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.