Being on the Board of Directors

August 30, 2012

So you decided to be a member of the Board of Directors of your HOA.  Now what?  Running a homeowners association is not that much different than running a household or a small business.  Let’s address some important factors for effectively managing a homeowners association.

Should you outsource association management

The size of your community could be the biggest consideration when it comes to outsourcing the management of your HOA.  If you have a small community with very few amenities (less than 40 owners), the board could manage the association with very little time expended and possibly contract a management company for bookkeeping responsibilities.  However, any association that has buildings, pools, gates and roads to maintain should contract with a management company.

The benefit of contracting with an association management company is that as a Board member you are not consumed with the day to day operation of the neighborhood.  You are also not engaged in trying to govern your neighbors, which tends to get a bit uncomfortable.  For a professional management company, its a business, its not personal.  Management companies will assist the Board of Directors by developing budgets, soliciting competitive bids for services, provide annual, semiannual or monthly billings and provide financial statements each month.  Association management companies will also handle the other unpleasant tasks such as enforcing  the Covenants, Conditions and Restrictions.  Therefore you, as a Board member, do not have the difficult task of confronting a neighbor about the boat in his front yard.

But that doesn’t mean you’re off the hook.  The one job the management company does not undertake is the decision making process.  The Board will be tasked with the decision to file liens for unpaid assessments, further actions for violations of the Covenants, Conditions and Restrictions and increasing assessments to cover  the financial burdens of the association.

How to effectively govern your HOA

Finding the right balance between neighbor and authority is daunting for some.  With a professional management company you can focus more on being a good neighbor and less on being the police of the neighborhood.  Let the management company do the heavy lifting.  But make sure your own ducks are in a row and that you are compliant with the deed restrictions.  Remember nobody wants to live next to the nosy, know it all neighbor.  If you find that a resident in your neighborhood is not complying with the Covenants, Conditions and Restrictions maybe do a little detective work to see what the cause may be.  Perhaps there’s been an illness, husband is working overtime or is out of town a lot.  Most people who live in a community understand there are restrictions but circumstances come up beyond their control and they might just need a hand.  Try to lend a helping hand before you become heavy handed.

Peace and harmony in a community is important because your home should be your refuge.  By not being heavy handed in the enforcement of the deed restrictions you can create a sense of community instead of resentment.

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What is a Homeowners Association?

August 28, 2012

What is the purpose of a homeowners association?  Contrary to what some think, it is not to make your lives in suburbia miserable by measuring your grass height or making sure your house is not purple with pink trim.  Homeowner associations are put in place by property developers, usually at the direction of a municipality (local government), to promote, market and sell a particular parcel of land.  The developer incurs all of the cost of infrastructure placement (roads, sidewalks, drainage) with the municipality only responsible for maintenance once the developer has completed the project*.  In Florida, associations are put in place to have a method of maintaining and repairing storm water retention or detention areas that serve that collection of homes.  If there are additional amenities such as pools, buildings or playgrounds, the association then has the responsibility for maintaining those as well.

Membership is the homeowners association is mandatory.  When you purchase your home you become a member of a deed restricted community, which is exactly as it says-there are restrictions to the ownership of your home.  At your real estate closing, you should receive a copy of the Declaration of Covenants, Conditions and Restrictions.  This document lays out specifically what you can and cannot do with your home and property.  By keeping your home properly maintained and in good condition, keeping your lawn mowed and not parking boats, RVs and broken down vehicles in your driveway you can usually avoid the ire of the association’s board of directors or manager.

Maintaining the storm water retention areas and amenities comes at a cost.  Each owner must pay a share (as outlined in the Declaration of CCR’s) of the maintenance cost.  Most of the time in homeowner associations, this is shared equally with each homeowner.  The Board of Directors is charged with developing a budget each year to determine these assessments.  If your community is still controlled by the developer, the developer will determine the budget with the shortfall being funded by the development company.

Once the developer has sold all of his lots and built a majority of the homes he schedules a turnover meeting so that the homeowners may elect their own Board of Directors to oversee and manage your community. These Board members are homeowners and will oversee the financial concerns and compliance with the Covenants, Conditions and Restrictions of your community.  In our next blog installment, we will dive a little deeper into how to effectively govern your community.

* If your community has private roads maintained by the association, the cost of maintaining the infrastructure-roads, drainage and sidewalks, usually rests with the association.  For specifics of your association, refer to your Articles of Incorporation, Declaration of Covenants, Conditions and Restrictions, and By-Laws.