6 Common Failures of HOA Board Members

Far too often associations fail to please their homeowners, making their neighborhoods a place where noone wants to live. That’s why we are listing the biggest mistakes we see board members make time and time again. If your association is experiencing some of these problems please refer to the preventative steps listed below

1.Failing to collect overdue fees on a timely manner

Collecting fees can be a daunting task, especially if some homeowners are reluctant to pay them. As a board member, it is your duty to collect fees in a timely, professional manner, without fear nor favor. Failure to do this can impact your entire association’s cash flow and hinder your HOA.

2.Failing to review financials

It is very important to closely watch your associations spending. Far too often, association’s experience fraud in some way or another. In order to prevent this, accounting for every dollar spent will help ensure homeowners that their money is going towards their best interest and prevent fraud amongst your association.

3.Failing to file tax returns

It is very common for board members in self-managed associations to forget to file important legal documents each year. Every homeowner’s association is required to file a federal tax return (IRS Form 1120-H). Many board members think that the association is not required to file anything because it doesn’t pay taxes. This is not true. You are still required to file this form on behalf of your association. Failure to do so can put your association at risk of losing its non-profit status and will result in penalties and interest that will need to be paid to the IRS.

4.Failing to file Secretary of State documents. Another common mistake is board members forget to file their annual reports with the Secretary of State. Failure to file the required documents can result in a dissolution of the association which can cause potential legal and financial issues. If this does happen, it can easily be remedied by contacting the Secretary of State office to file the necessary forms and pay any applicable penalties.

5.Failing to maintain insurance coverage. Boards need to take special care to review insurance policies; understand lapse dates and renewals; and review coverage amounts. If a claim occurs during a time when insurance has lapsed, it can cause major problems. Do you want to be the one to break the news to the association members that a Special Assessment is going to be required because your board forgot to renew the association’s insurance?

6.Failing to ask for professional help

There is absolutely nothing wrong in seeking help for your association, especially when it comes to accounting and money management. Let the professionals come in and help you with these matters to ensure your association is functioning at its greatest potential.

 

 

Are You Asking Enough Questions Before Hiring an HOA Contractor?

The HOA board is responsible for making decisions when the community is in need of maintenance or repair. Different skill sets are required based on the area of need, so it’s important to be mindful of the contractor you use to get the job done. It’s easy to go with anyone and assume they’re able to perform whatever type of work you need, but that line of thinking can get you in a lot of trouble. Let’s go over the top factors to consider when hiring a contractor to work on your HOA.

Are They Licensed and Bonded?

This is so important. Always be sure the work being done is performed by a company that is licensed and insured. Yes, other companies might be cheaper, but they are cheap for a reason. Having insurance means you have protection is the contractor doesn’t complete the full work for some reason or if someone gets hurt on your property.

Ask each contractor you interview for proof of insurance and verify with the insurance company to make sure it’s legit.

Ask Questions

Be sure the contractor is knowledgeable in the area of work you need. Ask them how they will handle the project and what they know about the process. Look for someone who has done the type of work you need many times before and seems confident in it. You’ll also want to do a review of their online status. Google their name and see what their online ratings look like. How are they rated with the Better Business Bureau? And do they have a company website?

Set Scope of Work

If you find a  roofing contractor you’re impressed with, start talking about the specifics of the work. Be clear about costs, expected timeline, and materials needed. The bigger the project, the more you’ll want to go over details and be clear on expectations. This will help you avoid any surprises or disappointments down the road. And board members will be able to watch the work in progress knowing what’s expected.

Get Contact Information

Do this way before the work begins. Tell the company your preferred form of communication, then get more than one form of contact for them — preferably at least two phone numbers. Also, find out when they are available to answer during the day and make sure they are responsive while doing the work.

If you have any doubts about hiring a contractor, a homeowners association management company can also help guide you or give you a list of companies they suggest.

How to Stay Neutral as an HOA During Election Time

Election season is in full swing, and it’s usually expected to see people supporting their political views publicly, often in the form of yard signs, flags, or car stickers. And while it’s of course fine to have members in your HOA with passionate and opposing views, you also want to make sure everyone sticks to your HOA’s rules related to this.

