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.

 

 

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.

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.

Board of Directors: Do You Qualify?

There’s something rewarding about being on the Board of Directors of an HOA, especially if you fit the criteria. Like that one time when you you were spending time at the pool on a sunny summer day and you noticed one of the umbrellas was not doing their job due to the huge hole at the top. Being on the board allows you to take responsibility and replace the umbrella. With a HOA management company, the request is simple. All the board member would have to do is call their management company, report the maintenance issues and the company would contact a vendor for them.

There is a certain type of person that can serve on a homeowner associations Board of Directors. The person needs to be responsible, trustworthy, and have the community as a whole in mind when making decisions. When board members are elected, the community chooses the people they think would do the best job at overseeing the community and all the aspects that come with the position. They need to know how to handle money and have the ability to make wise financial decisions. A board member is a leader and should have the knowledge necessary to oversee the community.

Do you have what it takes to be on the Board of Directors of your homeowner association? Would you be able to conduct the day-to-day business of the HOA and make decisions that affect all the owners? Most board members agree that serving on the board is a valuable and rewarding experience. It gives you an opportunity to serve your fellow neighbors while protecting and enhancing the assets of the community. It is serious business, but also a task worth doing well in order to safeguard the investments of all.

HOA Board Member Responsibilities

If you’re new to your HOA board, you probably have some questions about the roles of the individual officers. Please keep in mind that the specific responsibilities of each board member are subject to change from association to association. However, these are the generalized roles for each officer:

Board Secretary – The Secretary plays an important in the association’s affairs. This officer accurately records the minutes at board meetings and insures that quorum criteria has been met. In addition, the Secretary has the job of sending meeting notices to homeowners and ensuring that they are sent in an advance, to comply with state laws and the community’s governing documents.

Board Treasurer – The Treasurer has a prominent role in overseeing the associations finances. This officer has the responsibility of developing the association’s budget as well as overseeing the financial operations of the association. If the association has a Finance Committee, this is usually headed by the Treasurer. This is a vital position for any association, and it is highly recommended that the Treasurer have experience in accounting, business, or financial management.

Board President – The leader of the Board of Directors, the President of the Board works in close conjunction with the community association’s property manager. If the association is using the services of a professional management company, the president is usually the main point of contact for that company, though this is not always the case. The President conducts all board meetings and should always set the example for others by being ready to take charge and serve whenever the situation calls for it.

Board Vice President – The role of the association’s Vice President varies with each community. One constant is that the Vice President will take the place of the board President if that member is not present. Like any other position on the board, the role of the V.P. can be as effective as the officer is willing to be.

In all actuality, the property manager is not a member of the Board of Directors. However, the manager plays such a pivotal role in the direction of the board that we couldn’t leave this position out of the mix. The manager exists to help the board in many ways. This often entails assisting the President with meeting annual and board meeting preparation, working with the Treasurer to draft the next year’s budget, and offering guidance when making decisions.

The property manager should be an experienced professional with extensive knowledge of the industry. He or she should have the “people skills” necessary to lead and guide the members of the board without being overbearing or harsh. The manager offers unbiased and informed counsel to the Board of Directors which, ultimately, ensures that everything runs as it should.

Though these are only brief and general descriptions, they give insight into the basic functions of the average Board of Directors and how they work with their property manager. At a minimum, the board will have a President, a Vice President, may group the Treasurer and Secretary into a single position.

An effective board will always keep the best interests of the association at heart. They will enforce all of the association’s rules equally and fairly. The will take seriously their fiduciary duty to the community, and will do their best to make informed decisions. If your HOA or condo board is considering a new management firm to help with the day-to-day operations, contact Cedar Management Group by calling us at (877) 252-3327 or by sending us an email. We would love the opportunity to serve you.

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

Board Member Education

If you are a new member of your community association board of directors, you are in for an educational experience.  Among the many subjects that you will deal with are architectural review, contracting, communication, meeting conduct, insurance, financial reports and taxes. Most new members of community association boards of directors do not have a broad knowledge of these topics.  So how does one get up to speed about these subjects?  In a word, education.  Many educational opportunities exist for both new and experienced board members; the important thing is to avail yourself of these opportunities.

