hoa finance

As a member of an HOA board, you are representing your entire community. You should know the responsibilities that come with your position. Chief among these is the financial responsibility you have to your community. Homeowners are paying to ensure their neighborhood is running efficiently. They place their trust in the board to optimize their dues. Whether you are the treasurer, another board member, or just a member of an HOA community, this article will help you handle your financial responsibilities.

1. Make Collection Easy

The frequency of assessment (payment) is determined by the specific HOA rules and regulations. Your governing  documents will determine whether dues should be collected monthly, quarterly or annually. Dues can be collected in a number of ways. You should choose a method that is convenient for your members, whether it be in person, with a drop box, or digitally. Many communities choose to hire a management company to help with this. Many management companies, including remote managers like Clark Simson Miller, offer pay-by-mail and online portals that make it easy for residents to pay their dues.

2. Handle Delinquent Payments Fairly

A common problem board members run into is a delinquent payment. A good first step in these cases is to reach out to the resident and understand their situation. Working with the resident can help get you through this dilemma smoothly. If this option does not work, check your HOA bylaws for additional actions you can take. In many cases, you can warn the resident with a lien. This is a legal claim that can hinder the homeowner’s ability to sell or refinance their home. If a resident continues to deny payments this lien can force foreclosure to satisfy the debt. If all else fails, the final option would be to take the case to small claims court. Throughout this difficult process it is important to stay firm, fair, and diligent.

3. Know What Assessments are Used For

Homeowners Associations are generally non-profit organizations. This means the dues may only be used for the benefit of the community. Allocation of the funds collected from residents depends on the HOA’s budget. This budget should include like ongoing maintenance, community insurance, reserve and contingency funds. Many communities also allocate funds to hiring a management company. The type of management company will determine the focus of their services. The most common, full-service management companies will assist with bookkeeping, collections, maintenance, and violations enforcement and more. Others, like Clark Simson Miller, offer a cheaper alternative by focusing only on specific services such as financial management. The company you choose will be determined by the needs of your community.

4. Keep Good Records

good recordsAs a board member, it’s your responsibility to be a good steward of your association’s funds. That’s difficult to do without proper record keeping. Smaller communities can be easily managed in-house but once the population grows, expect problems to arise.The consequences of bad record keeping can negatively affect your association. Legal issues can arise from missed payments, disorganization causes a loss of documents, or future ramifications from bookkeeping negligence. An association management company provides services that will organize your records so you can rest easy knowing there will not be any problems in the future.

5. Communicate Your Progress

In a homeowners association it is important to be transparent with your community. Residents entrust you with their assessments so they have the right to know what it is being used for. Communicating information such as an increase in dues, maintenance issues and solutions, or even community events will give residents a better understanding about their association. When residents have more knowledge about their community, they are more confident in the board leading them. With the proper association management company, communicating is simple. Message boards, or websites provided by a management company will convey any information. Staying connected with residents will benefit your entire community.

A Management Company Tailored to Your Community

Every community is unique, which means every HOA has different needs. Large communities need help managing the hundreds of houses and assets within it. Smaller communities do not need all the services provided by large association management companies. Several companies near your community are not within your budget or they do not give you much attention because of their client profile. Your community can be negatively affected by this, which is why  Clark Simson Miller offers remote management for your community no matter where you are. It is a good option to stay within your budget and gives you the services your community needs. For more information, request a proposal or call 865.315.7505.