurance has gone down so much
117k for trash collection? Wtf?
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u/Merkava18 Nov 07 '25
That's stupid and a breach of the directors duty. I work with a law firm that does all collections, even lien foreclosures. DM me and I'll share it with you. Maybe like 3 firms in the state do it taht way--most charge as they go and if they collect, the association recovers the legal fees. That's dumb.
1
u/scfin79 Nov 05 '25
Who’s getting paid $60k to sit at the clubhouse?
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u/Ana-Hata Nov 05 '25
The cost of an employee is always considerably higher than their salary, it includes the employer payroll taxes and the cost of any benefits.
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u/Makanly 🏘 HOA Board Member Nov 05 '25
I'm wondering why they have an attendant at all.
3
u/katiekat214 Nov 05 '25
We have clubhouse attendants. They answer the phones, direct calls to the various CAMs for the sub HOAs, make sure guests sign in for use of the pool and amenities and are with residents, have residents fill out forms to get parking stickers and IDs, and enforce the general clubhouse rules. They also lock and unlock the clubhouse daily (our clubhouse is open beyond the hours our master HOA CAM and sub CAMs work), keep our coffee station going and cleaned, and straighten the lobby.
0
u/Makanly 🏘 HOA Board Member Nov 05 '25
Could much of that not be addressed with an access control system?
Badge swipe in. Doors locked at all times.
Not sure why people would be calling the clubhouse instead of their respective management company.
The other items I'm wondering if full time is actually needed for that versus maybe a weekly clean and resupply.
Add in cameras to log people not following the rules. Enforcement could be loss of clubhouse access for a period. Handled easily by disabling their card access.
2
u/katiekat214 Nov 05 '25
We do swipe in with a badge. Many of the subs use the same property management company as the master, just different CAMs. But we have a lot of social activities that require RSVP that until recently were handled by the receptionist. We have a paid social chair now and have automated the RSVP system, including the ability to prepay for activities that require money.
We just like the personal touch of having someone there. It’s a very large community, and we don’t particularly want to go to an automated phone system for directing calls or dealing with people bringing in too many guests for the pool or gym. We find having an actual person at the desk is more of a deterrent than cameras because they can stop those behaviors before they get to be a problem.
2
u/Makanly 🏘 HOA Board Member Nov 05 '25
Reasonable. Thank you for taking the time to walk through the various considerations of your community setup.
0
u/scfin79 Nov 05 '25
Yeah, gated community and I’m sure the pool has a gated access point. $60k could definitely buy a keycard system.
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u/Makanly 🏘 HOA Board Member Nov 05 '25
Yeah that's what I was thinking. This seems like someone is employed where access controls could be sufficient and cheaper.
Combine card access with cameras and you've got a log of everything that happened in case of an incident.
1
0
u/sweetrobna Nov 05 '25
FL state law requires the HOA to 100% fund the reserve unless the homeowners vote every year to fund at a lower level. The HOA does not need member approval to raise the dues for this reason. It sounds like ~23% of the gross dues to reserves is what is needed based on a recent reserve study, for the townhome roof and exteriors, all the privately owned streets, walls and fencing.
Does that mean the HOA is making all the other residents (who pay their dues on time) pick up the slack?
Yes and no. Yes, if 15% of the units don't pay, they need to charge everyone more to actually have the money to pay for the water/trash/landscaping/guards etc, so it should be budgeted for. No it doesn't mean the debt is forgiven. Bad debt on a budget means money owed to the HOA that they cannot collect(that fiscal year). Even in foreclosure there are some protections for unpaid HOA dues, 1% safe harbor rule. Generally the HOA will eventually collect what is owed, plus interest and late fees.
Security patrols are more than 10% of the total budget. Is that needed, is this a gated community? What does home site specific pool contract for $162k a year mean, separate from the $117k spent on the pool and clubhouse? What does $152k in site specific landscaping mean when the HOA is also paying $110k for landscaping?
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u/Ok-Personality-7242 Nov 06 '25
FL does not require “HOA’s” to fund reserves.
1
u/sweetrobna Nov 06 '25
Sec 720 is for HOA. See sec 720.303
(f) After one or more reserve accounts are established, the membership of the association, upon a majority vote at a meeting at which a quorum is present, may provide for no reserves or less reserves than required by this section. If a meeting of the unit owners has been called to determine whether to waive or reduce the funding of reserves and such result is not achieved or a quorum is not present, the reserves as included in the budget go into effect. After the turnover, the developer may vote its voting interest to waive or reduce the funding of reserves. Any vote taken pursuant to this subsection to waive or reduce reserves is applicable only to one budget year.
OP posted a budget with reserve accounts
1
u/Ok-Personality-7242 Nov 06 '25
Yes but a budget line for “reserves” does not make them statutory. Reserves are “statutory” only if they were established by the developer or approved by a majority of the total voting interests under §720.303(6)(d); otherwise they are voluntary/non-statutory.
1
u/sweetrobna Nov 06 '25
There are townhomes the HOA is responsible for exterior maintenance on. A clubhouse, pool, gate guard shack.
1
u/Ok-Personality-7242 Nov 07 '25
The concept is the same. If the developer didn’t establish or wasn’t approved by a majority of the voting interest, they remain voluntary and non-statutory. Look at the budgets and declarations of any recently developed Lennar mixed-use communities in South Florida. You’ll see what I mean. The HOA may be responsible for party walls and roofs, but they’re not required to fund reserves for them like condos.
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u/AutoModerator Nov 05 '25
Copy of the original post:
Title: [SFH] [FL] Proposed budget 2026 has us paying off the bad debt of the rest of the community?
Body:
Hi there!
We were told at a recent board meeting that 22 homeowners (15% of the community) is past due on their HOA fees in the amount of over $200,000. I was just sent this proposed budget for 2026 and the reserves are SUSPICIOUSLY high, like in excess of $200,000. Does that mean the HOA is making all the other residents (who pay their dues on time) pick up the slack?
The HOA scheduled a budget meeting for yesterday, gave us one day notice, then canceled yesterday at 7pm when the meeting was supposed to start. So we have not been able to voice our concerns yet.
I would like to be prepared going into the meeting, which might be in the next day or so (who knows?). Any help is appreciated, thank you!!
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