Community Associations Institute

One of the best sources of information is Community Associations Institute.  CAI is a national non-profit organization that provides education and resources to community association homeowners and the professionals who work in this industry.  The CAI website (www.caionline.org) has helpful resources online, like a Board Member Basics course, available to CAI members and to nonmembers.  There are also publications on a wide variety of topics geared toward community association volunteers.  CAI members are eligible to take in-person and online classes, attend programs and receive Common Ground magazine.  A CAI membership can be a great investment if you want to know more about community associations and best practices in community association operations.

Community Manager

Another educational resource for board members is the person who serves as your community manager.  He or she is a generalist who is familiar with a wide array of topics encountered every day in community associations.  Need to know about the different kinds of grass that grow in your area?  Do you need help conducting a productive meeting in the shortest time possible?  What are the different types of federal tax forms that are filed by community associations?  Ask your manager.  He or she should either know the answers or be able to get them for you.  Your manager can also help you avoid reinventing the wheel.  He or she is likely to be knowledgeable about how other associations have successfully dealt with problems that your community is experiencing.

Board Training

Some management companies present educational programs from time to time on subjects of interest to board members.  Topics may include free legal advice, how to read a financial statement, tips on taking minutes, and suggestions on how to run a board meeting. They will often call in local industry experts knowledgeable in fields like finance and law.  At times, they may even call in national experts to discuss board best practices and conflict negotiations.

Research

Yet another source of educational information is the Internet.  Answers to many questions are available online.  For instance, if you have had a soil sample done and want to know the significance of the pH level, there’s a lot of information about this subject on the Web.  Or if you want to educate yourself on the state statutes governing your community, a copy of the law is just a few clicks away.

More than ever before, there are educational opportunities for board members who want to enhance their knowledge.  If you want to do your best for your community association, take advantage of CAI, your manager, your association management company and the Internet. You’ll be glad you did.

Stewart Wise, PCAM®
Community Manager
Community Group

Board Minutes – The Basics to Include

Good minutes of the board of directors meeting can take a variety of styles, and levels of detail. But there are certain “key ingredients” that all minutes should have, in order to provide an intelligible history of the organization’s activities, and serve as an effective tool for managing the organization going forward.

Date, time, location and type of meeting (e.g., regular, annual, special) – If notice of the meeting was required by your bylaws, attach a copy of the actual notice, with a brief explanation of how it was disseminated. This information, in conjunction with the bylaws, can establish that the meeting was properly called.

Attendance – Names of all attendees, and names of any board members who did not attend. If the bylaws require that absences be excused, indicate whether any absences were excused or unexcused. The attendance record establishes that there was a quorum, and can help clarify whether a particular individual participated in a board action. If someone leaves in the middle of the meeting, the minutes should record the point at which he or she left.

Discussions – It is often difficult to decide what to include, and omit, in lengthy discussions. At a minimum, the minutes should indicate whether an agenda item was addressed or not. They should describe any agreement on action that will be taken (for example, a committee agreed to meet on an issue), whether the issue being discussed was on the agenda or not. Also, any new information presented to the board, even in a casual way and even if immediate action is not required, should be mentioned. It might become important later.  The gist of each discussion should be recorded, although it is not necessary to go into detail, or to indicate which board member said what.

Actions – Recording actions of the board is critical. If resolutions drawn up before the meeting were adopted or rejected, the action can be noted in the minutes, with the resolutions attached, or the resolutions can be incorporated into the text of the minutes. When resolutions or motions are being considered, it can be helpful to the board if the person taking the minutes reads the exact wording of the motion before the vote is taken. If the vote was unanimous, the minutes should reflect that. If not, the names of those voting for and against, or abstaining or dissenting, should be listed. This can be crucial for an individual director who seeks to associate or disassociate himself or herself with a particular board action, or establish that he or she abstained because of potential conflict of interest. In many states, directors are assumed to have agreed to board actions unless their dissent is noted in the minutes.

Special procedures – For example, if a “supermajority” is required for certain actions because of bylaws or state laws, the minutes should reflect that the requirement was met. If an action is linked to the action of another organization, the minutes should mention that the other organization’s action was taken appropriately, and evidence of that action should be attached.

Approval – The minutes should be approved, as read or as corrected, at the next meeting of the board. The secretary of the organization is responsible for making certain that the minutes accurately reflect what happened at the meeting – even if the taking of minutes was delegated to someone else.