HOA boards are vital to the value of your property and neighborhood. It isn’t just about your neighbor painting their house purple – it is so much more. HOA boards make and enforce rules to keep everyone accountable. They make sure that the home and property of each member is properly cared for and ensure safety for all in the neighborhood. When a community has an HOA board, homeowners can also make certain that renters are made to follow the rules as well, even though a renter doesn’t have a financial investment. Research shows that homes with HOAs are higher valued by 4.2%.
Roles on HOA Boards
Most HOA boards consist of Officers, specifically President, Vice President, Treasurer, and Secretary. Some also have members at large. The officers are traditionally elected by the Board of Directors. The point of having a board is to evenly distribute the work and to have a forum of opinions and ideas. All board members are always expected to act in the best interest of the homeowners and to never use a position for personal gain of any type. Responsibilities include:
The board of directors is normally elected by the members of the HOA. Often, they are given the right to sign checks and contracts as well as access the HOA checking account. A director can also be an officer.
Most HOAs are designated as non-profit organizations so the President is like a CEO. He/she will direct meetings, present ideas and lead the group in making decisions. The President will be the one who organizes the meeting agendas and will make certain that each member gets to express an opinion. In addition, he/she would be signing checks and contracts. It should be someone with strong leadership skills and in-depth knowledge about HOA statutes. He/she should also possess good people and communication skills but not thrive on controlling situations or others.
As in a government capacity, the Vice President will take on the President’s duties if the President is unable to do so or is absent. As he/she is intended as a replacement for the President, the Vice President should also be a good leader and have a thorough understanding of the HOA regulations. Many who serve in this position will have other tasks as well and may chair one or more important committees.
Most associations will have a management company that is in charge of the collection of fees, the billing of regular HOA dues and of any late or unpaid fees. In these situations, the Treasurer will be in charge of reporting the financial condition of the association as well as planning an annual budget with income and expenses for approval. In addition, at the end of each year, the Treasurer will, together with a CPA, do an audit of the books.
The secretary is not really a clerical position. This person should be organized and understand how to properly store HOA records such as homeowner information, meeting minutes and financial records. He/she may also assist the President with the agenda for board meetings. Also, the Secretary will make certain all legal requirements are filed in a timely manner and that homeowners, as well as board members, are aware of meeting times. In some communities, the secretary and the treasurer are the same people.
Although you may not see this position on all boards, it is a unique one. There may only be one member-at-large or there may be several. This person or persons acting as a liaison between the board and the homeowners of the community. He/she will be attending all of the meetings and give feedback based on community members’ opinions, ideas, and concerns. A member-at-large may also serve as the head of a committee that is not a good match or may be a conflict of interest for the officers of the board.
Differences in Condo Associations, Neighborhood Associations, and 55+ Associations
The main difference in HOA associations for different types of housing is the perimeters which the association is responsible for taking care of. While neighborhood associations are used to maintain common grounds including any amenities such as pools, clubhouses, and playgrounds, the outside of homes are repaired and improved by the individual homeowner. In Condo and 55+ communities, the association is also responsible for the outside maintenance of the homes. This could include pressure washing, painting, repairs of any kind, and roof replacement. If the condo has indoor areas such as elevators, a lobby, and hallways, the HOA will keep these areas clean, inspected and up-to-date.
Most condo and 55+ HOAs consist of the same types of roles and responsibilities as a regular neighborhood: President, Vice President, Secretary, and Treasurer. There may be some variations in the part each one plays based on property development. These deviations would be outlined in the HOA ordinances.
Time Commitment Requirements
The time commitment required for each officer position on the board of an HOA depends on the size of the community as well as the scope of the covenants. The time needed may range from a couple of hours a month to 15 hours a month. Larger localities with multiple amenities such as pools, golf courses, clubhouses, and tennis courts, usually have many rules and regulations that need to be enforced and policed. Obviously, this type of neighborhood association will require more time. A small community with only a front entrance that needs to be maintained doesn’t require nearly as much time commitment for board members.
As far as terms of office, this is determined by the individual association when the covenants are written. Some may have term limits while others may just be happy to have a volunteer who is willing to serve for more time. Some states have specific rules about term limits for officers within an HOA and these must be followed when setting forth.
