Members trust that the HOA board is making decisions that are in their best interest, and that these decisions are fair and legal. And in many instances, they are. However, the board may unknowingly be making mistakes that put the association at risk. Here are a few common errors that the HOA should be on the lookout for and strive to prevent.
1. Not understanding the governing documents.
These documents detail exactly how the HOA should be run and what is and is not allowed. Before making decisions or taking action, the board should check the governing documents to ensure that they are in compliance. If they don’t, they may be mistakenly violating their own rules. Oftentimes this is truly not intentional – there are a lot of rules and regulations to remember. But brushing up on what governing documents say about various situations and how to handle them can be beneficial.
2. Not communicating enough.
This could be between board members, or between the board and homeowners. A lot of disputes occur because of misunderstandings or lack of information. The board should be transparent with members and keep them informed about what is happening in the community, how their money is being spent, what projects are coming up, and what changes are being considered. It is often better to err on the side of overcommunicating rather than under communicating. If the board does not have an immediate answer, it is okay to say so and let members know they will follow up.
3. Not consistently enforcing rules.
Association rules should apply to everyone equally. Every member should be held to the same expectations. The board should not be picking and choosing who the rules apply to or when. Violations needs to be handled the same way every time. If there is a question about the fairness or validity of a specific rule, then it needs to be discussed by the board and changes recommended.
4. Not paying enough attention to financials.
An effective budget is central to HOA operations. The board should carefully consider how its income and expenses line up and where there is room for improvement. There should be a collection policy in place to ensure members are paying on time, and some of this money should be put away in the reserve fund. If the HOA is not bringing in enough money to cover its costs and build its savings, it should look at raising dues before more serious financial problems develop. In addition, it should review options for saving money such as eliminating unnecessary services, renegotiating contracts, or switching vendors.
5. Not asking for help.
There is no way for board members to have all the answers all the time. Making decisions without having the right information or resources can put the association at risk. Rather than hoping for the best, the board should engage the help of a highly trained and reputable community manager. A community manager brings with them a wealth of knowledge, tools, and resources that can support the association in operating as effectively and efficiently as possible.
Kuester works with HOAs throughout the Carolinas to ensure that they have the information and assistance necessary to operate successfully now and in the future. Contact us today to learn more about the wide range of services we have to offer associations.