Know Your CC&Rs

So, are members in your HOA allowed to post political signs in their yards? That can depend on your state and your rules. In some states, HOAs have to allow political signs, but they have to be restricted to a certain size. Others prohibit them completely. Encourage each owner to understand your state’s and HOA’s specific rules before putting up anything about the election outside their home.

And of course, make sure you as a board understand the rules so you can relay them to any owners who ask. And always be sure that the board and HOA as a whole sustains a completely neutral bias during each campaign election. You can, however, encourage homeowners to go out and vote.

And remember that if your CC&Rs conflict with the law, the law does take priority. If you have any questions or doubt about what to follow, speak with your attorney and call on your HOA manager to help you deal with any conflicts of interest among members.

Remain Unbiased Online Too

Remember that there shouldn’t be any leanings towards one political view or another on anything related to HOA business, including the HOA website, social media accounts, and (online and offline) newsletters.

Finally, send out reminders to owners during each election season about what is and isn’t allowed, and encourage everyone to remain respectful of their neighbors’ opinions. We all know politics can get heated, and it’s important to maintain the sense of community among HOA neighbors despite any conflicting views.

How to Make Sure Your HOA Homeowners are Heard

Although board members in an HOA are responsible for making important decisions in the association, it should be noted that decisions affect every homeowner. Thus, it’s important to be sure all homeowners are still given a voice and an opportunity to be heard in the community.

Here are the top tips for making sure your HOA homeowners are heard:

#1 Communicate News and Updates

Figure out the methods of communication your homeowners most prefer, and use them to communicate regularly. If your homeowners are generally older, you might want to stick with mail or email; but if they include the younger crowd, it might be a good idea to use social media accounts and an HOA website for most updates.

#2 Give Homeowners a Place to Speak Up

As much as it’s great to keep homeowners up-to-date, you still won’t be hearing what they have to say by just sending updates. So make sure the communication is a two-way street. Encourage owners to submit their concerns and opinions on a website forum, through surveys, or communicate with your community on social media.

You can also make sure time is set aside for owners at each board meeting  to speak their minds. Update them on when the meetings are scheduled to be held and the topics that will be discussed. Your HOA manager can help with arranging this.

#3 Only Communicate When Needed

Remember that it’s not necessary to get input from homeowners every time. Research reaching out to homeowners for times when you’re making a decision on something that really affects them, such as making changes to amenities or proposing big projects that could change their monthly fees.

As an HOA board member, part of your responsibility is to make decisions that are best for the community. So when it’s important, reach out to homeowners so they have a chance to voice their concerns and opinions as well. Figure out which means of communication is best for your community and utilize it to the best of your ability.

Developing The Annual Calendar

iStock_000022164657XSmall-400-x-380-300x285One of the most important roles of the Board of Directors for a community association is to establish the direction of the association and allocate the necessary resources.  Most of this work is done through the approval of your annual budget, which many of you just completed for 2013. The resources you have available to allocate in this process include both dollars and human resources.  Dollars take the form of the assessments you collect for operations and reserves, and human resources are the time required of your community management team, the board and other volunteers.  One way to assure that you use these resources wisely is to create an annual plan also referred to as an Annual Calendar.

Used effectively, Annual Calendars become the road map for management to control operations and for volunteers to manage deadlines for community functions.  It becomes the single-source of all of the critical events, activities, compliance and renewal dates for the year.

Following is a sample listing of items found in an Annual Calendar:

  • Meeting Dates (Board Meetings, Committee Meetings and the Annual Members meeting)
  • Routine Preventative Maintenance (gutter cleaning, equipment service, carpet cleaning)
  • Reserve Projects  (replacement of common area components)
  • Facilities Open and Closing Dates (swimming pools)
  • Election milestones (call for candidates, mailing of election materials, meeting  plan)
  • Budget Preparation Cycle
  • Insurance Policy Renewal Dates & Milestones
  • Common Area Inspection Schedule
  • Social Events
  • Newsletter Publication Dates

The intent is to note key dates and events, however the details will generally be found in other documents.

In addition to the operational benefits of having all of the community priorities noted in one location it can also serve as an effective communication tool.  Think about the time you spend at board meetings explaining to members the current priorities or defending a scheduled expense.  If you publish the calendar, and have it available on the association’s website, everyone in the community will know what they can expect during the year and they’ll know that the funds for all the activities published in the calendar have been included in the approved budget.

