Being a member of the HOA board is a challenging job. There are several HOA Board mistakes that should be avoided from minor to serious that you will encounter along the way. Frequently some flaws will occur, especially in rule enforcement.
Homeowner’s and board members’ relationships are among the most significant parts of a homeowner association. However, it can also be the most exasperating part of HOA if there is no harmonious relationship. And there are many responsibilities that a board member should accomplish before achieving that kind of relationship.
And as a human, people’s reactions are uncontrollable, and as a board member, you must do your best to avoid mistakes and encourage peace and order in the community.
Here are the top HOA board mistakes that should be avoided
HOA Board mistakes that should be avoided: Failing to Read the Governing Documents
One of the most common HOA Board mistakes is not reading the governing documents. In fact, the HOA’s governing documents have everything from the association’s rules and regulations and others. It serves as a guidebook that the HOA needs to follow. And as a board member, it’s your responsibility to be knowledgeable about these documents. However, if you’re not familiar with it, you can’t enforce the rules appropriately.
HOA Board mistakes that should be avoided: Not Following the Governing Documents
The rules were created to be followed. Therefore, you must read and follow the governing documents to the best of your ability. And neglecting these rules is not just a mistake to avoid but can lead to severe consequences.
Working Against the Board
It’s normal to have disagreements when you are discussing some topics. However, if the board has already come up with the decision you oppose, you must respect and support the decision. Thus, never work against the board which will result in disharmony. And worse will prompt the members that the board cannot work together.
Allowing Conflicts of Interest is One of the HOA Board mistakes that should be avoided
Hiring a friend or relative as the vendor is very tempting. From this point of view, it’s a win-win situation since your friend or relative can get a new client, and the HOA can have a great deal. But it’s a typical example of an HOA board member’s conflict of interest. Indeed conflicts of interest are not good for how HOA works.
Not Knowing How to Delegate
As a board member, you must know how to delegate and not shoulder all the work because it will result in poor outcomes and burnout.
In particular, it will help if you consider forming committees to handle different tasks in the association.
Here are some of the committees:
- Architectural Review Committee – they can oversee architectural requests, and they recommend and ensure that the community or property is compliant with the architectural guidelines.
- Budget Committee – aids in the making of the annual budget.
Fail to Budget Properly is one of the HOA Board mistakes that should be avoided
Failure to budget correctly is one of the worst mistakes you can commit as an HOA board member. In any case, the annual budget is the guide for the association’s finances. And if there’s any inaccuracy, it can have a significant effect on HOA’s financial health.
And to avoid these, you have to ensure that it should be adequately budgeted for the short-term and long-term expenses. Moreover, it would be best to reserve fund contributions so that the HOA will not struggle with the funds for major repairs and replacements.
Certainly, it’s also tempting to lower the dues to win over the members. But it’s not ideal. You must keep in mind that low dues are not a sign of a thriving community. Instead, you must not endanger the community’s quality just to save money for the association.
Allowing Late Dues to Accumulate
The primary source of the association’s income is the dues. And without it, the association’s funds will be insufficient. As a result, the first to suffer is the community. Some members pay their dues late; however, the board is the one that is responsible for the collection of it.
One of the responsibilities of the board is not only to collect dues on time. But also encouraging the members to pay on time in their most convenient way is a way to avoid late dues. Moreover, they can use a different payment method such as online or HOA software.
Another way is to apply repercussions to reduce the accumulation of late dues. But if members don’t pay their dues, you can charge them late fines, suspension of amenities access, and take them to court in the worst-case scenario.
Not Communicating Properly is one of the HOA Board mistakes that should be avoided
One indicator of an effective HOA board has open communication. Therefore, the HOA board must communicate with all the residents punctually and properly regarding updates, new rules, and meetings.
Furthermore, it will also help if the members can express their opinion, particularly during an open comment time during HOA meetings.
Certainly, communication is number one when you are on an HOA board. And failure to communicate with your co-board members and residents will lead to misunderstandings. Otherwise, make certain to use the allowed communication channels by your governing documents. Such as mail, email, phone calls, and newsletter. For instance, others also utilize the website to distribute information like policy changes, updates, and events.
Not Learning from Past Mistakes
Learning from the past mistakes of those past board members is a way to avoid them. Thus, you must review past board mistakes through previous minutes of the meetings to understand those mistakes. Most importantly, analyzed what happened with the administration earlier to know and not commit the same mistakes. Hence, you are proposing a new rule, finding out later that it was presented before, and gaining negative reactions.
Inconsistent Policy Enforcement
As a board member, you must enforce policies consistently and fairly. So, don’t be rude to someone you don’t like, and don’t let a friend get away with violating the rules. Set aside any personal feelings that you will not face consequences or legal ramifications for unfairly enforcing rules.
And another common thing that is happening in the HOA is when new board members take seats and change a specific policy or rules without the proper perception of why they exist. Therefore, before revising any regulations or policies, you have to analyze their impact on the community.
Fail to File Tax Returns is one of the HOA Board mistakes that should be avoided
One common misunderstanding among board members is the importance of filing tax returns. HOAs must file federal tax returns like in New York City. HOAs are treated as a corporation and are subject to the New York City General Corporation Tax. Failure to file will result in monetary penalties.
And to avoid forgetting to file tax returns, you must include it in the annual checklist or let someone professional do it.
Fail to Update Insurance
One of the most irresponsible things that an HOA board can do is not to review and update the association’s insurance policies. Insurance is a way for the HOA to protect itself from liability and possible damage. And if the coverage isn’t enough, it will have to pay for things that can’t be paid for, and it might even have to pay for things that can’t be paid for.
Therefore, always ensure to check the insurance policies annually. Validate the renewal and lapse dates, coverage amounts, and claims process.
Fail to Record and Review HOA Finances
HOA is familiar with fraud. And the key to overcoming this is to keep an accurate and consistent record of your financial transactions, which you should review on a regular basis. Working with someone who is knowledgeable about accounting and bookkeeping will be beneficial, or you can seek the assistance of an accountant who can also audit association finances.
Improper and Reckless with Vendor Choices
Another common mistake is when a board member wants to quickly change vendors when they start their new task. However, every change or proposal you make will have to go through a very long process. You can’t fire a vendor quickly in the middle of a project because it will hurt the project.
Before changing vendors, you must do your assessment and talk to the vendors to find out what seems to be the problem and do proper research.
Additionally, you must also follow a particular procedure when terminating a contract with a vendor and hiring a new one. It would also help to thoroughly screen potential vendors and keep away from possible conflicts of interest.
Committing Fraud or Embezzlement
Fraud is the greatest mistake that an HOA board can commit. Fraud, theft, and embezzlement are criminal acts and are prosecutable by law. Sad to say, more HOAs are falling over to these activities. However, you can prevent these criminal acts and remain positioned on the top of your finances, and be honest all the time.
The Bottomline
Committing mistakes is truly inevitable. However, these mistakes are common, and you must learn from them. As a board member, you must be aware that your mistakes could be at risk to the whole community. So please stay away from these mistakes. And remind the co-board member to avoid them as well, and through these, you can lead the way to favorable changes to your HOA.
