Serving as a board member of a Homeowner's Association (HOA) is a role that carries great responsibility. You are entrusted with the community's well-being, both in terms of its physical upkeep and financial stability. To effectively manage these responsibilities, board member education in several key areas is critical to community success. This ensures that the association runs smoothly and that the board consistently serves the community's and its members' best interests.
Here is a breakdown of essential topics every board member should be familiar with.
1. Association Financials
One of the board's most critical duties is overseeing the association's financial management. Proper financial oversight is not just a best practice; it’s a fiduciary duty. This means board members are charged with acting in the association's best financial interest on its members' behalf.
Key responsibilities include:
- Approving Budgets: The board needs to approve a thoughtfully prepared budget, considering all business functions and allocating funds effectively. This ensures that all community needs are met without compromising future financial stability.
- Managing Reserve Funds: Reserve planning is critical to ensuring the long-term health of the association and for unexpected repairs and large-scale projects. The board ensures reserve accounts are adequately funded and properly managed in compliance with IRS regulations.
- Understanding Financial Reports: Regular review of financial reports is essential. Board members familiar with the association’s income, expenses, and overall financial health are better equipped to make informed decisions.
Failure to properly manage association financials can lead to serious consequences, including legal liabilities or a lack of funds that impacts the association's overall health.
2. Compliance with Governing Documents
Every community association is guided by a set of governing documents that outline rules, regulations, and procedures for managing the community. Board members are advised to be intimately familiar with these documents to ensure they are applied consistently and fairly.
- Enforcing Rules Uniformly: Understanding restrictions applicable to the membership is crucial. Equitable and consistent enforcement of rules and regulations helps maintain a harmonious community and aids in preventing disputes. Uniform enforcement also ensures that all homeowners are treated fairly, which is essential for maintaining trust.
- Setting an Example: Board members must not only enforce the rules but also lead by example and follow them themselves. Compliance with all governing documents reinforces the board’s credibility and authority.
- Understanding Board Powers: The governing documents contain restrictions and outline the board’s powers and administrative procedures. Familiarity with these topics is key for running meetings and decision-making, as it is critical for boards to understand the boundaries of their authority and operate within these limits.
Governing documents provide a framework for the board's operation. The board risks creating confusion and inconsistency without strict adherence to these guidelines.
3. Handling ARC Requests
The board and/or the Architectural Review Committee (ARC) are responsible for approving or denying homeowners' requests to make exterior changes to their properties. Whether adding a fence or painting a house a new color, ARC decisions must be fair, uniformly applied, and consistent with the community’s aesthetic standards.
- Consistency is Key: Approvals and denials should be made based on clear guidelines to avoid favoritism or the perception that any homeowner is being singled out. Consistent rulings foster trust and respect from the community.
- Timeliness Matters: It is critical that ARC requests are processed within the timelines outlined in your governing documents. Delaying decisions can frustrate homeowners, lead to unnecessary tension, or, in some cases, cause a request to be automatically approved, which potentially has serious legal implications for the association if a dispute should arise regarding the change that was made.
- Consult Professionals if Needed: When an issue arises that the board or committee is unsure about, consulting an attorney or expert is always wise. This helps avoid legal complications down the road.
ARC requests can be a source of contention in HOAs, and handling them with care, transparency, and professionalism benefits everyone.
4. Managing Urgent Situations
Whether natural disasters or urgent repairs, emergencies require quick and decisive action from the board. Without proper planning, an emergency can leave the community vulnerable and board members scrambling to respond.
- Create a Plan: A comprehensive emergency plan ensures the board knows exactly what steps to take in a crisis. This plan should cover everything from natural disasters to unexpected community-wide issues. The community manager can work with the board to create a disaster management plan tailored to your community’s needs.
- Implementation and Review: Having a plan in place is not enough. Board members need to know how to implement it efficiently. Additionally, the plan should be regularly reviewed and updated to ensure it remains relevant.
- Govern based on Policies: Adopting a board policy to outline accountability for taking action and clear procedural steps is key to success for routine or non-routine operations. Eliminate the tendency to ‘reinvent the wheel’ by memorializing processes that worked and ensuring they are kept current over time.
Planning for emergencies may seem daunting, but having a plan before an emergency occurs is essential to keeping your community safe and secure.
5. Proper Communication
Clear and frequent communication is essential to the success of any community association. Miscommunication or a perceived lack of transparency can lead to confusion, mistrust, and tension within the community.
- Act as a Group: The board must present a united front. Individual board members are not empowered to make unilateral decisions or statements without consensus from the entire board. This helps prevent miscommunication and ensures the board is working together for the good of the community.
- Keep Private Matters Private: Board members are often privy to sensitive information about the association and its residents. Maintaining confidentiality is essential, even when discussing matters with friends or neighbors.
- Be Cautious with Social Media: Social media can be a useful tool for communication, but it can also lead to problems if not used carefully. Board members should be cautious about what they post online and avoid discussing private or sensitive information.
- Use Written Communication: Whenever possible, communicate in writing to ensure a clear and documented trail. This helps prevent misunderstandings and protects both the board and the homeowners.
- Provide Timely Notices: Ensure residents are given plenty of notice about meetings and community events. Good communication helps keep the community engaged and informed.
Board members can foster a more connected and engaged community by maintaining clear, consistent, professional communication and inviting homeowners to share feedback.
In conclusion, serving on a community association board is a rewarding yet challenging responsibility. Board members must educate themselves on key aspects of association management, including financial oversight, compliance with governing documents, and effective communication. By doing so, they can ensure the community thrives and operates efficiently for the benefit of all residents. Knowledgeable and engaged board members are the cornerstone of a successful community.
CAMS understands the importance of board members feeling confident in their roles. That’s why we offer a plethora of educational opportunities, all geared at helping board members effectively govern their communities. These include
webinars, software training, blogs,
case studies, and more.
About Community Association Management Services
In business since 1991, CAMS has grown to become North and South Carolina’s premier community management company. With experienced local managers in each of its nine regions, CAMS provides innovative solutions to the community associations it serves. To learn more, visit
www.camsmgt.com/choose-cams.