Common Mistakes in HOA Management and How to Avoid Them

November 21, 2023

Homeowners associations (HOAs) play a vital role in maintaining and improving the quality of life in residential communities. However, even the best-intentioned HOA boards can make mistakes from time to time. These mistakes can lead to a variety of problems, including financial mismanagement, conflict among homeowners, and a decline in property values.

Here are some of the most common mistakes in HOA management and how to avoid them:

Mistake #1: Ignoring or Misreading the Governing Documents

The governing documents of an HOA, such as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, and Articles of Incorporation, are the legal foundation of the association. They outline the rights and responsibilities of homeowners and the HOA board. Every HOA board member should be thoroughly familiar with the governing documents.

Solutions

Make sure that all new HOA board members receive a copy of the governing documents and time to review them.

Hold training sessions on the governing documents for all board members.

Mistake #2: Lacking a Budget or Reserve Fund

A budget is essential for any organization, including an HOA. It helps the board to track income and expenses and to make informed decisions about how to allocate resources. A reserve fund is a savings account that can cover unexpected expenses, such as major repairs or replacements.

Solutions

Work with your association management team and develop a detailed budget for the HOA each year and review it regularly.
Establish a reserve fund and make regular contributions to it.

Mistake #3: Not Enforcing Rules

HOA rules and regulations are in place to protect property values and quality of life in the community. It’s essential for the board to enforce those rules fairly and consistently.

Solutions

Make sure all homeowners are familiar with the HOA rules and regulations.

Establish a process for handling violations and enforce it consistently.

Mistake #4: Not Communicating with Homeowners

Communication is essential for a successful HOA. The board should keep homeowners informed of upcoming meetings, important decisions and financial matters. The board should also be responsive to homeowner concerns.

Solutions

Establish and use your communication channels: newsletter, community texting, website and/or social media page.
Hold regular town hall meetings to answer homeowner questions and concerns.

Mistake #5: Lack of Transparency

Homeowners have a right to know how their HOA is managed. The board should be transparent about its finances and decision-making process.

Solutions

Make all financial records available to homeowners upon request.
Hold open meetings where homeowners can participate in the decision-making process.

Mistake #6: No Conflict Resolution Process

Disputes among homeowners are inevitable. It is important for the HOA board to have a conflict resolution process in place to help homeowners resolve their differences peacefully.

Solutions

Develop a conflict resolution process that is fair and impartial.
Ensure all residents are aware of the conflict resolution process and how to access it.

By avoiding these common mistakes, HOA boards can help to ensure that their communities are well-managed and that homeowners are happy with the services they receive.

Additional Tips for HOA Management

Hire a professional management company like Goodwin and Company. If your HOA is large or complex, you may want to consider hiring a professional management company. A professional management company can help you to avoid many common mistakes and to ensure that your HOA is run efficiently and effectively.

Get training for HOA board members. There are a number of organizations that offer training for HOA board members. This training can help board members learn about their duties and responsibilities and how to avoid common mistakes.

Be proactive. Don’t wait until there is a problem to take action. Be proactive in managing your HOA’s finances, maintaining the common property, and enforcing the rules.

Let Goodwin and Company Take the Lead

By proactively following these tips, HOA boards can help to create and maintain thriving communities. Whether you’re a homeowner or part of an HOA board, or both, a collective effort to avoid these mistakes and follow the provided tips can lead to a better quality of life for everyone in the community. Goodwin and Company can provide professional management services to assist HOAs in correcting these issues and designing a brighter way forward.