Best Practices of a Well Performing HOA

Started by FrankS10 • 26 replies • 1865 views

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FrankS10 (Kansas)
Posts: 276

Posted:

OK, Tim's threads beg another thread. There are common themes being hammered out as to why people get involved, or do not get involved. Most of it seems to be people are moved because of problems they see, or back off because of how they are treated when they do try to get involved.

So, in order to help provide some insight to our leaders here, maybe sharing what us commoners would see as necessary practices of a well performing HOA would be helpful. I guess defining what a well performing HOA is must come first. So to me, it is one that abides by all governing documents and laws and safe guards the interests of the community as defined by the membership as a minimum. Additionally one that enhances property values and culture or community spirit would be positives as well.

Your own answer can offer both- what traits you think are necessary and your own definition of a healthy HOA.

FrankS10 (Kansas)
Posts: 276

Posted:

I'll start...

A) The HOA's business must be conducted in complete transparency meaning
1. All meetings are announced and open with an agenda provided at least 1 week in advance. This includes all committees. Only exceptions are executive privilege as provided by state law.
2. All documents are provided upon request, within cost reasons. If available check registers, invoices, Income/Expense statement should be posted via the HOA's web site or sent electronically to each member on a monthly basis. This part includes copies of all meeting minutes

B) Term limitations for every BOD position-flexible by area, size of community etc...

C) Every Board member being provided a copy of all documents that govern the HOA upon being elected, with the requirement they sign a statement that they recognize their responsibility to become intimately familiar with the documents and applicable state laws, and that they also recognize their trustee responsibility is to the membership. They must also sign a full disclosure of all conflicts of interest, or potential conflicts of interest at each Annual meeting.

I have more but want to see what others think.

TimB4 (Tennessee)
Posts: 21,062

Posted:

One Word: CONSISTENCY

If the Association is going to waive fees for one member, it should be offered to all members.

If the Association is going to enforce a violation because one member's actions brought it to the Board's/Committee's attention, they need to inspect the development and make sure they enforce it on all current violators.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Let's clarify things first...

1. HOA documentation: Your documents are considered PUBLIC documents. They are YOUR responsibility to be informed. It is NOT your HOA's, lawyer, real estate agent, title company, or even seller*. (*The seller is responsible for turning over the documents in some states but NOT all.) The CC&R's are on file at your local courthouse. The Articles of Incorporation are filed at the STATE level. Your By-laws (if they do exist) are filed with your HOA. By-laws can sometimes be filed with the CC&R's but are NOT required to be. If you have a Archetectual Control Committee (ACC), those are typical HOA documents. Considering you are NOT a member of the HOA until you close on the home, the HOA can provide you with the documents (at cost or without) as a COURTESY.

Let us make this VERY clear that I am NOT a supporter of this as I believe someone should inform the buyer of this process. However, this is the LAW and not my or many poster's here PERSONAL taste. The courts decided that the CC&R's/Articles are to be considered PUBLIC and the responsibility of those making purchases. The FACT remains that HOA's do NOT have to provide any documentation but the members in it do have to obey them.

2. HOA's do NOT maintain home values. Many will not agree with this statement I am sure. However, home VALUES are evaluated by: 1. Location. 2. The size/bedroom/bath 3. The prices including foreclosures houses have sold for in the last 6 months within a few mile radius. The HOA does maintain ATTRACTIVENESS to buyers. That means I may pay top dollar for a home that offers a pool, clubhouse, tennis courts, or golfing but the home value is what the mortgage company approves the loan for. Mortgage companies aren't going to loan money for a house you love and willing to pay a million dollars for when the house value is only 500K. You can price a house for how much you want to sell it. The mortgage company in the end will sell it for what it's worth. Do not confuse house VALUE with house ATRRACTIVENESS. Your HOA want to attract more potential buyers so that the homes do sell and at a good price if possible.

Now that is clarified a bit:

1. I believe a HOA board should ALWAYS bring the documentation to a meeting. They should refer to it when addressing issues and writing letters. The section of the violation should be well stated and referred to in the documents. If someone asks a question, then that should be looked up in the documentation if necessary. Any clarification needed then delay the answer until clarification can be provided.

2. The HOA should use their money to upkeep and keep the HOA in an attractive state for potential buyers. It may not be able to afford everything that needs to be done, but organizing a volunteer day for members to chip in helps. The HOA provide the materials and the members the volunteer labor.

