The day-to-day planning and financial stability of a Homeowners Association is generally attributed to the diligence and competence of its HOA Board. If you’re thinking about running, there are a number of things to take into consideration, such as the skills and qualifications, which will help you manage effectively.

Responsibilities

Board members may possess numerous powers, depending upon their designated office, and they collectively will decide how to wisely spend the income of an association and protect it from unnecessary expenses. They will also decide who should be hired to perform tasks like property management, maintenance, reserve studies and legal services.

Some board members will also be accountable for setting the agendas and keeping accurate minutes on all of the meetings. Other such responsibilities include conducting fair elections that are in accordance with the state laws and CC&R’s and establishing rules and working alongside the HOA’s attorney to settle delinquent debts. Members of the board may also be involved with architectural improvement, application reviews and budgeting.

Qualifications

There are specific qualifications an HOA board member must possess to avoid making you and your association open to legal liabilities. A board member will normally be required to have a high school diploma or GED and, for some of the larger associations, a bachelor’s degree is the minimum requirement for board member consideration. There are also a number of college and certificate type courses that specialize in HOA operations. Communication skills are also imperative since a board member will have to deal with other members, occupants, vendors and attorneys to discuss HOA issues that may arise.

Since you will be partly responsible for creating budgets, making payment to vendors, assessing fees and going over financial reports, basic accounting skills are imperative for the position. Even where a property manager is employed for these tasks, the board must be able to provide oversight to some degree.  A background in management and business administration might be especially helpful for maintaining policies, updating incorporation articles and addressing issues in relation to property and tax assessments. A person with strong management skills can help the association form a tight bond and business structure. There are a number of programs designed to help board members with the current laws and regulations in regards to HOA management.

Personal Attributes

Before contemplating a run for the HOA board, you may want to take a couple of things into consideration. Depending on the size of your association, holding a board position could be very time consuming, so you first need to determine whether you can devote the hours to the tasks at hand. People who are impatient and lack people skills may not be the most suitable candidates for this position. Board members service the owners, and you may face difficult situations. This type of job takes good listening and team building skills. It’s also a thankless position with few rewards, other than being able to participate in shaping the environment in which you live.

If you have determination, and you are a motivated person with the right qualifications, being on the HOA board may be the right fit for you. It’s an excellent way to give back to your community by finding the best solutions and ideas that will bring the residents together.

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 Increasingly, many Americans turn to gated neighborhoods in an attempt to live in a place where they feel safe and secure. The concept of walls, gates and security cameras keeping out invaders and capturing attempted crime before it starts is very appealing to many who are willing to pay more for that privilege. Logically, it seems that such places would have less crime, or even be entirely devoid of crime.  Let’s take a look at the pros and cons, and examine whether or not that theory is holding up.

Is the Concept All Wrong?

The basic premise behind gated communities is that by keeping out unwanted visitors, especially those from bad neighborhoods or who have no good reason to be there, crime may be prevented. Logically this makes sense – those who have no good reason to be in a community could very well be up to no good.

Statistically, however, the vast majority of crimes within a neighborhood are committed by its own residents. Criminals of any sort tend to be opportunists, and venturing far from their home “turf” is not something they lean toward. After all, it would not only be harder for them to get there, and they might not know how to get away rapidly. The facts are that most crimes are committed by residents within a community, not foreign invaders.
Are All the Gadgets Doing Their Job?

You might think that at least the presence of guards, cameras and gates would deter any would-be criminals who are living in or legitimately visiting the gated community – but long-term studies have shown that they do not. Criminals are by their very nature not good at making decisions. After all, if they were good decision makers, they would not have chosen to be criminals.

Deterrence like walls, cameras and guards tend to be ineffective at preventing crime, though they might be instrumental in catching and prosecuting criminals after the fact. That is certainly a good thing, but if your sole purpose of purchasing a gated home is to prevent crime, the fact that the people committing crimes are much more likely to be caught is not what you want to hear.
The Bottom Line

The conclusion from various studies and crime statistic surveys concerning gated communities is this: they are no more or less safe than other suburban areas! Certainly, getting away from neighborhoods most plagued by poverty and gang violence increases personal security. Additionally, logical steps like keeping your house locked and secured will equally help prevent crime. But the installation of walls, cameras and guards does little beyond that, since only ‘police-state style’ surveillance (and their methods of immediate removal of persons before they have made their move) is the only way to truly prevent crime. This sort of lifestyle is unpleasant and not what most people want – even if they value security.

