11 Jan Common Mistakes Your HOA Can Avoid in 2021
When a new year begins, it’s an opportunity to pause and reflect on ways to better our communities and professional lives. The process is not always easy or pleasant, but the changes that come from it can mean a world of difference for a homeowner’s association and the community it supports. An HOA has a responsibility to its members and residents to assess where change is needed, understand what those changes are, and implement them.
A homeowners association and the supplemental team that surrounds it, such as property managers, have the power to impact and enrich people’s lives. Doing an internal audit can help stave off common mistakes. Here are some areas and processes that should ensure a smooth 2021.
Not Following the Three C’s: Contact, Connect, and Communicate
Communication tops the list of things an HOA needs to prepare for annually. Outlining clear communications guidelines during meetings, out of meetings, and for day-to-day issues and concerns residents have is a must. Ensure and follow the bylaws and host meetings when required; if a quorum of board members is playing a round of golf and discussing association business, that does not count as the meeting.
When communication expectations are met, people will be surprisingly accommodating and understanding. There need to be multiple ways for residents to contact and connect; phone, email, text, even social media. Returning and thoughtfully answering phone calls and emails within a defined period will alleviate issues before escalating. By acknowledging that a request or complaint has been received and addressed can make a world of difference and minimize complications.
Resident feedback is also vitally important to running a thriving community. In addition to open meetings, including a suggestion box and sending out surveys using an online tool increase feedback. An online survey lets you capture information, making it easier to group multi-choice or one-word responses into a visual format, leading to action.
Falling behind on routine maintenance early in the year
A home is a very personal thing. The same pride of ownership felt for one’s own home extends throughout the community and we all know how easy it is to fall behind. Property maintenance is one of the core things the HOA manages and the most apparent to residents. Maintaining high standards throughout the community by keeping common and recreation areas clean, dutifully landscaping, pest control, and taking care of amenities is a big part of the job. One of the selling points for residents is the value they place in this service. A low-maintenance lifestyle is vital to community residents, and often their expectations are high.These large scale, high amenity communities require knowledgeable support. That’s one reason why utilizing a trusted property management company is essential.
List and stay on top of necessary upgrades for 2021 and do not “nickel and dime” major capital expenditures. Trying to kick the can down the road to artificially keep costs low will ultimately catch up and put the board in an uncomfortable place. A special assessment (when needed) might be unpopular, but that is part of the job, and people understand it when it’s explained correctly.
Download our planner/outline and make sure you plan for maintenance, meetings, and more.
Not following your own rules and guidelines
Nothing will frustrate residents faster than seeing a board member bending the rules. If you’re on the board and your best friend begs you for a cat, but no pets are allowed, do not give the “okay.” Your board must have the ability to discuss tough subjects like playing favorites when it comes to residents. Follow the governing documents or have a “voted on and openly communicated” reason for an exception. An HOA is a formal process run by a professional group; operate within the declaration, covenants, conditions, and restrictions (CC&R’s) and bylaws to minimize potential liabilities and out of respect for ALL residents.
When issues do arise, emotions can run high. Always find a resolution that adheres to board policy. When in doubt, the right property management company can provide the professionals or expertise to review the proper procedures and guidelines. There needs to be a few degrees of separation between a board member and residents. This can be tricky, and the lines can sometimes get blurred. But when issues or accusations arise, especially when the legality of something comes into question, follow the formal process and proceed with caution.
Fines without proper warning
Have you ever parked your car illegally, knowing that you just had to “run in and out” but ended up getting a ticket? Well, that’s the feeling many residents will have when they are fined for something, especially if it’s a first offense. The truth is that not everyone does familiarize themselves with the rules. People usually do things meaning well but may not think things all the way through. If a resident is new to the community, be lenient the first go around. But also make sure that the bylaws are easily accessible and spelled out clearly for residents so that confrontations arising from fines can be reduced or ideally eliminated for the most part.