So, with the approval of the budget fresh in your mind, and the beginning of a new year less than a month away, now is the time to get that annual calendar completed.  Not only will it help you track your accomplishments, but it will improve communication between the board and the members of the association.

The Role of an HOA Board Member

It’s that time of year again… new members have just been elected to serve on their Board of Directors. With this comes the election of officers and thus a new tone is set for the Association.

Each new Board member brings a dynamic to the meeting that sets the tone for the operation of the Association. These new volunteers are, most of the time, homeowners who have a vested interest in the protection of their property values and the direction the community takes into the future. Each of them can make their role as important as they choose and become as involved in the Association operations as they desire.

The President obviously presides over the meetings and typically works closely with the Association’s manager. This role is an important one and usually the one that is most clearly defined. We all know that the President “runs the ship” at the Board meetings and takes a prominent lead with the attitude of the Board of Directors, which at times, can be a reflection upon the rest of the Community. It is primarily the President’s role to be the liaison with the management agent and this person can often be called upon in an emergency to make a quick decision. The President should be the solid voice of reason for the Community and extend a neighborly hand when tragedy or the unexpected strike the Community. Sometimes it is the President who leads by example and gets involved with the “Community Clean Up” day, for example. Clearly, this role is the most well established and easily determined role for the Board to recognize and respect.

The Vice President serves the role as President in the event the President is not available. However, other responsibilities for this position remain up to the person holding it. It could be the easy thing to do to sit and wait for something to happen and to jump up when called upon – – but as leaders of the community, it is important to set an example. So while the Vice President may not take center stage at the Board meetings, this role as well as the others can be equally as important as that of the President.

The Secretary and Treasurer are sometimes combined into one position or separated depending upon the requirement in the governing documents as well as the preference of the Board. The Secretary holds the responsibility of ensuring adequate notice is provided for meetings, quorum requirements have been met and the minutes of the meeting are adequately taken and maintained. The responsibility that comes with this role is not something to be taken lightly as the records of the Association are precious. It is a necessity to ensure that notices are sent in compliance with not only the governing documents of the Association but also the state requirements as well.

The Treasurer reviews the Association’s financial records, ensures timely payment of invoices, and makes necessary investments of the Association’s funds. The Treasurer also takes a lead role in the development of the financial budget. Clearly the importance of this role should not be overlooked. However, Treasurers may not become as involved with the financial operations of an Association if they don’t feel comfortable in this arena. On the other hand, the complete opposite may occur wherein the Treasurer becomes too involved or advises management of certain practices that could be completely out of line with appropriate business practices. Selecting a treasurer with an accounting background and good business judgment is essential.

In all cases, it is necessary for management to play an active role in the direction the Board takes and to help guide and direct the Association along the best path. Usually, Boards recognize the value of having professionals handle their day to day operations and of being in a position to offer their community the very best in experience and wisdom.

Each of the above roles can be as prevalent and responsive as the amount of effort one puts into them. The newly elected board member can take the position and run with it or not, but in all cases, the expertise of the management staff should be fully utilized. Such guidance is invaluable and a professional manager recognizes that there is nothing more important to an association member than protecting one’s home.

Heather Graham, CMCA, PCAM

President & CEO
Community Management Corporation

Helpful Tips When Preparing To Attend Board Meetings

Every association has board meetings, and every resident of that association is allowed and welcome to attend these meetings, if there has been public notice (usually with a postcard or noted on the HOA’s website). All residents are not only encouraged to read the prior meeting’s approved minutes once available, they also should observe and actively participate. All meetings of the association board are open and residents who wish to address the board are welcome to do so during the homeowner forum conducted at the beginning of each business meeting. Here are few tips for participating in your association’s meetings:

1. Put it in writing

You will get the best response if you put your questions or opinions in writing prior to the meeting. This isn’t mandatory, but it helps you and the board. Some issues may require a little research by the manager. Also, the board can serve you better if members havetime to consider your concern.

2. Call ahead

As a courtesy, the association asks that you phone and let the manager know that you wish to address the board. This also allows them to notify you if a meeting is cancelled for any reason.

3. Plan your remarks to last no longer than five minutes

Board members enjoy visiting with residents; however, the meeting agenda is always very full, and the five-minute limit ensures that all business gets conducted. This doesn’t mean big issues can’t be presented. If your concern requires more time, please summarize it in five minutes, and the board will add it to the agenda for the next meeting.