If you want to live in a gated community, you certainly have many choices. Gated communities generally enjoy higher home values, better care and maintenance of general facilities (roads, parks, clubhouses) and are tailor-made to the desires of the affluent. They are, however, no more or less safe than other suburban communities.

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 Selling your home can be a difficult experience, but if your homeowner’s association is preventing you from displaying a “for sale” sign on your property, the process can be downright impossible. A homeowner’s association is typically an organization that has been set up by the residents or developer to regulate and maintain a certain standard of living for members. Unfortunately, some HOAs go to extremes when it comes to enforcing rules, and this may be a problem if you need to sell your home using traditional methods.

Why HOAs Don’t Like Sale Signs

One of the biggest reasons that an HOA would choose to prevent a seller from placing a “for sale” sign on their own property is that it may give the appearance that the neighborhood is an undesirable location. This effect can be multiplied if a number of people are trying to sell their homes in the same neighborhood at the same time. Another reason for preventing such signs could be that some signs may not reflect certain image standards that the HOA contract dictates. In some cases, even if an HOA allows a sign on a homeowner’s property, the sign must conform to strict standards regarding size, color and placement.

Why Signs are Necessary

As a homeowner, not being able to place a sign in your yard advertising the sale of your home can mean many missed opportunities, especially in a poor housing market. Using a “for sale” sign is one of the most common and effective ways to let a passersby know that your home is available, possibly the asking price, the name of the real estate agency in charge of the sale and more. When these signs aren’t able to be displayed, due to the actions of an HOA, sellers may find it takes much more time and money to advertise their properties through other channels.  Some HOAs even prevent open houses, or even showings other than by appointment only.

What Can Be Done?

If you’ve found yourself in a situation where your HOA is blocking the placement of your sign, you may want to first speak with your HOA president. This should be done politely and professionally, and you should outline your reasons for needing the sign. Additionally, you should carefully examine your CC&R’s Rules and Regulations to find out exactly what you can and cannot due to remedy conflicts. Finally, if you are unable to come to a resolution with your HOA, you may need to speak with an attorney who specializes in property and real estate law or contract law.  Another avenue is to search for your county’s ombudsman; with so many HOA complaints in the past two decades, most areas have ombudsmen available to protect the public.

It’s important to keep in mind that, while most HOAs have some legal authority over their members, homeowners in California can rely on civil code section 712-713 for legal recourse. Essentially, this section of the civil code states that homeowners may place a “for sale” sign on their property displaying relevant information, as long as the sign is reasonably sized and is not blocking traffic. This means that your HOA cannot make something that is legal by California law into something that is illegal – simply by putting it in a contract. If you have more questions on how this law pertains to your specific situation, please seek out the services of an attorney.

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 Homeowners associations (HOAs) have great powers in marketing, selling and managing residential subdivisions. The more amenities a homeowner association has, the more attractive it will be to potential residents. Having specific amenities can even allow the association to raise their HOA rates.

One way of increasing the attractiveness of an HOA is by adding a common area health club. This club could include saunas, showers, gym equipment and even hot tubs. The advantages of adding this amenity are numerous, but it does not come without a few possible liabilities. Knowing all of the rules, advantages and disadvantages of a common area health club will allow an HOA to properly weigh the costs and benefits before investing in such a large amenity.

Advantages

Having an on-site health club carries several advantages. The property values of the homes related to this club will assuredly rise, allowing the homeowners association to raise its HOA dues. Though there will, of course, be new expenses, the additional fees can also be put toward other positive endeavors that can raise property values. Some people would wonder if the higher dues would dissuade some from buying into the HOA, but in all likelihood a health club can do just the opposite.

Health clubs are becoming increasingly popular throughout the United States. People are finally realizing that active lifestyles can save them a host of health problems in the future. Some states have seen over a 100% rise in health club memberships since the new millennia. This is a sign that people are beginning to take better care of themselves, and if they have the option to pay a little more in HOA dues to have a health club at home, they are likely to jump at the opportunity.