3. OPENNESS. This is a hard concept to grasp. One of my board members put it best to me: "Remember this is NOT your money, it is EVERYONE's money. Make the decisions for the HOA as a WHOLE". That means if the membership told me to paint the roads "red" I had to go out and price the cost of painting the roads "red". Even if I personally thought it was a dumb idea. You do what the majority of interested parties express and want.

These are just a few things I found in running a successful HOA. Mine was very successful and improved. We had a house sell within 6 hours of going on the market and a waiting list to get in. Not everything was perfect but so is life. You just juggle the best way you can and hope the balls fall within reach.

Former HOA President

BrianB (California)
Posts: 2,820

Posted:

I will triple say the transparency thing. If an HOA practiced that, many of their issues would go away. Just be open. Transparency begets consistency (if all decisions and actions are open, then it's easy to see when something doesn't follow the standard plan/response).

I will add "efficiency in communication" to capture two things: HOA's should have a feedback system that is quick, and that works both ways. Information coming in should be seen/viewed and responded to quickly, and information needs to flow from the HOA to the owners, and a method for owners to flow information to the board. There's little more demoralizing than a lack of communication.

Quickly does not mean "Board must provide answer in 2 days", but.. a board should have a system to respond to a letter/request with some answer:

"Your question/request has been received. We will take this before the committee, and provide you with an answer within 10 days of the next committee meeting, which is scheduled for October 3rd."

"Thank you for your concern. The board has considered this option in the past, and determined that due to the increased cost to implement it, it is not feasible at this time. However, if you have new information that could change that feasibility, please bring it forward to us, and we can reconsider the option again."

"we appreciate the letter regarding XX. However, this is not an HOA matter, but a matter between one homeowner and another. The HOA has no rules to enforce in this issue. We can, however, suggest that often the first step to solving a problem is communication, and suggest that you take up the issue first hand with the other owner, and see if a resolution cannot be found."

RayM6 (Virginia)
Posts: 40

Posted:

I agree on Transparency and Consistency
Balance cost management with appearance/maintenance - spend money carefully, but spend it when you need to
Get the right things done right, and quickly
Let the experts, committees and volunteers do their jobs and provide guidance when needed
Treat others with respect.

SheliaH (Indiana)
Posts: 6,964

Posted:

I see a well-run HOA as one where:

1. ALL homeowners understand one can delegate authority, but none of the responsibility. The homeowners may delegate overall direction of the Association to the Board, who delegate everyday tasks to the property manager, but in the end everyone’s responsible for the well-being of their community, and it’s too important to leave to just anyone, pay assessments and go on about one’s business

2. Homeowners know what, how, when, where and why something is or isn’t being done. Nothing’s done in secret

3. The majority of residents are owner-occupants, but you can’t tell the difference between them and renters because everyone keeps their home exterior well maintained, noises down, litter picked up, dogs leashed and curbed, notify the authorities of suspicious people/activities (whether it affects their property or a neighbor’s) and even smile and say hello when they see you

4. Homeowners have several ways to contact the board – email, a dedicated post office box or even a box at the clubhouse where letters can be left

5. Homeowners receive regular updates on the Association’s activities and financial health and those updates are complete and accurate

6. Board members lead by example, whether they sign a code of ethics or not, leave their personal agenda at the door and work to make decisions that will benefit the entire community, and take advantage of any and all training that can help them do their jobs better

7. The Bylaws, CCRs and other Association rules and documents are written in plain English and they are enforced consistently and fairly

8. The board doesn’t micromanage the property manager – he or she was hired for a reason, so give him/her the freedom to carry out the Board’s instructions in the most cost effective manner possible. However, they will not hesitate to ask questions or call out the property manager if he/she does something inappropriate or wrong

9. There are regular audits of the books to ensure things are being done decent and in order.

10. Delinquent accounts are addressed quickly, but with some compassion (everyone has financial challenges every once in a while and you’ll soon learn to tell them from the deadbeats)

11. Board meetings and annual meetings are advertised in advance and attendance is strongly encouraged. Agendas include a resident forum as part of the meeting agenda

12. The association commissions a reserve study at least every five years and tries to adopt as many of its recommendations as possible.

13. Everyone thinks short AND long term – have a 10 year plan, but concentrate on the next five.

14. Creative thinking is encouraged – no one ever shoots down an idea simply because “that’s the way we’ve always done it.”

15. Due diligence is the rule, not the exception – a minimum of three bids for expensive projects, periodic reviews of local, state and federal law to ensure the governing documents keep up, etc.

