RealManage Insight

Should Delinquent Owners Voting Rights Be Revoked?

by Steve Walz on Apr 7, 2022 9:30:00 AM

One of the thorniest issues to tackle in an HOA is homeowners in delinquency - not paying their dues or being significantly behind on dues payments. The community and owner dues are two sides of the same coin. The community cannot maintain the grounds, amenities, or sidewalks without yearly owner dues. However, financial issues are a minefield of complications from family tragedy to cantankerous entitlement.

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A challenging question arises: What should an HOA do if a homeowner refuses to pay their dues? Your options range from leveling fines to revoking voting rights. Many communities favor withdrawing voting rights - cutting off the privilege of community control that comes from being a contributing homeowner in the community. Any HOA considering this route should plan carefully to ensure this decision is legal, permitted, and potentially effective before putting it in place.

Is it Legal to Suspend Delinquent Owner Voting Rights?

Your state determines the legality of suspending voting rights in an HOA. Some states allow for the suspension of HOA voting rights for specific reasons or in general, but others prohibit the rest of any remaining owner voting rights. You will need to check the detailed laws regarding HOAs in your state. There may also be rules relating to HOA homeowner rights regarding delinquency and suspension of voting rights in your county and municipality.

Is it Permitted to Suspend Voting Rights Over Dues Delinquency?

The next question is whether your own HOA permits this policy. Next, check your governing documents and by-laws to determine if there are already policies regarding dues delinquency and when an owner's voting rights can be permitted.

The legal language in HOA governing documents can vary widely. For example, according to some condo associations, all homeowners are subject to the same rules, which means no voting rights. On the other hand, some HOAs may define that an owner always has certain voting rights, like council elections. Still, you may be able to suspend lesser voting rights regarding community matters.

Can Suspending Voting Rights Effectively Resolve Delinquent Dues?

Finding a practical consequence for delinquent dues has always been a challenge for HOAs. The community can't support many homeowners using the roads and amenities without paying into the infrastructure. Nevertheless, choosing the proper measures to achieve your goals is also imperative.

Considerations

  • If a homeowner never votes on anything, suspending their voting rights will not impact them in any way. Likewise, if the community votes on very little.
  • How can you fairly make exceptions for invested people experiencing financial hardship?
  • How can you protect against people who take advantage of safety net systems?
  • Never combine vote suspension and leveled fees  (not dues). This opens the door to corruption and the ability for the board to tax a homeowner out of being able to vote, then drive them from the community. If you revoke voting rights, this must only be for dues and not the total owed amount in fees.
  • You may revoke some - but not all - types of voting. Most HOAs take a few types of votes: meeting votes, election votes, special assessment votes, and so on. You may find selective vote limitations to be more effective - or permitted by your documents.
  • Prevent them from making changes, but don't prevent them from self-advocation.

Other Potentially Effective Ways to Penalize Delinquent Dues

Suspending voting rights is a sticky proposition. Some homeowners won't care, some will be devastated. This means it's also worth considering a few alternatives or additional penalties that may drive homeowners to get right with their dues more effectively.

Denying Permit Approvals

  • Parking permits
  • Building permits

Refuse delinquent owners of any more permit approvals. No guest parking, and no home improvement projects. Guest parking is for people who are contributing to the neighborhood road and lot maintenance.

Denying Amenity Access

  • Pool access
  • Spa/Fitness room access
  • Clubhouse bookings
  • Sport court reservations

A first-time refusal to allow someone access to the pool due to their inability to maintain it can emphasize its importance. Consider denying non-paying homeowners something they will miss that their dues contribute to paying for if this type of solution is permitted in your state and governing documents. Your HOA gets to have sweet amenities because everyone pays in. Those who don't, don't. Also, this has a fair, lower impact on families experiencing financial hardship. However, they may need to use their voting rights to oppose special assessments they cannot pay or fight an oppressive fee structure.

When approaching the issue of HOA owners with delinquent dues, remember to create an adaptive and considerate system of response. Build a plan that equally accounts for the absent-minded, the scam artists, the family hardships, and the belligerent bullies. Whatever your solution, make it your central goal to resume regular dues for each property without causing or being subject to unnecessary loss.

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