Sometimes a community may not have any new volunteers to take the place of an officer who has reached the term limit. Some states will allow the officer to remain in the position until a new officer steps up.
What Does An HOA Board Do?
HOA Boards do not have to write the covenants. These are written and regulated by state law. However, there are many ways that an HOA helps to run a community for the benefit of all of its members. All members of the HOA board should be familiar and understand the bylaws, articles of incorporation, the covenants, conditions, and restrictions or CC&Rs, of their community. You should never go by someone else’s knowledge about these documents but do your own research and learning. It is important to note that a poorly run HOA will be a mess for all – bills don’t get paid and maintenance doesn’t happen.
- The HOA board is tasked with enforcing all of the bylaws and CC&Rs regardless of opinion or bias. This means you cannot let your best buddy next door get away with parking his boat in the front yard or paint his front door orange. The rules apply to all. This also means that officers are required to dole out disciplinary measures when appropriate for violations.
- The HOA board is required to pay any and all taxes on common areas in such a way that additional fees or interest are not charged.
- Officers of the board will agree on purchases of goods or services necessary to upkeep common areas. This means that if a landscape company is needed to cut, weedeat, edge, and blow, the board will hire this person and make sure they are paid accordingly. If playground equipment is broken, the board would need to hire someone to fix it or purchase new equipment. Each vendor used should provide proof of insurance to ensure that liability is limited.
- The association will require its own insurance and the board is responsible for paying and keeping the policy paid at all times.
- It is also necessary to have an association with a CPA and attorney.
- Forming committees for various needs and providing leadership
- Prepare a budget for each year as well as providing financial statements
- Putting together regulations for amenities and common areas. These should be provided to all homeowners once the document is final. Any changes should be sent to community members immediately.
- Some communities may also have capital investment fees that are in addition to the HOA fees. These may be used to improve the community or repair items not specifically covered in the HOA fee. For instance, an HOA may determine that the current swimming pool isn’t large enough to accommodate the growing population of the community. In this case, funds would be used to enlarge the existing pool or add an additional pool, based on future population expectation.
- In cases of capital investment or when assessment fees need to be increased, the board will determine, based on a realistic budget, what the amount will be and notify all members in a timely manner.
- Buying a home with an HOA is a binding, legal contract, one you cannot walk away from unless you sell the home. HOAs can and will enforce rules. Before you buy in an HOA neighborhood, make sure you are familiar with all of the covenants and can fulfill them.
What Experience Do I Need To Be An Officer?
Although someone who is an effective leader will make a good President of an HOA, it doesn’t mean that a person has the knowledge necessary to do so. There are some skills and expertise that can help to make an officer more inclined to succeed in the job set before them. This might be through education, work experience or prior experience on an HOA. An individual considering applying for an officer position should consider the following recommendations:
President and Vice President
This person may want to have experience in law, construction, real estate or have run a medium to large size business.
The most common experience needed would be accounting or financial management.
Experience should include being an Administrative Assistant or Executive Assistant.
Keep in mind that these positions are traditionally unpaid volunteer positions. You need to have a passion for your community and the people within it as you will be working for free for them.
What To Expect
As an officer on an HOA, you should realize that you cannot always please everyone. You may come up against a homeowner who isn’t properly maintaining their home and most likely won’t be happy you are telling them they have to do so. In addition, there may be heated discussions among board members or even homeowners as to how to run the community. You must always keep an open mind, not allow your preferences or prejudices to influence your attitude and be fair to everyone, even people you don’t like or those who seem to constantly stir up trouble. Successful HOA officers will understand how to negotiate and discuss rather than to react to anger or complaining.
How Should I Handle Conflict?
If an individual comes to you in private without the presence of other board members, you should always listen and take notes. However, do not make any promises or give an opinion of what might happen. Explain that the board will need to hear from the homeowner as to his/her grievances. If the person becomes belligerent or argumentive, try not to engage because this can escalate anger and bitterness. As always, if the individual becomes violent or gets out of control, you are perfectly within your rights to call the police.
