As a property manager, I work with several Homeowners Associations (HOAs) in the Memphis area. My door is open to every member of the communities I serve, but the vast majority of the time, the folks I talk to are members of a Homeowners Association Board of Directors.
I have to tell you: I really admire these people! They work hard to serve their community in completely unpaid volunteer positions. And even when they have a property management company, they have a lot of responsibility.
In today’s blog post, I’m outlining what I’ve learned from working with HOA Boards. It may surprise you to learn just how much Board members do! Whether you are in the process of electing a new Board, considering running yourself, or just want to learn more about your HOA, this post should shed some light on a day in the life of an HOA Board member.
5 Crucial Duties of An HOA Board Of Directors
1. Represent the entire community of homeowners.
When you elect a Senator, you send them to Congress to be the voice of your state. In the same way, your HOA Board of Directors is elected to be the collective voice of your entire community.
Ever heard the phrase, “Too many cooks in the kitchen?” Nothing would ever get done if HOAs were democracies in the truest sense, with every little thing voted on by all the community members. By selecting just a few homeowners to lead, decisions can be made quickly by representatives chosen for the job. And more importantly, the Board can make decisions that are in the collective best interest of the community, not just you or your neighbor.
2. Preserve the value of all the homes by maintaining and enhancing the community.
When you think about maintaining or increasing your home’s value, you might think of putting in new flooring, or pruning your own rosebushes. But curb appeal doesn’t stop at your property line. An attractive, inviting community that is well maintained doesn’t just make current residents happy. It will draw new residents too, and entice them to pay top dollar, driving up property values for everyone.
There are countless small details your HOA Board handles in order to achieve this “win-win.” Your HOA Board is responsible for keeping everything in tip-top shape, from the elevator in your condo building to the sign in front of your subdivision. When you net a great profit on the sale of your house, be sure to thank them for their part!
3. Interpret and enforce the rules.
Here’s where the “collective best interest” I mentioned earlier really comes into play. We’ve all heard the HOA Board horror stories, when ridiculous fines have been levied for innocent bylaw infractions. We believe HOA Board members should certainly exercise common sense. Yet, it’s important that they keep everyone in your community following the rules, even when those rules don’t seem the most critical.
HOA Covenants, Conditions and Restrictions (CC&Rs) are in place to protect you. Once again, your HOA Board safeguards the value of your home by making sure your neighbor doesn’t build an unattractive fence, for example.
It can be a challenging and thankless job for HOA Board members to interpret the HOA rules, communicate and enforce them. After all, every situation is unique, and no one wants to be the bad guy. But remember it’s because of your HOA Board enforcing the rules that your neighbor has not painted their house hot pink!
4. Minimize risk and plan for the future.
There are many tasks a HOA Board undertakes that are essential to safeguarding you and your neighbors from risk. HOA Board members have to consider the needs for this month and this year, but they also have to plan for the next several years, and be prepared for challenges that could come up unexpectedly.
- Collect dues. When dues go unpaid, the HOA has to dip into reserve funds to meet its obligations. And if dues aren’t paid regularly, dues for the next year have to increase for everyone. To avoid that, HOA Board members have to diligently ensure that dues are collected.
- Build reserve funds. HOA dues don’t just cover this year’s budget. A portion of regular dues should be put aside for large, infrequent expenses. If a HOA doesn’t have adequate reserve funds, when the clubhouse needs a new roof, special fee assessments of the homeowners have to be made. Instead, most HOA Boards plan for the future and determine how to apportion dues so they can save for rainy days.
- Obtain insurance. You have homeowners insurance, but what about everything in your community outside your door? What if there is vandalism to your condo building, or someone is hurt in the pool? Your HOA Board selects an insurance company and policy to make sure all homeowners are covered in these situations.
- Oversee an audit. A yearly audit of the budget and books is customary for HOAs. It’s the job of the HOA Board to secure an auditor and work with them to check that your Treasurer is running a tight ship.
5. Hire and work with a property management company.
For many HOAs, the responsibilities of the Board of Directors is simply too great of an undertaking for a few volunteers who also have families and full time jobs. That’s why HOA Boards often hire a property manager that offers services such as collecting dues, creating budgets and hiring contractors for maintenance. Having been a part of this process, I can tell you that interviewing and selecting a property management company is an intensive process!
If your HOA Board works with a property management company, they still have plenty of hard work to do. On any given day, the HOA Board members we work with are approving vendors, reviewing reports, making payments, handling disputes, and addressing countless other needs.
I’d love to hear from you: Were any of these responsibilities new to you? Are there any responsibilities your HOA Board of Directors handles that I didn’t include? Leave a comment below!
About Ryan Edwards
Ryan Edwards is the owner and property manager for EZR Management. He founded the company in 2006, building on his years of experience managing and renting properties.