I started with characteristics of the homeowners because that's where Board members come from - if you don't have good homeowners, you may have issues getting Board members who do the right thing.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

RogerB (Colorado)
Posts: 5,067

Posted:

Attached are rights and responsibilities which our management company compiled several years ago after attending a class on creating a balance between individual homeowners and all of the homeowners in a common interest community. This can be provided to all new homeowners.

📎 Attachments (1):

⏸ Downloads temporarily unavailable

📝1822205415371.doc(40 KB)

JeanneK3 (Maryland)
Posts: 562

Posted:

I believe asking the community's advice and opinion before any major decision by the board is essential to a happy community. That's how you keep people involved in the welfare of the community.
Jeanne

FrankS10 (Kansas)
Posts: 276

Posted:

Thanks, these are very helpful and should be shared within our communities.

FrankS10 (Kansas)
Posts: 276

Posted:

I hope the regular community leaders are reading this. These are straight forward common sense approaches that fall under the 'Golden Rule' IMO. The next time someone wants to belittle a poster or call them a whiner or advise them to get involved, I ask that they read this thread first and ask if they are doing everything in their power as a leader to fix the situations causing members duress before just criticizing. Obviously there are enough problems out there that are similar across this nation that just attacking the members is not solving anything.

If you want to be a leader, then lead or get the hell out of the way. Leaders can handle criticism and make necessary changes without taking it personal.

SharonH9 (Virginia)
Posts: 216

Posted:

I have had only one experience living in a neighborhood association. I can't really say HoA because the covenants have expired and the association is left with a common sewer to maintain and 2 recreational ponds. My personal experience has given me a very negative opinion of HOA's in general but I do see some benefits particularly when common elements need maintained.

My preference would be to be free from any type of neighborhood association and will be elated when the County takes over control of the sanitary sewer. With that being said in my personal opinion the best practices of an HOA are to practice the KISS rule. (Keep it Simple Stupid.)

Keep the covenants short and to the point. Limit the numbers of restrictions and stick with basic architectural rules. Ours were quite simple when they were enforceable. A few of them were square footage, siding must match, fences no taller than 6 feet, no private privies, etc. Just very basic stuff.

No rules and regulations to enforce hence no fines, liens, foreclosures.

Transparency and accountability.

Open meetings.

Open records.

Owner input regarding dues and fees.

Owner input regarding any bylaw revisions.

MichaelO4 (Montana)
Posts: 40

Posted:

As with most if not all group endeavors, effective leadership is critical to success. That is, the Chair of the Board should be not only a good manager, but
also an effective leader. IMO, there are five essential elements that a leader should possess: TALENT, TEMPERAMENT, TIME, TENACITY, AND TRANSPARENCY.

BrianB (California)
Posts: 2,820

Posted:

Quote:

Posted By SharonH9 on 08/23/2013 5:00 PM
I have had only one experience living in a neighborhood association. I can't really say HoA because the covenants have expired and the association is left with a common sewer to maintain and 2 recreational ponds. My personal experience has given me a very negative opinion of HOA's in general but I do see some benefits particularly when common elements need maintained.

My preference would be to be free from any type of neighborhood association and will be elated when the County takes over control of the sanitary sewer. With that being said in my personal opinion the best practices of an HOA are to practice the KISS rule. (Keep it Simple Stupid.)

Keep the covenants short and to the point. Limit the numbers of restrictions and stick with basic architectural rules. Ours were quite simple when they were enforceable. A few of them were square footage, siding must match, fences no taller than 6 feet, no private privies, etc. Just very basic stuff.

No rules and regulations to enforce hence no fines, liens, foreclosures.

Transparency and accountability.

Open meetings.

Open records.

Owner input regarding dues and fees.

Owner input regarding any bylaw revisions.

And open bathrooms, apparently. No private privies? That is the first time I have heard of an HOA with shared bathrooms. Very interesting, how does that impact property value and resale?

DavidW5 (North Carolina)
Posts: 565

Posted:

Quote:

Posted By JeanneK3 on 08/22/2013 12:23 PM
I believe asking the community's advice and opinion before any major decision by the board is essential to a happy community. That's how you keep people involved in the welfare of the community.
Jeanne

Jeanne,

I have to disagree. That method makes it almost certain that little or nothing will get done. It is hard enough to reach consensus with four of seven (a majority of) board members for a decision. Asking the uninformed and uninvolved members may make them happy in the short run but unhappy in the long run as the HOA dithers and things deteriorate. Board members are elected to make the tough decisions and they do so based on a much deeper knowledge of the associations governing documents, financial status and challenges than most of the members.