Remember that you are not just this person’s neighbor, you are in a position of authority. As in a government position, decisions must be made corporately. In meetings, board members should always remain professional and respect one another’s opinions and ideas. If, at any time, a meeting gets heated, you may want to reschedule for a different time when everyone has had a chance to cool off and can think more logically.
Although there is little liability for officers within an HOA, there are some exceptions. Those who are considering serving in this capacity should be aware that you should never make decisions based on personal interests. Decisions should always be made as a team with everyone’s input carefully considered. It is also vital that officers ascertain that funds are collected and used appropriately so that debts are paid in a timely manner. There are a couple of things that an officer can do that would open them up to personal liability. These are cases of neglect of responsibility:
- Personally signing for a debt
- Signing a contract or agreement without doing so as an agent of the HOA
- Agreement or contract execution without permission to do so by the rest of the board
- HOA directors are not personally liable for injuries that have been caused by HOA neglect. However, an HOA officer could be held liable if they neglect to perform or direct activities that cause injury.
Obviously, the taking of HOA funds to use for personal use is a felony offense just as it would be if you did so with company funds from your employer. Funds should always be handled carefully and all members should decide how to spend money.
Positive Reasons To Serve
There are also some great reasons to serve as an officer on an HOA. You will make many lifetime friends and have an intimate understanding of all that is going on within your neighborhood. Other positive reasons include:
- Being a part of something bigger than just your little piece of property
- Helping to keep your property value and the property value of your neighbors’ homes high
- Protecting the environment where you and your family live from deteriorating
- You will have a say in how the money you pay your HOA is spent
Common Problems Within HOAs
There is no perfect HOA. But working as an officer or director gives you the power to make your HOA as effective as possible. With work and dedication, an HOA can run like a well-oiled machine and benefit all of its members. Some common issues include:
It is the board’s responsibility to inform members about meetings and assessments. Often times this doesn’t happen and homeowners will be angry. They pay a lot in HOA fees and deserve to be kept up to date.
Not following up on violations
The homeowners count on the board to deal with neighborhood violations. Everything from dead grass to parties at 3 am need to be addressed. This is the only democratic way to handle things.
Maintenance and repairs of common areas, as well as homes, should be done promptly.
The main purpose of having an HOA is to ensure that property keeps its value and the only way to do that is by following through.
Making exceptions for some residents
Again, it is imperative that board members treat everyone the same and hold each homeowner to the same expectations.
When a neighborhood is in the process of being built, the developer is often the decision-maker on board members. This can cause problems because the developer may not want to spend money to take care of the things that should be done. However, the good news is that once a certain percentage of the neighborhood is occupied, a board will be appointed that is made up of homeowners. The bad news is, in situations where a community is slow to fill or construction is stopped due to problems or a slow housing market, the developer and his employees could remain as the board for quite some time.
What Happens If I Want To Resign?
Officers are able to resign at any time. However, be aware that this might affect the HOAs ability to conduct business. In voting situations, an HOA is required to have a quorum. This means that of the positions traditionally on the board, a percentage of the people must be available to vote on issues and make decisions. This is much like our democracy in the United States. It provides a certainty that representation is reflective of the people involved. Without a quorum, nothing can move forward. One of the most common percentages for a quorum is 51%. This means that if the board has five positions available, three people must be present to vote.
If an officer is also a director on the HOA, it can have an even bigger impact. A Director may be the only person allowed to sign checks or may be the 1st signer. They are often the only ones with access to the checking account and who can execute contracts. In some states, the board will have 30 days to get a replacement for the director. If this does not happen, the board must petition the court for a receiver.
A receiver is someone who will be paid for their services. This will definitely be a negative situation for the community as this is not a budgeted expense. Funds normally used for updates and maintenance will be used to pay the receiver a salary, court costs and fees for attorneys.
Deciding If You Want To Do This
If you are considering a position on an HOA board, there are many things to consider. To make an informed decision, research your HOA, talk to other HOA board members and consider your time constraints. Also, think about your personality and experiences that might or might not make you a good candidate. Lastly, study your HOA rules to make certain you feel passionate about the requirements you will need to reinforce.