Working with the wrong property management company
There’s an excellent reason why HOA’s rely so heavily on a property management team: it’s their full-time job to ensure the community runs the way residents expect and the board wants. Not bringing in a professional team will end up burdening the HOA board regardless of the community size. Board members will have varying degrees of experience when it comes to community management. Attempting to self-manage a community usually ends poorly. A trusted team is there to move the “big rocks” for the HOA, handle emergencies, enhance the community’s quality for residents, protect and prepare residents, and maintain high standards.
Not keeping tabs on vendors
It’s common knowledge that the cheapest option is usually not the best option. Find trusted vendors that continually deliver quality. Review contracts as needed to ensure they are keeping up with everything agreed upon and are charging the approved rates for service. Rely on your property management partner to help in this area.
Avoid conflicts of interest and lack of communication when selecting vendors for the community too. It’s a headache waiting to happen if you don’t, and if something does go wrong, the finger-pointing is in the direction of the person connected to that vendor. Be sure the vendor directives are spelled out and the expectations are being met, or find the right company to handle this process.
Trying to keep costs low to appease residents
The on-time collection of fees is an absolute necessity for the HOA. Late payments can negatively affect the cash flow on which the community depends. When a problem or dispute comes up, know your action plan and the protocols. There needs to be prompt follow through on whatever the consequences are for nonpayment and what other potential actions may occur. Do not let residents call your bluff and back down.
Boards have a fiduciary responsibility to be upfront about financials. Unforeseen costs can and will happen. What was the hand sanitizer budget one year ago before Covid? Probably not too much. It may be a good idea to do a financial audit to ensure everything is “accounted for” and that no claims of fraud or mishandling of funds can be declared. Audits and financials are one of the critical reasons communities and associations look to Worth Ross for services.
Giving in too quickly to resident demands
A good rule of thumb is to be firm but fair. If all parties are doing their part – residents, property managers, and HOA – there will be mutual respect. Inevitably there will be disagreements (some stronger than others), refuted payments, violations, etc. Do not let the “squeaky wheel” get oiled. It’s also good to ask, “if I let this resident do this, where will it end?” Is it something that can be granted for an individual, or will other residents expect or demand the same? Use the rules and bylaws to back up any disagreements and temper aggression.
There will be people always jockeying for preferential treatment in some way or another. But that’s a slippery slope and not one you want to go down. When changes do need to be made, see if there is a way to usher them in slowly, with communication, and the least amount of disruption to the community. And make sure any new policies are for the benefit of the overwhelming majority of residents, not just a few squeaky wheels.
Not keeping administrative duties in check.
Budgeting, assessments, taxes, insurance, oh my! Take a moment and think about what is required to manage our own homes; now extrapolate that out by, well, a lot. It’s a big plate that keeps getting more helpings added. Set up systems that remind you of important dates for filing or submitting documents at the state and local levels. A community calendar that provides details about when to file annual reports, taxes, and other documents should alert the HOA board well in advance.
Insurance remains one of the most critical aspects of planning and preparing in a community too. If your crystal ball is broken, don’t worry, everyone else’s is too. That’s why insurance is essential to protect a community adequately. There’s a host of unforeseen events that can strike at any moment (if 2020 has taught us anything, it’s that). There’s a fair amount of liability that must be accounted for, and rates can vary wildly, so shop around and do your due diligence.
As a voluntary board member, it’s okay to be busy with other things and not have all the answers. It can be a challenge for the homeowners association to balance their personal lives’ responsibilities with that of being a board member. Everyone has demands on their time and a finite capacity. That’s why an HOA can only be as good as the team that surrounds it. Working with an experienced property management team can provide guidance and stewardship HOA’s need when faced with difficult choices.
There’s a lot to consider being a board member, and the learning curve can be steep. Try consulting with your property management team, past board members, and current sitting members to find out where mistakes most often occur. Learn from the past and trust in the experience of those around you. Staying active and engaged in the community, openly communicating with residents, and making sure the board processes are formal, and rules-driven will ultimately make 2021 a (mostly) mistake-free year.