Disadvantages

Having an onsite health club does carry with it some possible risks. Any injuries sustained in the club may very well be placed in the lap of the HOA. Even having the liability waiver in the HOA membership agreement, a California court recently found that this waiver doesn’t prevent a person from bringing forward a negligence claim.

Liability waivers may help in some cases, but absence of negligence is going to be a HOA’s best defense in any liability claims against them. Equipment should be properly maintained at all times, with service records maintained. One HOA recently faced civil liability because someone had allowed gum to get stuck to a treadmill; not having been cleaned in a timely manner, a member’s resulting injury landed the HOA in civil court.

Precautionary Measures

There are a few things an HOA should consider before bringing in aspects of a health club. One is that these facilities will likely be available twenty-four hours, but they are not likely to be staffed at all times. This means that everything should be done to ensure all equipment is absolutely safe to use and spaced properly to give plenty of room to move about. Faulty equipment should be shut down and repaired or removed as soon as possible.

One way to waive potential liability is to hire a corporate entity to manage the health club facilities; this can be done through your professional management company.  A full time attendant may seem unnecessary, however having watchful eyes on the area during all open hours could make the difference between a mishap and a serious injury and lawsuit.

Having a common area owned health club can be a great addition to any homeowners association. It certainly makes your community stand out in a crowd, attracts those interested in a healthy lifestyle and of course raises property values substantially. Whether you’re considering adding a health club to your common areas, or purchasing a home in a community that includes one – you’re about to add tremendous opportunities for enjoyment to your wise investment.

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  If you live in a home or a condo that is part of an HOA, you might wonder how they ever became so powerful and seemingly all pervasive. As you may know from experience, when you live in a developed community you are required to abide by the rules, or you could be on the receiving end of repercussions from fines and penalties to property liens. While some believe Homeowners Associations are tyrants, others love that they help keep property values high and their communities clean.

Events That Prompted the Need for HOA’s

When you connect the dots, the history of HOA’s can date back all the way to the nineteenth century. In the late 1800’s, the economic structure of the nation shifted from primarily agricultural to innovative industrial. As more and more industrial jobs became available in the city, our citizens began moving into town to be closer to their work. When the 1900’s brought the invention of the automobile, workers were now able to move back outside the hustle and bustle of city life. This created a greater demand for suburban areas where people really wanted to live.

For over 100 years, the American Dream has been mostly about home ownership. To keep up with the growing demand for a “home of your own” in the 1960’s, our nation took on a number of different development projects toward making this dream come true for many Americans. With less government open lands available around the nation and the rising costs of construction, more and more people drove the need for developer-planned communities to be built in suburban and metropolitan areas.

The First HOA’s are Conceptualized 

Whether you love HOA’s or dislike them profusely, you can thank William Levitt for the concept, born from the vision of providing attractive homes on a budget for veterans.  It was the country’s first concept of a modern planned community, and the first Levittown was built in 1947 on Long Island. When veterans bought these homes, they were required to agree to very strict terms that prohibited many actions. While those terms did not constitute a formal HOA, they set the tone for the future, with more and more developments recognizing the need for bylaws and restrictions that were formally written into every contract.

In the late 1960’s, industrial workers throughout the nation started to buy residential homes in planned communities that were created to give people the opportunity to live a more rural lifestyle. As these communities cropped up, the developers also realized the need for laws to be enforced to keep these new communities nice and safe. Local governments also began to require the developments to create and maintain their own streets, utilities and common landscaping.

HOAs remain very popular today because they maintain amenities and keep the common areas in a community clean and presentable. There are often more amenities offered, property values are generally higher, and community pride is more evident in a development managed by an HOA. All these factors have naturally given the HOA a very powerful position, sparking much debate and additional governmental regulation.

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California Assembly Member Wieckowski, along with Assembly Member Dickinson, has introduced a new bill that would amend the Davis-Stirling Common Interest Development Act. This amendment would make it easier for Homeowners’ Associations (HOAs) to identify the buyer of a home that has been foreclosed on and sold. This would benefit the HOA because, until the buyer is identified the HOA can’t collect fees on the property.