4. Don’t expect an immediate response

Board members don’t act independently. All issues require discussion and sometimes a vote. Sometimes an immediate answer is possible, but it’s just as likely that you won’t get a response until after the meeting.

5. If you need information, call the manager

The purpose of the Homeowner Forum is for residents to share opinions and concerns with the board. Residents seeking general information (like a status report on a project or the board’s position on an issue) can get a more immediate answer from the manager.

The HOA Election is Over, So What’s Next?

The ballots have been counted and the new board has been chosen.  Immediately following the board member acceptance of their new Board of Directors positions, it’s time for business.

Immediate Decisions

The first step is immediate – the community manager officially opens the organizational meeting, allowing the board members an opportunity to choose who will serve as officers of the association.  In most cases, there are only four officer positions: president, vice-president, treasurer and secretary. But in some cases the governing documents allow for an assistant treasurer or assistant secretary to fill in the position if the officer is unavailable.  These additional roles play an important part, but as assistants, they do not have voting power and will not count toward quorum of the board.

The next important piece of business is to determine the signors on the bank accounts. The manager should provide a new set of signature cards with a Corporate Resolution to be signed at that meeting. Most banks require copies of driver’s licenses with the submission of the new signatures as well as a copy of the minutes from the Annual and the Organization meeting.

Review and Communication

During the first week of the new board of directors, many items should be reviewed, including existing contracts, delinquencies, financials and any immediate problems for the association.  It’s also important to take advantage of the momentum of the election and begin communicating with homeowners.  An introduction letter announcing the names of the board should be sent out either by the board president or the association manager. This letter is a great opportunity to relate the board’s goals for the association in the short term and in the future.

To make sure everyone is on the same page and of singular focus, the new board president and other board members, if they chose, should schedule appointments with their association management company (if they have one), the association attorney, accountant and insurance agent and any contract vendors they may have. It’s also imperative for board liaisons to standing association committees meet with their committees and discuss the future of the committee.

One of the most important aspects of serving on a board is the opportunity to communicate. When an association has communication, rumors and complaints are few. Newsletters, websites, unit owners education seminars, small get-togethers and other events are all ways to increase communication.

Serving on a board of directors in an association is a volunteer position, a selfless task.  You can either be treated as royalty or as an employee but either way you have accepted a fiduciary responsibility to protect the association, ensure wise spending, and maintain the value of the property by regular maintenance and no “Band-Aid” repairs.

What it Takes

Be prepared to make all types of decisions. You have an obligation to act in the best interest of all owners in your association, who elected you to represent them.  It is important to understand the strengths and weaknesses in your community, to work within the parameters of the budget, to know your governing documents, and to be consistent in your actions and decisions. Board members are humans; they may make a mistake, but should always practice full disclosure.

An ideal Board Member:

  • Has a general interest in the community as a whole;
  • Is able to look at the big picture;
  • Can differentiate between pet peeves and major problems;
  • Is not interested in actually managing the community, but allows the Manager and staff to do their jobs and works as a team with fellow board members;
  • Never makes a decision based on their own likes or dislikes but rather on what is best for the community;
  • Must be willing to give a reasonable amount of time to devote to being a director;
  • Understands that majority rules and no one board member can make decisions alone.

A good mission statement, for any board of directors:  Practice justice in governing, be prudent in business decisions and search for harmony in the community.

Joanne L. Willoughby, CMCA, AMS, PCAM
Vice President
Association Services of Florida, AAMC

How Do I Run a Successful Open Board Meeting?

Community Board Meetings can be challenging in terms of overcoming logistics. As always, the key is time invested in preparation and organization. Please consider the “professional meeting skill tips” provided below that might assist your Community in conducting a successful Open Meeting .

SETUP

Seat all your Board members at a head table. The table should be arranged in a semicircle with the President at the center. Place the Board members on either side of the President. Have name cards printed large enough to be read by the community members present. Seat the Community Manager and other staff on one end of the table. Seat the Council to the Association and others who are guests (perhaps an accountant) on the opposite side for balance. In the center of the semicircle place a podium facing the President. The membership should be seated facing the Board members. Name cards, with positions or titles, should be placed in front of each person. In evaluating this arrangement, homeowners will realize immediately that this is a business meeting, not a social event.

