HOAs (Harassing Overbearing Authority)

We all know HOA stands for Home Owners Associations, but to many they are just a Harassing Overbearing Authority.  We’ve all heard horror stories of selective management, rude violation letters, etc.

I have been a member of no less than five different homeowner associations over the years.  All had an outside management company with a homeowner based board of directors, except the one I am now in.

When I moved into my home in 2013, I got a rude awakening as to the function, or should I say malfunction, of a self-managed HOA.  The board had been in place for over ten years and its members were all from the same click.  Board meetings were not publicized, minutes were hastily taken if at all, checks were written by the treasurer to the treasurer, communication with homeowners was lax or nonexistent, governing documents were out-of-date, tax returns were not filed, the reserve account was low without any deposits made for years, delinquent accounts existed for over ten years without trying to collect, dues kept going up, board elections were not held, and management of covenant violations was selective at best.  Basically, there was a we they attitude in place that is until 2017.

That year a new board was finally elected when the membership attending the annual meeting asked for and got three new members elected to the board.  In my opinion, getting new members on the HOA Board is the best way to combat problems with a self-managed HOA.  Not just new members, but new members who care about following the governing documents and state laws set up to protect homeowners.  Members who are compassionate of others and care about the association as a whole, without self-interests, is essential.

As the newly elected volunteer president of our HOA in 2017, I suggest the following for any self-managed HOA board:

• Follow the covenants, resolutions and bylaws when making decisions.  If your documents have not been updated in a while, check out the current state laws governing HOAs and update your documents as soon as possible.  Using an attorney to make these updates is expensive but well worth it in the long run.  These documents make handling any disputes or violations easier to manage and the possibility of selective management less likely.

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  If you have delinquent accounts, focus on them after you get your governing documents up-to-date.  Check out the state’s requirements about debt forgiveness.  In Colorado you have only six years to collect.  Our board had to write off over $10,000 in past assessments due to this law.  The board then sent out letters to all past account holders for the previous six years.  We offered them a six-month payment plan (required by law) which let them pay what was owed without any fines or fees (a one time offer).  We just wanted the dues paid up.  With this plan we were able to collect all but one of the delinquent accounts within six months.  With the last one unsettled we filed a lien on their home for the past due amount including fees and fines.  Then we filed a lawsuit in small claims court.  This threat of legal action compelled the homeowners to meet and negotiate a settlement out of court.  Now, in just 15 months we have settled all of our delinquent accounts and collected over $8,000 in past due accounts.

• Survey homeowners.  Find out what is important to them and then budget accordingly.  It may take a couple of years to meet their needs and wants but just by asking you will get buy-in and create goodwill in the neighborhood.  The survey results take the pressure off the board when criticism occurs.  You are able to tell the critics the homeowners voted to do such and such, not the board.
• Communicate, communicate, communicate!  Our board created a user-friendly website, a board Gmail account, and a quarterly newsletter to help us communicate with homeowners.  The website includes all governing documents, board meeting and annual meeting minutes, and past newsletters.  The Gmail account is accessible to all board members and is a great way for homeowners to communicate with the board collectively.  The newsletter is sent out electronically to owners who gave us permission (required by law) and the rest are mailed or hand delivered.  Newsletters take time to create but are necessary.  The more owners know what is going on with their neighborhood and their money, the better.
• Have your bank accounts reviewed by an outside accountant when a change in the treasurer’s position occurs or every two to three years.  This review will help keep everyone honest.
• Speaking of honesty, be sure to have all outgoing checks signed by more than just the treasurer.
• If you don’t have a reserve account or have not conducted a reserve study, it’s never too late.   No one likes special assessments due to unforeseen expenses.  It is good practice to keep a reserve account well-funded to at least 70% of future needs.  Our board added a provision to our bylaws to add at least 10 percent of annual dues collected to our reserve account every year until it is well-funded.
• As a board host a spring clean up or other type of community-wide event.  As a new board we instituted a spring greenbelt clean up to bring neighbors together and to save the association money.  We pruned trees and shrubs, cleared leaves out of the fence, raked up leaves and twigs, and even put in some new plants and bark mulch around our pool area.  Homeowners have helped us paint the pool house and even remove a dead tree.  We have saved the HOA thousands of dollars through these community building events.
• Consider hiring an outside management company to manage the HOA.  This option is expensive but may be necessary in some situations.

Through volunteer homeowner efforts our board has seen more positive interaction within the neighborhood.  While things are not perfect in our neighborhood and we lost a couple of board members through the process due to the stress involved, we have made many positive changes for the association.  We have helped change our Harassing Overbearing Authority of an HOA into a Humane Organizational Activity.  You can too by getting involved!

Feel free to comment about your HOA or any questions you have in the space below.  I’d love to hear from you.  And remember, if you like this post, please click on the Like button.