The Davis-Stirling Act – In a Nutshell

The Davis-Stirling Act allowed developers to create common interest developments, commonly called Homeowners’ Associations (HOAs). This act also gave HOAs the authority to make rules and levee fines against homeowners for breaking these rules. When HOAs are formed, they must create a document called a Declaration of Covenants, Conditions and Restrictions.

These CC&Rs, as they are commonly known, are recorded at the county court. When someone buys a home or condominium that is under the jurisdiction of the HOA, they agree to abide by the CC&R. HOAs have been likened to city governments; and they often provide similar services like security, utilities and trash pickup. The CC&R functions like a city charter, with the HOA being the government body.

Why the Law Needs to Change

The services that HOAs provide are paid for by those who live in the common interest development, in the form of HOA fees. If some owners don’t pay their fees, the rest of the homeowners may have to pay more to maintain the same level of service. When owners get behind or even stop paying their mortgage, they often also stop paying HOA fees.

If the property is foreclosed upon, the responsibility for the fees goes to the bank until it sells the property again. When this happens, it can be very hard for HOAs to find out who is now responsible for the fees. It is especially hard to find the new owner when the foreclosing agent doesn’t record the sale with the applicable agency.

Positive Outcomes are Possible

The current law requires that a notice be sent to the HOA within 15 days of the sale being recorded, if the HOA requested a notice. The law does not, however, require that the sale be recorded, and mortgagees often neglect to do so.

AB 2273, the Wieckowski amendment to the Davis-Stirling Act, would help remedy this situation. This bill introduces two requirements that would help HOAs. One is that mortgagees would be required to record the sale of a property within 30 days of the sale. The other is that the mortgagee would have to mail to the HOA a notice of the sale within 15 days of the sale rather than the date of the recording of said sale, as is currently the case..

AB 2273 will be a positive change for HOAs and the community homeowners who are in good standing. In these tough times there can be multiple foreclosures in one neighborhood at any given time, placing an undue burden on the common area commitments of the HOA. By requiring mortgagees to record the sale of a foreclosed property and more rapidly noticing the HOA as to ownership, the delinquent dues and/or legal fees will be recovered from the banks or new owners in short order.

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 From renowned organizations to small start-up companies, the Internet has provided thousands of groups with the opportunity to be accessible, successful and purposeful. Moreover, managing a website is an excellent tool for these groups to provide information and to enhance communication without the burden of a high financial cost. Since HOAs are an integral and active component of many communities, maintaining an HOA website is the perfect avenue for associations to bring cost-effective benefits to the community at large.

Website Elements

HOA web pages must be comprehensive in nature so that they are both efficient and user-friendly. Thus, there are several basic elements that should be in place prior to launching a website. First and foremost, the site should contain simple sections such as contact information, a member directory and regulations set forth by the association. Other important documents that require accessibility include monthly newsletters and calendars.

To promote interaction among members, consider adding a forum feature to your site. Forums are a quick and easy way for individuals to gain access to information, discuss issues or to ask questions. You may also want to include surveys to gain instant feedback, links to other relevant sites and space for advertisements. Additionally, many websites have protected sections that are available to registered users only. For many members, the privacy of this security feature is an important aspect when it comes to community matters.

How Do Websites Save Money?

Since individuals are generally more apt to use Internet-related services as opposed to other means, feedback, participation and information through a website may increase exponentially – saving valuable time and money. For example, feedback can be easily gained by providing surveys or through browsing forum topics. Members may be more comfortable voicing their opinions online or in an anonymous capacity, and you won’t have to worry about the price and hassle of traditional surveys. Furthermore, printing materials can add up quickly.

Whether someone wants to know about upcoming community events or needs important safety information, they can easily access these documents at their fingertips. If your HOA has a monthly newsletter, making this available online can save a tremendous amount of money with the lack of printing and distribution costs. In addition, cancellations, rescheduled meetings or community alerts can be posted online rather quickly, and these last minute occurrences won’t end up costing you a dime.

Benefits of the Internet

Perhaps the best feature of having an HOA website is that members can log on anytime and participate in their association wherever they feel comfortable. This flexibility may encourage an active and functional homeowners’ association, which in turn may be highly correlated to cost-efficiency. It is greatly beneficial to have all the facets of your HOA covered in one centralized and convenient location.