AnnH4 (Florida)
Posts: 53

Posted:

I see a lot of common themes in the posts. Transparency, consistency, fairness, professionalism. One thing I see the HOA in my community lacking is any sense of history. The Board turns over frequently and everyone who sits on the Board is always clueless as to what has been done in the past. Save for the Board President who seems to be able to conveniently "forget" from year to year. Listening to the same discussions year after year tells me that the HOA is disorganized and inefficient.

Our HOA also lacks a punch list for routine maintenance. We know we need to do things annually yet every year, it is an ordeal for the Board to get simple maintenance accomplished.

A strong HOA will also admit when things do not go right and create a corrective action plan instead of pointing fingers.

A strong HOA does a cost-benefit analysis before approving certain projects.

A strong HOA also acknowledges the end users (ie the homeowners) and considers the potential impacts on the end user. I have seen a lot of short-sighted amendments fail because the Board did not consider the impact on the end user. Another consideration is enforcement. Pass a new restriction but consider that the HOA is now on the hook for enforcement. At some point the HOA needs to consider just how much they want to be responsible for enforcing.

Reserves should be taken seriously. It is too bad that the only requirement to sit on a Board is that one must be a homeowner. We have had too many Board members who are careless with their personal finances who are making financial decisions for the entire community. The results to date are lackluster.

If the HOA employs a property manager, it is paramount that the HOA allows the property manager the opportunity to do their work. Cutting people's ability to get their work done with interference, needless meddling, and directives that are not backed by the deed restrictions/statutes only creates chaos.

Above all else, a strong HOA does not alienate the homeowner and breed resentment. By creating a positive environment, homeowners are going to be more willing to participate.

KellyM3 (North Carolina)
Posts: 2,239

Posted:

Quote:

Posted By AnnH4 on 08/24/2013 9:54 PM
I see a lot of common themes in the posts. Transparency, consistency, fairness, professionalism. One thing I see the HOA in my community lacking is any sense of history. The Board turns over frequently and everyone who sits on the Board is always clueless as to what has been done in the past. Save for the Board President who seems to be able to conveniently "forget" from year to year. Listening to the same discussions year after year tells me that the HOA is disorganized and inefficient.

Our HOA also lacks a punch list for routine maintenance. We know we need to do things annually yet every year, it is an ordeal for the Board to get simple maintenance accomplished.

A strong HOA will also admit when things do not go right and create a corrective action plan instead of pointing fingers.

A strong HOA does a cost-benefit analysis before approving certain projects.

A strong HOA also acknowledges the end users (ie the homeowners) and considers the potential impacts on the end user. I have seen a lot of short-sighted amendments fail because the Board did not consider the impact on the end user. Another consideration is enforcement. Pass a new restriction but consider that the HOA is now on the hook for enforcement. At some point the HOA needs to consider just how much they want to be responsible for enforcing.

Reserves should be taken seriously. It is too bad that the only requirement to sit on a Board is that one must be a homeowner. We have had too many Board members who are careless with their personal finances who are making financial decisions for the entire community. The results to date are lackluster.

If the HOA employs a property manager, it is paramount that the HOA allows the property manager the opportunity to do their work. Cutting people's ability to get their work done with interference, needless meddling, and directives that are not backed by the deed restrictions/statutes only creates chaos.

Above all else, a strong HOA does not alienate the homeowner and breed resentment. By creating a positive environment, homeowners are going to be more willing to participate.

These are really excellent points, particularly in regards to passing rules that won't be enforced as well as treating property managers with the respect that allows them manage the property. I can, somewhat, hold my nose on the Reserve Fund and how boards don't adequately fund them; I think many board members don't understand Reserves and their function. They see it as an over-collection of dues.

On the cost-benefit analysis, if we do that with a strong focus, we'd probably hire the bulldozer and plant shrubs where the pool used to be as it's a hassle, whether from equipment, pool vendors or the people using it.

HeleneN (Connecticut)
Posts: 84

Posted:

Orientation for new residents with a periodic re-orientation for all unit owners as well as a professional orientation for new board members!

SharonH9 (Virginia)
Posts: 216

Posted:

Quote:

Posted By BrianB on 08/24/2013 11:36 AM

And open bathrooms, apparently. No private privies? That is the first time I have heard of an HOA with shared bathrooms. Very interesting, how does that impact property value and resale?

