The goal of any community association is to preserve value and prevent HOA financial loss—an important task, to be sure, but also a daunting one. Of course, financial loss can be incurred in numerous ways, so it falls to the HOA to be ever-vigilant. Still, the question must be asked: What are some tangible, practical measures your board can take to ward off financial shortcomings?
Here is one that might surprise you: Make sure you don’t turn off the utilities in foreclosed or vacant homes. Many homeowners will turn off the utilities when they move out, and sometimes the HOA is all too willing to go along with this; after all, doesn’t turning off the utilities ultimately save money? Well, not necessarily: Turning off the heat can lead to frozen and burst pipes in the winter, just as surely as turning off the air conditioning can cause mold problems in the summer. It may be most cost-efficient, in the long run, for the HOA to leave the utilities running, even if nobody is currently occupying the home.
It is important for the HOA to protect itself against property damage, but also against delinquent payments. That’s why it is so important to have written policies in your governing documents, stating the ways in which the HOA can work to collect dues and assessments from delinquent accounts.
A third way in which HOA boards can ward off HOA financial loss is to ensure that all big capital improvement projects are supervised by an independent, third-party consultant—a contractor or a structural engineer, perhaps. This may seem like an unnecessary, additional expense, but, again, it can save on costly mistakes and errors, making it a smart long-term option.
Finally, HOA boards should audit their own expenses on an annual basis. Get several sets of eyes involved with looking over board expenses, and determining what might be unnecessary. A professional management company can provide invaluable services on this front.