Serving on a community board is typically driven by an eagerness to raise property values and cultivate a friendly neighborhood environment. You quickly learn that balancing the books, sticking to co.
Delivering on this trifecta of duties without previous corporate leadership or real estate experience can send the best-intentioned volunteers headlong into common missteps with HOA operations. Everyday mistakes in managing finances, communicating with homeowners, and enforcing HOA rules can escalate into unruly neighbor disputes, oversized special assessments to catch up on maintenance, and avoidable legal liability for the board.
When neighborhood associations struggle to define clear processes and procedures for everyday operations, the slightest oversights can snowball into major problems. Effective HOA governance starts with proactive policies that cover financial management, legal compliance, and member communications. Let’s take a look at several HOA governance pitfalls and how volunteer leaders can steer clear of the fray.
What Are Some HOA Board Mistakes in Communication With Owners?
Poor communication erodes trust between homeowners and the board of directors. HOA board mistakes commonly include using outdated notice boards, not explaining assessments or voting outcomes, and skipping online communication channels. Boards can enhance communication by utilizing resident portals, monthly newsletters, and providing open-microphone Q&A sessions at board meetings.
Neglecting to keep owners informed of upcoming projects, association fee changes, or rule amendments is a leading cause of frustrated homeowners. If residents don’t know what to expect from the board, they are more likely to push back on decisions, refuse to pay their HOA fees, and fight violation warnings. Board members must establish open lines of communication so that homeowners know where and when to find updates on association activities. A good place to start is posting detailed meeting minutes and budget reports online for members to access at any time.
How Do HOA Boards Put Themselves at Legal Risk?
Ignoring your CC&Rs or bylaws hurts HOA governance and puts the association at risk of being sued. Volunteer leaders must revisit their governing documents yearly, speak to an association attorney when confusion arises, and follow the rules for calling meetings, holding elections, and fining homeowners.
Your HOA’s declaration, bylaws, articles of incorporation, and rules all have a specific hierarchy that must be followed. A mistake that HOA boards make is trying to enforce restrictions that are not listed in the governing docs or forgetting to follow the required steps for voting, such as calling a meeting or amending a rule. If the board takes enforcement action that it does not have the legal authority to do, then not only will its decision not stand up in court, but the entire community will have to foot the bill for legal fees.
Avoiding legal issues requires boards to triple-check that their operating procedures are always in alignment with their governing documents. Board members should each read their HOA’s governing documents at least once and schedule an annual law review with an association attorney to ensure their rules are not violating any state or federal regulations. When an association has a question about enforcing architectural standards or lease restrictions, it’s always best to contact an attorney before taking any punitive measures.
Are HOA Boards that Avoid Long-Term Planning Doomed to Fail?
Proper HOA board responsibilities include planning for future maintenance and repair projects through routine reserve studies. HOAs that fail to plan for the future often have to issue emergency special assessments that hurt property values and take homeowners by surprise.
How Proper Planning Affects Your HOA’s Reserve Fund
Most HOA boards make the mistake of trying to keep monthly dues as low as possible. When components such as roof replacements, elevator updates, paving, and pool equipment need repair or eventual replacement, an HOA without a proper reserve fund grows reliant on special assessments. Rather than predictably collecting a few dollars each month from homeowners to prepare for the future, boards who haven’t planned for the long-term find themselves forcing owners to pay thousands of dollars all at once.
One of the best ways to save your HOA from speculative special assessments is to budget for the future with a reserve study. Reserve studies done every three to five years allow you to better estimate the remaining useful life of your association’s common elements. By treating reserve allocations as a mandatory budget item that cannot be compromised, HOAs can ensure they will not have to disproportionately increase HOA fees for future homeowners.
How Does Putting Off Maintenance Hurt Homeowners?
Small repairs become more costly and attract additional damage when HOAs postpone maintenance. Odd as it sounds, putting off maintenance can cost homeowners much more down the line. HOA management best practices include creating a preventative maintenance calendar and addressing issues as they arise, rather than letting them escalate.
It’s easy to ignore little problems when the budget is tight. But allowing a small leak to spread, leaving pavement unsealed, or not replacing worn siding can quickly evolve into a more significant issue. What may have cost the association a few hundred dollars to repair can easily become an expenditure of several thousand dollars that damages the common elements and private residences.
