Ten Things Every HOA Board Should Know
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- Category: Board of Directors
1. Your primary role should be to protect and enhance the value of your community.
2. As directors and officers of a non-profit corporation, you have a legal fiduciary duty. Your actions and liability as a board member are generally protected by governing documents or state statutes governing non-profit corporations based on duty of care, duty of loyalty, and acting in good faith. The board should also be protected with directors and officers insurance.
3. The Board should adopt and adhere to a written Code of Conduct.
4. The board must comply with federal, state, and local laws and ensure that the association's governing documents are followed in a fair and consistent manner.
5. Board members have no individual authority separate of the board and should not make any commitments on behalf of the board. Sensitive communications with other board members should be done by phone since email may be introduced by discovery in the event of a lawsuit.
6. Know the basics of parliamentary procedure, participate with etiquette and support the chair.
7. The board president does vote on motions unless there is a conflict of interest. In at least one state, Florida, the president must vote and is considered to have voted in the affirmative unless he or she votes against the motion or specifically abstains.
8. Communication with members is key. Do not govern in secrecy except when executive sessions are required. Treat residents with the same respect that you would expect. Provide residents with an opportunity to address the board. This is usually done in a resident's forum at the beginning of some or all board meetings.
9. The board should not become 'condo commandos' by overly aggressive enforcement or fining practices. There are first time infractions that usually result from a resident's lack of knowledge and misunderstanding. There are minor issues, major issues and safety issues. There are repeat offenders. There are the few that commit obvious rule violations, challenge the authority of the board, and stir up disharmony in the community. The challenge for the board is finding the right governing balance that includes objectivity, fairness, consistency, diplomacy, tolerance and measured response.
10. Always work to recruit new volunteers that have the time and skills to serve on the board and on committees. The board should also have a orientation or training plan in place for new members.
Ten Things Every HOA Resident Should Know
1. Know the Rules - Understand and comply with the restrictive covenants, by-laws, and other rules and regulations.
2. Know that you must pay your assessments on time.
3. Do not ignore communications from your homeowner association, especially notices that may regard outstanding assessments, rule violations, or fines. The board has the responsibility to govern fairly and consistently in the interest of all members, which includes placing liens or foreclosing for nonpayment of assessments and fines. Don't let a minor fine escalate to the point that the association board must turn the matter over to an attorney. A fifty dollar fine can easily lead to five hundred dollars to five thousand dollars.
4. You must maintain your property according to the governing documents and rules.
5. Know that an Architectural Review Application and approval is generally required before making improvements. This typically includes sheds, fences, above ground pools, playground equipment and much more. This may also include paint colors, door styles, landscaping, and mailboxes.
6. Know that your association has certain responsibilities to the membership including compliance with federal and state laws, fiduciary responsibility by board members, elections, meeting notices, meetings, due process and much more as defined in the covenants and by laws.
7. Stay informed and participate in the business of your homeowner association by reading the meeting minutes, attending the annual meeting, understanding the budget, and volunteering to serve on a committee or the board.
8. Maintain a current address with your homeowner association. This is critical if you are a member of a homeowner association but do not live in the community. Examples include rental property, second homes, homes used by children in college or retired parents, or investment property intended for future construction.
9. Know that if your home is rental property or occupied by others, ensure that tenants/occupants understand that they must also comply with certain restrictive covenants such as parking, pets, architectural changes, and other requirements. This may also include association rules regarding use of playgrounds, pools, tennis courts, parking and other common areas.
10. Know who is in charge. Maintain contact information for an association representative. This may be an on-site employee, a management company, a board member, or the builder/developer.
Ten Things Every Homebuyer Should Know
1. Do your HOA homework before you make an offer. Don't buy the perfect dream home in the neighborhood from hell.
2. Know who is in control. Almost always the association is a non-profit corporation and is governed by a board of directors. This is either the declarant (developer/builder) or elected residents. Only 20% of associations contract with a professional management company for day to day operations.
3. Know if your association is pre or post transition. The process of transferring control from the developer to the association residents is called 'transition'. The developer has wide latitude to amend the documents and change development standards when in control.
4. Ask for and read the governing documents before making an offer.
5. Ask for and review the association financials. – Review the operating budget and make sure the reserve fund is adequate for future capital projects.
6. Know that association fees (assessments) are required and that the board usually has the authority to impose special assessments.
7. Know that you have to live by the rules or gain the support of the community to amend the governing documents and rules.
8. Know that the board has the power to assess fines, restrict access to services, place liens, and foreclose.
9. Know that HOA laws vary widely by state and are complicated. Right or wrong, lawsuits are expensive, time consuming and stressful. Better to educate yourself rather than becoming involved in a lawsuit.
10. Don't be a whiner if you don't do your homework and purchase in a community with HOA issues. Your alternatives include accepting the issues, making things better by volunteering to serve, filing a lawsuit, or moving.