Similar to other agencies and companies, many HOAs are continually searching for cost-effective measures to enhance the overall productivity of their associations. Maintaining a custom-built website is an excellent mechanism that can promote community interaction without breaking your budget. Not only will creating a website save you money, it will also save you precious time so that you can devote more energy to the delivery and implementation of your HOA practices.

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 Ever feel as if a board member has crossed over the line while “enforcing” a rule or acting as a “messenger” for the Association?  You’re not alone.  Many homeowners have experienced a wide range of affronts by over-zealous officers of their HOA boards.  What these unsuspecting members of the community may not be aware of is that, in fact, such behavior is not only “over the line,” it is against the community’s governing documents and very possibly the law of the land as well.

Keep in mind that the CC&R’s, By-Laws and such are not just about making homeowners tow the proverbial line – they also include protection for these dues-paying members of the association themselves.   Which brings us to the question of where the authority of the HOA Board really lies, and when does it become invasive or criminally harassing.

The Role of Board Members

The very first step in comprehending all of this is to recognize that an association does have the authority to tell you what you can and cannot do; based upon the its recorded ruling documents, and the laws in the state where you reside. However, board members do not have any individual rights or authority to act on their own under the auspices of their respective positions.  In fact, the HOA board is the entity – not the officers themselves!
Homeowner Associations are mandated to operate within the best interest of the community, and to make the environment a pleasant place for all of its occupants. Unfortunately, some board members get too personally involved and can be found at the center of these disputes – and at times they may attempt to take these disciplinary matters into their own hands.

The HOA Board vs. The Management Company

The management company serves as an agent of the HOA Board, and takes direction from them up to a point.  The licensed property manager must also uphold the laws of the state as well as the CC&R’s and By-Laws, and make certain the Board doesn’t circumvent them without the proper votes or amendments thereto. Neither entity has the authority or power to change or pursue any of these decisions on an individual basis.

Homeowner Rights

To make sure your association, and the individual Board Members follows the laws and regulations, you should attend regular board meetings and especially the annual HOA meeting, serve on committees when you can, and even run for a place on the board if you feel you can add expertise. Become familiar with the CC&R’s and the Rules and Regulations that govern your association, and remember you can also take issues to the management company, especially if you feel you are being harassed.

Take Appropriate Action

Because there is a lot of power vested into an HOA Board, homeowners commonly complain that the board members are abusing their authority. However, if you have been targeted or threatened by an individual board member, you can take the following action:

•Set up a meeting with the entire board and discuss the issue
•Let the HOA know that you will take action if the harassment is not stopped
•Wait until the next election and vote off the offending board member
•Hire a private attorney and sue the HOA Board for neglecting their duties

Your state also has an appointed ombudsman to handle complaints against HOAs and their board members; this is your one objective point of contact when you feel the law has been broken or you are being unfairly targeted.

A well-run community association should provide structure and rules to protect and maintain the value of the property. A successful HOA Board promotes harmony on a group basis amongst the owners, and it is fair to all within the community. If there are any disputes or violations, it is up the HOA Board to deal with these infractions as a committee.

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 Many association board members and community management professionals are at a crossroads when considering the methods in calculating reserve fund needs. In the infancy of community association living, if Reserve Studies were done, they would simply leave it up to the management professionals to put a percentage aside of any association dues. However, things have become more complicated.

Both cash flow funding and straight line funding methods use the exact same data to put aside Reserve Funds, replacement costs and replacement years. The difference arises not from the data, but from the mathematical models used to calculate the funds for replacement costs.

Cash Flow Funding Method

The cash flow funding method makes a determination of the reserve allocation by estimating the costs over a specific period of time of 30 years, and it tests a variety of allocations until a minimum allotment is found that controls a net reserve or percent funded. The difference in the two is that the cash flow has a pool of money in the reserve fund instead of each element having its own balanced amount. Funds in the cash flow pool reserve can be used for expenses related to any item in that fund. An example of this would be both the painting and roofing reserve monies are pooled together into one fund. Unit owners don’t need to vote when costs from one reserve account are to be utilized for another purpose.