Creating a preventative maintenance calendar can help associations catch minor issues before they become serious. HOAs should schedule regular inspections of common elements and hiring vendors to proactively check in on the HOA’s assets. Pumping gas? Get the car checked out. Bringing in the bats? Hire a vendor to inspect your community’s condition.
How Can HOAs Remain Consistent With Enforcement?
Inconsistent enforcement leads to unhappy neighbors and weakens HOA compliance. When HOAs do decide to enforce rules, they must proceed with consistency and proper documentation.
Whenever a board decides to warn one homeowner about a violation and completely dismisses another homeowner’s similar offense, it is not consistently enforcing the rules. Whether done intentionally or out of negligence, inconsistency on the HOA’s part can do major damage. If an HOA suddenly decides to fine a homeowner for something that has been left unchecked for years, the judge may rule that the association waived its right to enforce that rule at all.
Consistency can be improved if the board creates a standardized system that treats all residents equally. Boards should distribute written warnings for the first offense, issue a formal violation for the second occurrence, and hear both sides of the story before issuing a fine. Documenting every step of the violation process creates a paper trail that shows the HOA held a hearing and gave the owner ample warning before penalties were enforced.
How Important is HOA Board Training?
Effective community association management is more than wanting to do what’s best for the community. HOA board training can ensure every board member understands how to read financial statements, compliance laws, and overall HOA governance.
New board members often want to help but don’t know where to start. Without the proper training, volunteer leaders can find themselves lost when it comes to reading financial statements, balancing vendor bids, and knowing what it truly means to act in the association’s best interest. These types of knowledge gaps can lead to inexperienced boards slowing down the decision-making process and spending more money on outside management help.
The best way to prevent common HOA mistakes is to ensure every board member has access to training. Giving new board members an onboarding packet with the current budget, previous meeting minutes, vendor contracts, and a copy of your HOA’s governing docs is an excellent place to start. Encouraging directors to participate in HOA workshops hosted by professional community associations can keep your board up-to-date on new laws, ethical improvements, and management strategies.
Does Your HOA Board Practice These Operational Best Practices?
- Conduct a reserve study every three to five years.
- Document all rule violations and conduct hearings using a uniform process for every homeowner.
- Distribute association financial reports and meeting minutes regularly (Monthly is Ideal).
If you answered “no” to any of the questions above, consider reviewing your HOA’s operating procedures.
Why Do Poor Vendor Relationships Cost Associations More Money?
Contractors should always be provided a detailed scope of work (contract) and have the HOA verify their insurance before work begins. If your HOA board skips this due diligence, you may be left with shoddy workmanship that costs more to correct.
Too often, HOA boards assume all contractors are created equal. When reviewing bids (prices) from vendors to conduct maintenance or major improvements, the board needs to do their homework. Awarding a contract to the lowest bidder without reading the fine print can come back to haunt you. If a vendor skimps on materials, doesn’t show up on time, or isn’t insured, your HOA will be left dealing with the consequences.
Boards should always obtain proposals from at least three qualified vendors that are licensed and insured. A good contract specifies what is expected of the vendor, when the project will be completed by, and the consequences if expectations are not met. Assign one board member to be your point person for the project to ensure work is being completed in a timely manner and up to the quality agreed upon in the contract.
Partner With Goodwin & Company for Operational Excellence
Even the most diligent volunteer directors can get overwhelmed with day-to-day operations, vendor negotiations, or planning your community’s financial future. When this happens, it’s time to call in the professionals.
Goodwin and Company has helped neighborhood associations just like yours overcome operational challenges while keeping resident communications transparent. Whether your board needs budget assistance, vendor guidance, or moral support to write and enforce their rules – we can help. Visit our “Resources for Boards” section to learn how professional community association management can make a difference in your neighborhood.
Running your neighborhood association should not consume all of your free time. Allow our professional team to manage the day-to-day while you focus on what matters most to you. Contact Goodwin and Company today to see how our month-to-month contracts and customizable services can benefit your HOA.
Frequently Asked Questions
Q. What responsibilities does an HOA board have?
A. HOA board responsibilities include budgeting and managing association finances, maintaining common elements, enforcing the HOA’s governing documents, carrying out their fiduciary duties, and more.
Q. How can HOAs improve communication?
A. HOAs can improve communication by utilizing online portals, sending out monthly emails, posting clear and thorough meeting minutes, and allowing open comments at board meetings.
Q. What is the purpose of a reserve study?
A. Reserve studies are crucial because they help HOAs know how much money they should be putting away each month to cover long-term repair costs.
