Wednesday, May 08, 2019

Tis the Season for HOA Boards

There are posts, that you just do not want to write, but sometimes you know that it is better to speak now before you are to the point of watching people endure a ship wreck.

I served on an HOA Board for three years. One of them was very tough.  See my article, My Descent into HOA Hell. I was also involved in the hiring a lawyer to fix our HOA after we got farther into the bowels of HOA Hell.  Then I got involved a second time when we had a board that decided the best way to have an HOA was to not meet with the members and keep them in the dark. I ended up writing an amendment to the by-laws to keep that from happening again.  I remain involved in our HOA as an advisor since I learned far more about HOAs than I ever wanted to know.

So as many HOAs go into the season of electing new boards I feel a little advice from someone with plenty of scars on his back might at least provide some discussion points before you step off the cliff and accept yet another bad board. You can either listen to my advice from the HOA school of hard knocks or pay attention to the people who are usually experts in everything but with little expertise to back up their freely shared opinions.

Many of you reading this have never heard of an oyster rock. Oyster rocks are very plentiful, sometimes beautiful and as extensive on the White Oak River as HOAs are across the country. I kayak and boat the river frequently so I have seen my fair share.  Oyster rocks are lot like HOAs, sometimes you have no idea they are there and often you can have an unpleasant experience if you are not watching for them.  Second, HOAs like oyster rocks often have far more below the surface than what is visible. Ours is a tidal river so our oyster rocks might be visible at low tide but nearly invisible at high tides or during storms. HOAs pop up at elections times and disappear sometimes when you think they should be there. That is just the way it is.

All HOAs are different so even if you have had experience in another HOA, you likely might not appreciate the inner workings of the one where you have moved.  HOAs are run by untrained volunteers for the most part and sometimes have a management company that in theory might rescue them from their lack of knowledge. It is truly a thankless, unpaid job that will take more time than you imagine if you do it right.

Unfortunately for a good HOA you need people that understand HOA law, your covenants, your by-laws and your history. Without that you are doomed to failure no matter how well intentioned your HOA board is.

One of the first rules that boards do not understand is that they cannot pick and choose which covenants to enforce. If you let something slide and want to enforce another covenant, someone might take you to court and you will likely lose.

Getting people to be on an HOA board is a challenge because no one wants to be the enforcer of rules especially when their good neighbor might be the person violating the rule. The best situation I have ever been on in an HOA board is when we had a secretary from a management company that did almost nothing for us other than provide secretarial help.  She took the angry calls, sent out the bills,  minutes, warnings and provided what passed for accounting services and budgets.

After scratching my head for my first term, it became clear to me that every board needs someone who really understands where every penny of the money goes and exactly how much is collected. I do not think that person shoiuld be outsourced. That means you need someone on the board who can keep a general ledger. I also believe it is reckless to be involved in an HOA without an independent, professional accounting service that reports directly to the board. The board should not give away its check signing privileges. If you sign all the checks, it much easier to account for all your community's money.

So here are my recommendations for people who should NOT be voted onto a board.
  1. Previous board members who got frustrated and resigned in anger from the job.  Even worse are those who have resigned twice.  The job has likely gotten worse and your personality has probably not changed.  An HOA is not a practice operation for you to prove yourself. 
  2. People who are unable to at least have a civil conversation with everyone in the community.  If you hold grudges and refuse to communicate with some people in the community, do everyone a favor and stay off the board. Work out your anger issues someplace else.
  3. People who made mistakes on a board and want another chance to show that they can do it right this time.  An HOA is not a place to hone your skills, especially if you have been unable to publicly admit your mistakes.  If your previous mistakes involved wasting money, do not even think about running for the board. Your previous mistakes will haunt you.
  4. People with a personal agenda and who view the HOA as a way to accomplish their goals which may or may not align with the community's goals.  An HOA leadership role is not the right spot to try to force everyone to see things your way.
  5. People who have thin skins and who take everything personally. A role on an HOA board is job that comes with criticism. No matter how hard you try, you will not be able to please everyone.
  6. People who are not willing to work. The boards most likely to suffer burnout or make serioius mistakes are the ones where one person does all the work.
  7. People who have to control everything. If you cannot delegate and work with others to accomplish a task, you have no business being on an HOA board.
  8. People who do not completely respect the confidentially and privacy needed to be on a board. If you inappropriately share information, you will destroy any trust your board has built up. 
  9. People who think running an HOA is a fun job. It is not fun and in spite of what some folks in lots of communities think, an HOA is not just a vehicle to have great parties. An HOA is first and foremost a business which needs to be treated seriously with a full understanding of the liabilities that are incurred by allowing any HOA-sanctioned reckless behavior- especially that involving alcohol.
  10. People who cannot see the big picture. If you do not understand doing the most good for the most people, you are doomed to failure.  If you play favorites and waive fees or rules for some people and not everyone, you will destroy the credibility of your HOA and have plenty of people angry at you.
HOAs need to be better regulated by the states, but until that happens when the blue moon with a red ring around it shows up, getting the right people on the board can help make the experience of living in an HOA a very tolerable one.  I have seen good boards and bad boards.  The good ones over communicate and make every effort to treat everyone the same.  The bad ones are rife with favoritism even to the point of letting people do things that are actually illegal.  The first and best weapon you have is your vote.  After that it gets really messy which is why you often see real estate listings advertising "No HOA."