The guidelines still dictate that the reserve schedule that is associated with the annual budget, sets forth the necessary items like paving, roofing and painting with the replacement costs and maintenance exceeding $10,000. The cash flow method must also acknowledge an estimated useful life and replacement costs for each reserve element.

Straight Line Funding Method

The reserve schedule that is associated with the proposed budget has usually used the straight line method of figuring out the reserves. This method provides funding that is allocated for each individual element. The reserves for roofing, paving and painting are all calculated separately from the other necessary components.

An example of Straight Line Funding would be as follows:

A condominium roof has a 20 year life, and it is 10 years old. The replacement cost would be $50,000. If the association has $25,000 in roof reserves, the condominium association would need another $2,500 per year for the next 10 years to equal $25,000 to fund this project. This basis is used for all other reserve items like repaving, buildings and painting projects.

The Cash Flow Method versus the Straight Line Method

The straight line approach is a more cautionary method that ends up with more money being secured away into the reserves. However, the cash flow method is much easier to manage because the funds can be allocated for any reserve item. The straight line method has so many more restrictions in place.

The law dictates that reserve funds can only be utilized for their assigned uses when following the straight line funding method. If the community needs painting, the painting reserves can only be used for that specific purpose and no other. Monies cannot be taken from the painting reserves to pay for the paving expenses.

The HOA can use reserve funds for non-designated purposes if this has been approved ahead of time by a majority vote of the community owners. A vote waiving or adjusting the reserve funding, and a vote using reserves for items that are not within the schedule are two separate entities.

The cash flow method is much simpler and only needs a vote when using reserve funds to pay for jobs. That is why it the cash flow method is taking the lead with most associations.

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 Special assessments can hit a community’s homeowners hard in two ways; first, they are usually abrupt and unexpected, and second, the HOA demands are usually restrictive and give no consideration to the financial distress they can cause the homeowners. Offering alternate financing options for special assessments can go a lot further than the basic “pay it all at once” methodology, and can also decrease the chances of having to resort to collection, fines and liens. Here are some creative financing tips for funding your special assessments.

Make the Special Assessment Terms Flexible

Think about a special assessment where the money is paid gradually, and by a determined date. You can be flexible by asking for an approved assessment of $1500 and have only $350 due at the beginning. This way the board won’t need to pass a special assessment if additional funds are needed – especially handy for unexpected expenses on a specific project.

Give Discounts for Pre-Payment

Another option to make owners feel at ease with a special assessment would be to offer them a discount for paying everything up front. You can even set an alternative payment plan where the owners pay $200 due today, $205 due within 2 months and $215 if you pay within 3 months. However, you may want to consult with an attorney to make sure you’re not violating any laws or restrictions.

Payment Alternatives

Not everyone is going to have sufficient funding in place to pay their assessments in full, so some associations have come up with other creative solutions. Try dividing the special assessment into a monthly, 2-year, 4-year, or half now, the remainder later type of payment plan. Another option is to split the payments up and have them due on a specific date. Before offering a long-term payment plans, you should check with your governing documents and guidelines to make sure this is allowed. Some guidelines are strict in keeping the assessments collected annually.

Allow Other Sources for Owners to Obtain Loans

Another alternative would be to set the foundation to help the owners obtain a loan. Some associations may have special assessments that could exceed $30,000 per unit. This is a large amount of money for an owner to come up with. A board could approach a particular bank or lender to lay the foundation (documentation, etc.) for loans; of course the individual owners would have to pay interest based upon their own credit pictures, but the lenders may look more favorably on the project as a whole.

Vendor Financing

With a slow economy, you may find a vendor that is agreeable to letting the association pay for services over a specific time period. Many vendors are in need of work because of the economic down turn, and they are willing to offer to work with the association on a payment plan. However, if an owner goes into foreclosure, the association is responsible for the full obligation.

The Association can Take Out Its Own Loan

An association could also get its own loan and provide the owners immediate funding to complete the project. This would allow the individual homeowners to pay the funds back over five or 10 years. This is a great benefit because they are enjoying the finished project, and they don’t have to break the bank to come up with the money all at once, and the association can proceed without waiting for the owners to provide their own financing.

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