The year 2021 is coming to a close, and a new year often means turning over a new leaf. For homeowners associations, it can also mean doing things better. What are the best HOA New Year’s resolutions that boards should make?
What to Include in Your HOA New Year’s Resolutions
As the world prepares (and recovers) for the new year ahead, HOA boards should start thinking about what 2022 has in store. The end of a year is usually the perfect time to make resolutions and, hopefully, stick to them all throughout the next chapter. But, what exactly should board members include in their HOA New Year’s resolutions?
1. Review and Update Governing Documents
An association’s governing documents consist of its bylaws and CC&Rs, among other things. More often than not, communities neglect to review and update these documents, only to find out that they have long been in violation of its provisions. An association’s bylaws and CC&Rs were created and recorded at the very beginning of the community’s inception. This can date back to years — even decades — ago. A lot of things can and would have happened in that period of time.
As part of the HOA New Year’s resolutions, a board should consider reviewing and amending old documents. Doing so will allow these documents to reflect the times and environment today, as outdated documents can put associations in a bind. As new technologies continue to emerge, HOA boards will likely need to do this every year to avoid getting left behind the times.
Of course, amending an association’s governing documents is not always an easy feat. For most HOAs, it requires a majority vote from the membership. Select changes may also face some pushback from homeowners who refuse to adjust to the changing times. A board must prepare itself for these challenges. Educating residents is key here.
2. Set Specific and Realistic Goals
A homeowners association should also set new goals for the coming year. But, it is important to be specific when it comes to this. It is not enough to simply want to “save more money” or “improve homeowner satisfaction” as part of your HOA 2022 goals. Every association wants that. What will truly set an HOA apart from the rest is detailing those goals in specific and realistic terms.
For example, an association that wants to “save more money” should outline how much money it wants to save and how it intends to achieve that goal. Perhaps the HOA can cut back on certain expenses or plan an initiative to go green. An HOA should also set the parameters by which a goal is judged complete. What counts as having accomplished a goal?
If an association wants to “improve homeowner satisfaction,” it should list down the ways it can do that. Maybe homeowners want to feel a better sense of belonging. In that case, social events can help. Perhaps residents are displeased because of dirty common areas. In that case, the board should take a proactive approach to common area cleaning and maintenance.
It is equally important to set criteria so that an HOA can gauge and assign numbers to homeowner satisfaction. And then, it can proceed to obtain feedback by conducting surveys.
3. Communicate More
Another HOA new year’s resolution to have is to communicate more. The success of any homeowners or condo association is built upon communication. Homeowners need (and have a right) to know what is going on in the community they live in. Boards should always maintain open lines of communication so that residents can freely voice their concerns without fear or trouble. Similarly, boards must keep residents up-to-date on the community’s progress and events.
4. Make Smarter Financial Decisions
One of the more common homeowners associations’ new year goals is to make smarter financial decisions. This can mean a lot of things, though it usually involves preparing better budgets and using resources more wisely.
For preparing better budgets, an HOA board will need to look at a variety of factors. This includes external economic factors such as inflation, wage increases, and price hikes for materials. But, it also requires a closer examination of previous years’ actual costs. Looking into the association’s financial history will help boards more accurately predict the coming year’s expenses.
It is also imperative to take a conservative approach to cost-cutting. If an HOA is having financial troubles, it makes sense to cut back on spending. To do this, a board should re-allocate resources and examine existing contracts to get rid of any redundancies.
Making smarter financial decisions also means getting a leg up on collections. Many homeowners associations struggle with alarmingly high delinquency rates. An HOA board should double down on collection efforts by ensuring homeowners receive their notices and allowing for more convenient payment methods. It may also be a good idea to offer a payment plan, though some states (such as Colorado) make this mandatory.
5. Review Insurance
Insurance is often an association’s essential line of defense against costly repairs and liabilities. From covering property damage as a result of certain perils to a number of possible liabilities such as discrimination and harassment, insurance is something no HOA should do without. Thus, reviewing insurance policies should always remain a part of HOA New Year’s resolutions.
There are many types of insurance policies, including liability insurance, D&O insurance, and a master policy. These policies can also differ when it comes to levels of coverage. To ensure an HOA’s insurance is updated, it is important to examine the association’s vulnerabilities and risks. For instance, if the HOA is located in an area with a high chance of wildfires, it is wise to up the coverage on wildfire damage.
6. Work Toward Better Transparency
Transparency is critical to any homeowners association’s success. It enables boards to gain the trust of the community’s residents and contributes to an association’s reputation, too. With that said, it is easy to see why every board should make transparency a part of their HOA New Years’ resolution.
Boards must practice reasonable transparency when it comes to the association’s funds. It is smart — and, in some states, mandatory — to present the annual budget to the community’s members for ratification. Expenses, once incurred, should also be reported. Moreover, boards should make the association’s financial statements readily available for homeowners to view.
Of course, this comes with certain exceptions. For instance, while an HOA can make delinquency reports available for review, it should not list down any names or contact details of residents. Releasing the names of owners with delinquent accounts can go against the law.
But, transparency is not limited to an association’s finances. It also extends to meetings. Boards should always notify homeowners of any membership or board meetings ahead of time. This way, owners can attend the meetings and get involved.
7. Pursue Further Education
As capable as they may be, association board members don’t know everything about community management. With evolving laws and changes in technology, there is always something new to learn. Thus, as part of a board’s HOA New Year goals, it should pursue further training and education on HOA management. This applies not only to board members but also to other industry professionals.
Boards can learn from countless resources online as well as from local professionals. The Community Associations Institute (CAI) also provides live classes and webinars. Even local chapters of CAI hold training sessions and seminars every once in a while.
Start Making Your HOA New Year’s Resolutions
With the new year comes a new beginning and a chance for HOA boards to better themselves. While boards typically make the resolutions, these resolutions can affect the entire community. As such, it is integral to take them seriously and stick to them the best they can.
Have trouble managing your community even after making New Year’s resolutions? Get help from Clark Simson Miller. Call us today at 865.315.7505 or contact us online to request a free proposal.
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