Do HOA's work?

Do HOA's work?

July 1, 2020

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Do HOA’s work?

An interesting question which we hear all the time. There is no definitive answer since every HOA is different. Most people we discuss this question with  say they have no idea what the HOA is doing. They just send in their monthly check and in the summer the grass gets cut, in the fall the leaves are picked up and in the winter the snow is plowed. Otherwise, they have no idea what their monthly contribution is used for.

HOA’s are actually legal not-for-profit corporations which are governed by the bylaws filed with the state the HOA resides in. The bylaws are necessary to ensure that specific guidelines are implemented and observed by members to maintain the integrity of the neighborhood. By following these guidelines the neighborhood is able to maintain property values and provide residents with a consistent and comfortable environment to live in. In addition the bylaws protect individual residents from inconsiderate neighbors who do not maintain their property or who consistently disregard the bylaws.

Often you hear about how upset people are by the enforcement of the bylaws. What they do not understand is that bylaws are meant to protect residents. Before purchasing a property in a community governed by bylaws individuals need to familiarize themselves with these rules and then determine if they can live in a community that does not give them carte-blanch to do whatever they want with their property. They need to understand that the bylaws serve a purpose and that all residents in the community must abide by these rules to make the HOA design work properly for all residents.

So why don’t HOA’s work?

There are several reasons why the concept falls short of expectations. Anyone who has ever lived in an HOA community will be able to relate to these. In many situations they are governed by what’s come to be known as a dictatorial board. This usually occurs when you have an a member on the board for an extended period of time i.e. more than 4 years. He believes he has the authority to make decisions and spend money any way he wants. He excludes the community from any discussion as to what the community needs and proceeds to spend the HOA’s money on what he believes the community needs. So there is no communication, no open discussion, no research and no feedback. He justifies his actions by saying the bylaws give him the authority he needs to make these decisions.

Residents are intimidated by this board member and are reluctant to challenge his authority. After all, the grass is getting cut.  

There a members who get on the board for the sole purpose of being able to circumvent the bylaws.  These are self-serving individuals who really have no interest of serving other than to have the board grant them exceptions to specific bylaws. Board members who are self serving are also known for using the HOA’s vendors to do work on their personal property and then have the HOA pay for these services. This can result in the loss of thousands of dollars each year of YOUR money.  

As indicated above the HOA is a not-for-profit corporation. Unfortunately there are no regulations that are enforced to monitor HOA activities. Unscrupulous board members know this and take full advantage. If the membership shows no interest in having a board that serves the community then corrupt board members know they are are able to misrepresent the facts and proceed to embezzle the HOA's funds.
    

Other reasons HOA’s struggle to succeed:

Inconsiderate residents – they just don’t care. Usually they have a friend on the board that gives then the permissions they need to get around the bylaws.

Lack of communication: “The Board” provides absolutely no information to “The Community”. “The Board” keeps the community uninformed as to what their objectives are and what they intend to get done in the coming year. “The Community” has no idea what “The Board” is going to do and when asked how much a specific project is going to cost they either avoid answering or they respond with a very low estimate.  “The Community” never discusses or votes on any expenditure.

No financial information:  “The Board” never provides accurate financial data to “The Community”. When this occurs you know there is a problem. They are not giving you accurate information because they do not want you questioning their decisions.  

Conflicting bylaws: Many times bylaws are just cut and pasted together by the attorney’s representing the builder. They just need something so they can file the incorporation forms with the state. As a result there may be numerous inconsistencies, articles that do not apply to your association and major omissions. This makes the bylaws difficult to interpret, which results in “The Board” stating hat specific articles are subject to interpretation. In this situation is important that an independent committee of members be formed for the sole purpose of revising and refiling the bylaws. The revised bylaws must be approved by the community before they can be refiled with the state.

Is there a way to make HOA’s work?   

After reading about all the negatives associated with HOA’s it’s hard to believe they could ever work.

In our blog titled “The Art of Property Management” we explain what’s required to implement a successful property management structure in your association.

HOA Self Management uses a comprehensive application that supports this structure. It opens up the lines of communication and information sharing by providing members with the information they are entitled to, supporting communications between board members and residents, allowing members to vote online so they are directly involved in the decision making process, it provides members with the ability to rate vendors used by the HOA, members are able to participate in a community bulletin board which is completely anonymous and members are provided with access to timely and accurate financial information.

Home Owner Associations were designed as a community living concept. As a community, individual members are the investors and owners. They pay the fees that maintain the amenities and common areas. Since it is their community they should be involved in making the decisions on how their funds are used and the should agree on how much should be spent. If your association has everything done by "The Board" then NO, your HOA is NOT working.! If your association maintains open lines of communications with the members and involves them in the decision making process then YES, your HOA IS working since you are using "The Community" approach..

The Accounting Outsource Center supports members who desire to have a better condo living experience and are concerned about protecting their investment. HOA Self Management was designed to support "The Community" approach to the HOA.

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