Oh my gosh. That is funny. I meant outside privies. I live in rural Iowa you know. LOL

BrianB (California)
Posts: 2,820

Posted:

Sharon, I grew up in rural Kansas, and spent many a call of nature in a one, two or even three holer.

SharonH9 (Virginia)
Posts: 216

Posted:

Quote:

Posted By BrianB on 08/25/2013 9:30 PM
Sharon, I grew up in rural Kansas, and spent many a call of nature in a one, two or even three holer.

My mother-in-law grew up on a farm in rural Iowa in a family of 12 children, in a two bedroom house with no running water. Can you imagine?

I live in the heart of Amish country. No HOA's in those communities but they do have their own Board of Directors so to speak that want to control everything in their communities. In some instances I see some similarities to HOA's. There certainly is an interesting dynamic when people are in positions of authority and control. If you don't conform to the rules you can be punished or even shunned. I believe that unchecked power can corrupt and unfortunately it happens in HOAs sometimes. That's why transparency and accountability are so important in HOA communities.

SharonH9 (Virginia)
Posts: 216

Posted:

I would just like to reactivate some interest in this topic because I think it's a very important topic and so many of the posters are right on. Just to give you all a little historical background on why I'm not a big fan of HOA's. My husband and I have owned 4 different homes in various middleclass neighborhoods in the Midwest.

House #1 - new split level home, 3 bedrooms, 1 bath, no HOA, no problems with neighbors. Neighborhood was well kept.
House #2 - older 3 bedroom, 1 bath, no HOA, no problems with neighbors. Neighborhood was well kept.
House #3 - new 1 1/2 story, 4 bedroom, 3 bath, pristine neighborhood, covenants but no HOA, no problems with neighbors but very expensive to maintain. High taxes and high utilities.
House #4 - new 3 bedroom, 2 bath, very mixed neighborhood, some homes very nice and well-kept, some not so much, has an HOA of sorts (just to maintain the common areas), many conflicts in the neighborhood.

Tim is right on about consistency and Sheila's list is excellent and some of the other posters listed some very good points.

I have become quite interested in the HOA concept and its successes and failures. Based on my own experience, my preference would be not to live in an HOA community.

Some of you have shared some experiences you have had in your HOA neighborhoods. If you have lived in both HOA neighborhoods and nonHOA neighborhoods as I have, I would love to hear some of your experiences and what your preference is. Thanks.

AllisonD (Florida)
Posts: 449

Posted:

Quote:

Posted By SharonH9 on 08/26/2013 12:16 PM

Posted By BrianB on 08/25/2013 9:30 PM
Sharon, I grew up in rural Kansas, and spent many a call of nature in a one, two or even three holer.

There is a fascinating and well known study you may have heard of, here is the link: http://www.prisonexp.org/ . In this experiment, college students played the part of the police or the criminals and they were allowed to do anything they wanted in their roles. The experiment had to be stopped after just 6 days because those in power abused their power so greatly that the student criminals' mental health was in serious jeopardy. I do believe if left unchecked, some board members could go off the deep end, and we have seen examples in some of the news articles posted on the front page of this website.

FrankS10 (Kansas)
Posts: 276

Posted:

Sharon,

3 neighborhoods for my wife and I. All new homes, first one no HOA but starter homes. Best experience here, pretty much all well kept. We were all young though and at that age everyone is pretty much very flexible.

Second and third homes were in HOA communities. Power trips in both of them. Treasurer convicted of embezzling in the second community, and the one we are in now the developers have retained control after 15 plus years. It is a very fragmented neighborhood and we have had to watch the developers closely, all the time. IMO they are nothing short of bullies and we have finally drawn a line in the sand. LE is involved. Worst decision of our lives to have moved here.

SharonH9 (Virginia)
Posts: 216

Posted:

I'm a little off-topic with my last post. My husband is always accusing me of talking about something then I change subjects on him and he gets confused. Sorry. I will start a new thread. HOA vs NonHOA and Your Preference.

SharonH9 (Virginia)
Posts: 216

Posted:

Allison and Frank do you mind re-posting your response into the new thread HOA vs NonHOA and Your Preference. Thanks.

JeanneK3 (Maryland)
Posts: 562

Posted:

David W:

You misunderstood me. I'm not saying the board wait for a vote before any decision. I'm saying that for any major action the board makes the effort to have all the facts out in the open and invite homeowners to have input. It really does work well.

Jeanne

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