When an HOA or Condo Association elects certain members to serve on its Board of Directors, the members have chosen to create a self-managed Association. The elected directors are usually volunteers; and setting aside the fact that many of these Associations are well managed, it is important to recognize that the Boards' Directors may be inexperienced and could make costly mistakes. A few major mistakes occur when the Boards: (a) are disinterested in reading and fully understanding the Association’s governing documents, (b) fail to recognize the limits of their authority imposed by state law or their own governing documents; and (c) are disinterested in, or unfamiliar with, keeping adequate books,records, and the Minutes of the Board's meetings. These mistakes create unnecessary problems that can go unnoticed for several years which makes correcting them more difficult than it needs to be; and frankly, some of these mistakes can be attributed to Boards of Directors that have self-servicing agendas, consistent with making decisions that benefit themselves at the expense of other members. Therefore, it is perfectly reasonable for a members of self-managed HOAs to ask for performance reviews.... similar to those used to evaluate professionally managed Associations.
Performance standards for a professional manager are stated contractually which means if the contract is breached, the contract can be terminated almost immediately. The performance standards for a Board of Directors of a self-managed Association are either set out in state law or in the Association's governing documents. But, usually these standards leave some leeway for interpretation. Therefore, a Board’s decisions for a self-managed Association should be monitored closely in order to deter possible misuse of funds or authority. An independent financial audit of the HOA’s books and records should be prepared periodically. The Minutes of the Board’s meetings should be scrutinized for omissions that reflect unreported decisions that became known later….when it may be too late or too costly to reverse them; and all alterations to, or misinterpretations of, the Association’s governing documents, should be checked for conformity with required rules for amending these documents.
Irrespective of the type of management that is selected for an HOA or Condo Association, every member should be able to expect that the Board will preserve, protect and advance the value and condition of his or her property which is usually stated in one of more of the Association's governing documents. Therefore, Boards of self-managed Association should offer to have their performance reviewed or the members should be obliged to do it themselves.
For example, take our survey.below...and let us know how well your HOA is addressing your needs- Email to firstname.lastname@example.org or contact us at www.Hoa-Consulting-Services.com
1. Do you think that the your annual dues have been spent to improve conditions nearest to your lot that in an effort to maintain or preserve the value of your lot or home? (e.g., Sometimes this can be achieved by improving entrances or landscaping common areas).
2. Do you know whether your HOA has set up adequate reserve accounts that are properly funded?
3. Have you noticed any decline in the physical condition of the Association's common areas, its buildings or infrastructure?
4. Have annual dues been increasing by more than 2 percent per year over the past decade?
5. Has the Association requested a financial audit of its books and other records every 3-years?
6. Have the Association's governing documents been changed accordance with the requirements of these documents?
*(Leaving a blank indicates that "you do not know"; and if answer "no" to every question, then your Association may not be functioning as well as it should in which case the Association's members can request that the Board agree to a professional performance review which may include a financial audit. These are services that we provide. Please submit your survey responses to and add the name and address of your Association.