AGENDA

Keep your agenda limited to the business at hand, small items that are easily accomplished first, controversial or complex issues next.

HANDOUTS

At the entrance to the room, place the agenda and summary or significant information concerning each agenda item. By the time the meeting commences, the attendees will be informed as to all issues that the meeting will address. 

CONDUCT OF THE MEETING

The President of the Community should run this meeting. After each agenda item is presented, the President should ask their questions, then ask Counsel (attorney) for input if there was a legal issue and then ask the Board members for input. All responses should be directed to the President, not the audience.  

After Board member input, the President should ask the public if there are any statements. (Please check your individual state statutes to ensure homeowner participation is required. There are states where is it required and states where it is simply requested to solicit input from community members.) Those in the audience who have a desire to speak should be asked to speak from the podium. Again, the podium faces the Board, not the audience.

After each statement, the President may ask other Board members if they have any questions. After hearing public input, the President may ask the Board Members if they have anything to add.

Next the request for motion should be made if needed and action on them. After the vote there should no further discussion and the President will then move to the next agenda item.

SUMMARY

Your Board meeting will run more smoothly and efficiently when good meeting protocol is followed. The position of each Board member is clear on each issue. The President has complete control of the meeting at all times. Board members should be well informed in advance with fact sheets, agendas and other necessary documents. The public is allowed input and the Board has the opportunity to consider all public input prior to decision making.

  1. Dissemination of information: handouts at the door. 
  2. Logistics: A lens has a focal point. Holding a meeting with the audience in a curvature plane that focuses on the President and board achieves an end result: keep eyes forward! 
  3. Behavior: The President obviously needs to be strong enough to take control and to have exercised some ground rules for which all boards members are aware of and abide. 
  4. Public Input: Opinions are spoken, understood and taken into account. Motions are made after Board and public input.

Jo-Ann M. Greenstein,CMCA, AMS, PCAM

Vice President, Phoenix, AZ branch

RealManage

Selecting a new HOA Board member

Something unexpected has occurred, leaving you with a vacancy on your condo or HOA board. Now board members must step up to the plate and appoint a new member to serve until the next election…. How can you make that decision without causing dissention amount the members?

It is important for a board to have all available seats filled throughout the year so if you find yourself with an open seat you should take steps to fill it.  The steps you take could lead to finding a productive member or could lead to distrust within the community so it is important you consider taking the following steps.

First, you want to make the community aware that a seat has become available, and that any member of the community in good standing can nominate themselves to fill that position, which will be appointed by vote of the remaining board members.  The community will appreciate knowing that you have opened the door to volunteers within the community.  What the community will not appreciate, is appointing a close friend to the board the second a seat becomes available, without looking into possibly more qualified members.

When you begin receiving names of interested members, have a questionnaire prepared and ask them to take a moment to answer each of the questions.  This will help you get to know each of the volunteers and what their goals and interests are.  A productive board is going to be well rounded so try to vary the skills and professions of the members.  This will allow for different insights into problems, and more knowledge about particular issues that come up during normal business.  Try to always have one member that has an accounting or financial background, and one that has a profession that requires problem solving and long term planning, as both of these skills are important to an HOA.  These questionnaires will help determine the skill sets of each candidate for an initial review.

If you have multiple people that are qualified, the best thing to do is bring them to a board meeting and interview them each, to get a better feel for how they will communicate and interact with the other members.  Everyone should serve on a board for the same reason, to make the community a better place to live, so any personality conflicts between board members will just get in the way of the ultimate goal.  Try to avoid selecting a member that may be too confrontational or opinionated.  Confrontations between a board member and a resident reflect poorly on the whole board and cause the residents to lose faith in the board’s ability to run the community. Someone who is too opinionated may not be able to handle being outvoted on a particular topic which can cause a rift among the board.

Once you feel you have the best candidate selected, make them feel welcomed and announce it to the community.  If you have the time, setup a quick meet and greet so residents can meet the new board member.  The new board member should be made to feel like part of the team immediately, so get them caught up on projects already in progress, and assign them a task that they can handle right off the bat to make them feel like they are contributing.  Since filling an open seat will only last through that term, it is important to make the new member enjoy their time on the board so they rerun for a position when their term expires.