Homeowners associations come in all shapes and sizes. Some are professionally managed, making it easier for their HOA boards to make decisions and protect property values. Others, however, rely purely on volunteer board members to run the community. While there is nothing inherently wrong with this approach, self-managed HOA problems do accompany it.
Self-Managed HOA Problems to Be Wary Of
Managing a homeowners association is challenging. For many boards, turning to a professional HOA manager or management company is the clear solution. However, countless others opt to take the self-management route. Although self-management is a viable option, it comes with its own set of problems.
Here are the top self-managed HOA issues to keep in mind.
1. Lack of Communication
Communication is a pillar of successful community management. Without it, board members would get nothing done, and homeowners would remain in the dark about HOA operations. Unfortunately, many self-managed communities struggle with this very problem.
The most common example is board members failing to inform homeowners of meetings. Annual membership meetings and board meetings have certain notice requirements. Board members may forget or ignore these requirements, resulting in meetings without a quorum and unable to proceed with business.
Another example is when board members fail to respond to homeowner complaints. Homeowners will naturally have concerns about the community. But, they can’t bring up these concerns if board members don’t provide a way to communicate or don’t address the problems altogether.
A lack of communication can also occur within the HOA board itself. If board members don’t talk to each other or discuss HOA matters, the community can easily become chaotic.
2. Time Constraints
Time constraints are a huge problem with self-managed HOAs. Board members are volunteer homeowners who are elected into office. That means they also lead personal and professional lives outside of the HOA. Because of this, they don’t always have enough time to spare or dedicate to the association. They could easily fall behind on tasks and neglect their duties.
3. Inadequate Skills or Experience
Being a board member isn’t just about calling the shots. Board members must juggle many responsibilities, including collecting dues, resolving disputes, managing vendors, and overseeing projects. Board members must also manage the association’s finances. All of these things require some level of expertise or management experience.
Not all communities are fortunate enough to have skilled board members. Without a professional HOA manager or management company, there would be no one to fill in the gaps in experience or expertise.
4. Failure to Adhere to Governing Documents
Board members must adhere to the association’s governing documents. That means running the community and making decisions based on the CC&Rs and bylaws, among other things.
Unfortunately, many HOA boards aren’t well-versed in their governing documents. Some even struggle to understand the language in them. Due to this, an association can quickly fall out of compliance with their CC&Rs and bylaws. Worse yet, it would make a mess of how things are run, as homeowners may question future board members who try to remedy operations.
5. Delayed Maintenance
The HOA board is responsible for ensuring the maintenance and repair of common areas. However, due to a lack of experience or general neglect, maintenance may be delayed. This could result in long-term damage to common areas and shared components, inflating the cost of repairs or replacements in the future.
Delayed maintenance can also negatively impact curb appeal and property values. When the HOA board fails to schedule proper maintenance, common areas deteriorate and appear worn. This could affect the community’s aesthetic appeal and scare away potential buyers, dragging down property values.
6. Accounting and Financial Issues
One of the most prominent self-managed HOA problems involves accounting and financial management. This is arguably the one most self-managed boards struggle with because it requires experience or an educational background in the subject matter.
A self-managed board without accounting and financial management knowledge could quickly drive the association to bankruptcy. Board members may not record transactions properly, fail to balance expenses with revenue, plan budgets poorly, and fail to collect dues on time. Even committing just one of these mistakes could considerably impact the HOA’s finances.
Worse yet, self-management makes associations more vulnerable to fraud and other financial risks. There are plenty of news stories about board members embezzling funds. Without a neutral third party overseeing everything, board members would not be stopped from stealing from homeowners. There would be no transparency or accountability. Homeowners may only notice something amiss when it’s too late.
7. Legal Non-Compliance
Homeowners associations are organizations — corporate entities. They are not exempt from the legal requirements of the government. Many states have statutes governing the operations and management of HOAs and condominiums.
Many self-managed communities have a hard time keeping up with these laws. Again, this could stem from time constraints, a lack of legal know-how, or apathy. Whatever the case, non-compliance with these laws could land the association and its board in hot water.
A professional HOA manager or management company can ensure legal compliance. Professional managers are well-versed in the federal, state, and local laws that apply to HOAs. It’s also a part of their job to keep up with legislative changes.
8. Inability to Stay Neutral
When it comes to self-managed HOA problems, the emotional or personal component often gets overlooked. Board members are homeowners, too. As such, they know their constituents personally. They’re their neighbors, their friends.
With such a personal relationship, self-managed boards may find enforcing the rules difficult or imposing penalties. They might let their personal biases, judgments, and emotions cloud their decisions. This is much less likely to happen to a professionally managed association.
9. Lack of Buyers
Potential buyers always inspect the association’s finances and operations before purchasing a home in a community. This due diligence will help them protect their investment and ensure that they’re making the right financial decision. Buyers tend to want a professionally managed community. It reassures them that the association is in capable hands and its future is secure.
10. Few to No Volunteers
Self-management can also lead to a lack of volunteers. Homeowners are less inclined to run for positions on the HOA board if they know they have to do all the work. In contrast, homeowners feel more encouraged to volunteer if a professional HOA manager is present to handle the day-to-day operations.
Self-Management May Lead to Poor Management
Managing a homeowners association can be a rewarding experience. However, the road to self-management is lined with hurdles that an inexperienced board may not overcome. Ultimately, the community will suffer from poor management, diminished curb appeal, and lower property values. Fortunately, you can avoid these self-managed HOA problems by hiring an HOA management company.
Clark Simson Miller offers exceptional management solutions to HOAs and condominiums. Call us today at 865.315.7505 or contact us online to get a free proposal!
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