Board members must familiarize themselves with the prevailing issues in HOA communities. More often than not, associations encounter the same types of problems. Knowing what these are will enable HOA boards to prevent and address them appropriately.
Most Common Issues in HOA and How to Prevent Them
Homeowners associations are run by a set of volunteers known as the HOA board. This board handles everything from financial management and rule enforcement to maintenance and dispute resolution. As leaders of their communities, board members must know how to prevent problems from arising.
Here are the most common HOA issues and how to avoid them.
1. Noncompliance With State Laws and Governing Documents
It is imperative to adhere to state laws and the governing documents when managing associations. In Virginia, that means following the Virginia Property Owners’ Association Act and the Virginia Condominium Act. It also means reviewing the HOA’s CC&Rs and bylaws, ensuring compliance with all requirements and procedures.
To prevent noncompliance, board members should undergo training and pursue ongoing education. Review laws regularly, update policies as necessary, and check the governing documents. When in doubt, it is always a good idea to consult a legal professional.
2. Poor Budgeting
One of the main issues in HOA communities is poor budgeting. The board is responsible for planning the budget, anticipating both costs and revenue. If the board doesn’t accomplish this task well, it can lead to cash-flow gaps, unexpected expenses, and rising fees.
To avoid this, board members should rely on historical data and current market trends. Review past expenses, negotiate vendor contracts, and check reserve studies to arrive at a realistic budget. This helps the association stay financially stable and keeps everyone happy.
3. Fund Mismanagement
Mismanagement is the downfall of every association. From unauthorized spending and sloppy accounting to outright fraud, these issues can lead to significant losses.
Fortunately, boards can prevent these by implementing strong internal controls over the association’s finances. Checks and large withdrawals should require two signatures, regular audits of financial reports should be performed, and a clear spending policy should be established.
4. High Delinquency
A high delinquency rate is one of the most common issues in HOA communities. When homeowners fail to pay their dues, it can affect the entire association. Boards will have to raise dues for everyone else, levy special assessments, or cut back on essential costs.
Board members can reduce delinquency by implementing consistent, stringent collection policies. Send out notices in advance and follow up with reminders as the due date nears. If owners are struggling financially, consider offering a payment plan. For more serious cases, the board should consider legal action, liens, and even foreclosure.
5. Inconsistent Rule Enforcement
Board members are responsible for enforcing the rules consistently and fairly. This means applying the rules evenly to all residents, regardless of their personal relationship to the board. Nobody gets special treatment.
Unfortunately, one of the most common homeowners association problems is selective enforcement. This is when board members only apply the rules to some residents but not all, or choose to enforce some laws but not others.
Selective enforcement breeds distrust and frustration. Boards can avoid this by following the same process for every violation and documenting all actions taken. It is also imperative to follow notice and disciplinary hearing requirements.
6. Rule Disagreements
It’s hard to make a list of common HOA problems without including rule disagreements. Homeowners don’t always like the rules, especially when they feel too restrictive or unreasonable. This can lead to debates and even disputes.
To ensure harmony, boards should communicate the purpose behind each rule. Make sure all residents know why the rules are important and how they can affect HOA living. Boards should also gather feedback before adopting a new rule.
7. Poor Communication
Board members must keep an open line of communication with residents, managers, and vendors. This ensures everyone is on the same page and that residents are informed of community matters.
To improve communication, boards should leverage various platforms. This includes newsletters, emails, portals, and open meetings. It also helps to provide a way for residents to submit complaints or provide input.
8. Conflicts of Interest
When it comes to legal issues in HOA communities, conflicts of interest are pretty prevalent. This primarily affects board members, who may vote on matters that benefit them personally. This can damage trust in the board’s leadership. Moreover, it can even violate state laws and the board’s fiduciary duty.
To prevent this, boards should follow all policies regarding conflicts of interest. If there is a conflict, the board member must disclose it and recuse themselves from the discussion and vote.
9. Lack of Volunteers
Many communities struggle to find members willing to serve on the board or committees. This can slow down projects and even force a small group to handle heavy workloads.
Getting volunteers might not be easy, but it’s possible. Boards should encourage participation by breaking up tasks into smaller roles. It also helps to highlight the value of the work and recognize volunteers for their contributions.
10. Poor Maintenance and Repairs
When the board defers maintenance, it can lead to higher repair costs and unhappy residents. Curb appeal can plummet, taking property values along with it.
Boards can prevent this by conducting routine inspections and scheduling maintenance work in advance. Make sure to have vendors for every need. Finally, boards should maintain accurate reserves so that the association is prepared for the future.
11. Improper Elections
There are many HOA issues, but none quite as aggravating as improper elections. Election mistakes can result in disputes, recalls, and legal challenges. Homeowners will question the validity of the results.
To avoid this, boards must follow the procedures outlined in state laws and the governing documents. They should also use clear ballots, verify eligibility, and document every step of the process.
12. Discrimination
Homeowners associations must comply with fair housing laws. Violations can result in serious and costly penalties. These usually happen when the board applies the rules to a targeted group of people.
To prevent discrimination, boards must undergo proper training on federal and state housing statutes. Education can go a long way, and keeping each other in check will also help board members stay on the right path.
13. Abuse of Power
Boards sometimes overreach their authority by enforcing rules unfairly, failing to disclose decisions, or acting outside their power. This can create tension and even lead to legal trouble.
Boards can avoid abuse of power by implementing strong transparency policies. They should also adopt and follow clear procedures, involve homeowners in decisions, and establish internal controls.
More Help, Fewer Problems
Navigating the issues in HOA communities can be a challenge for board members, but it is nonetheless necessary. More often than not, seeking professional assistance can help ease the burden and ensure legal compliance.
Keymont Community Management offers expert management services to associations in Virginia, Maryland, and Washington, DC. Call us today at 703.752.8300 or request a proposal to start your journey!
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