- Rising interest rates. No matter what we do, we can’t escape rising prices. As prices increase and dues stay the same rate, your spending will become unsustainable. Even if you have a modest budget, you can never tell when an emergency could occur that forces you to use up any extra money you had.
- Ease of payment. Doing small but steady price increases will be much easier on HOA members’ wallets than sudden price jumps every few years. Small increases normally have less backlash and are easier for homeowners to budget around than large, irregular increases. Larger increases are also more likely to go unpaid, reducing your budget even further.
- Caps on annual increases. In most association’s governing documents, there is a maximum percentage that you can increase your dues every year. When you try to catch up with a large due increase, the cap percentage may not be large enough leaving your HOA to run at a deficit until you can increase prices again next year.
- Developer/declarant rights. If your HOA is new, it important to understand what declarant control is and why your governing documents need to be updated. Before an HOA is controlled by a board, the association is under “declarant control”, meaning the developer or other involved party has control of the property. If you have an operating HOA board, you no longer need sections or wording associated with developer/declarant rights, so you can either edit them to reflect the Board’s leadership position or get rid of them all together.
- Not in alignment with state laws. One way to quickly check if your document aligns with state laws is by comparing the dates of the laws mentioned in your bylaws to the date your bylaws were signed into effect. If your bylaws are older, it is good practice to review them to ensure your HOA is still in compliance.
- Outdated communication and voting requirements. The COVID-19 pandemic changed many things, but one of the most significant is how people vote and everything from their HOA boards to our elected officials. Make sure your voting options are updated by including options for voting by mail, online, and by proxy. If your bylaws also state that the only acceptable way of voting is via mail, make sure you update them to reflect current technology that your HOA uses when voting.
- Difficult to understand. If you feel like you need a team of lawyers to decipher your bylaws, it is worth the time to edit them to make them clear for all to understand. If there are words that you had to look up or phrases that left you scratching your head, it’s time to reword them for clarity.
- First and foremost, a Maintenance Plan is in place to preserve the value of all owner’s investment in the property. Enhance the property value, maintain the property value and create a comfortable place to live.
- Increase efficiency of HOA operations. Preventative Maintenance Plans help buildings operate efficiently. By effectively maintaining equipment, it functions at the highest levels and can reduce operational inefficiencies due to unexpected breakdown and can lessen wasteful energy usage.
- Prevent failures of building systems. Buildings that operate trouble-free allow the occupants to enjoy the property as intended. Preventive maintenance includes regular inspections and replacement of equipment crucial to building operations.
- Sustain a safe and healthy environment. Protecting the physical integrity of building components preserves a safe environment for residents.
- Provide cost effective maintenance. Preventive maintenance can prevent minor problems from escalating into major failures and costly repairs. Preventive maintenance can be handled relatively cheaply, efficiently, and systematically through advance scheduling while major failures always happen after hours, at peak billing times and to equipment that must be special ordered.
- Welcome letter. It would be expected for a welcome packet to contain a welcome letter from the HOA community. This letter can be generic and used for every new resident. Be sure to include a brief explanation of what is contained in the rest of the packet and note when the next HOA Board meeting will be taking place.
- Community rules and regulations. Even though rules and regulations have likely been covered already, it’s not to have a handy list for new residents.
- Amenity information. If your community has shared amenities, like a pool, gym, or clubhouse include a sheet detailing hours of operation and any other relevant information. Some examples of other information include if reservations are required, COVID guidelines regarding the shared gym area, or pool usage information.
- Owner contact sheet. If you don’t collect this information at closing, the Welcome Packet is an appropriate place to include a sheet to collect new owner’s contact information in case of emergency.
- Local points of interest. Exploring the community beyond the HOA is one of the most engaging parts of moving to a new home. Your Welcome Packet can make this an easier process for new residents by including local points of interest. Restaurant ideas, the address of the local library, or a “hidden gem” in the neighborhood like a great dog park are all nice tidbits to include and will help new residents in your HOA feel right at home.
- Request notifications on your deliveries so you can bring it inside as soon as possible and have a written record of your package being delivered
- Always require a signature on your deliveries so packages aren’t left unattended, especially when expecting larger/more expensive items
- Schedule deliveries for a date and time when you are normally home, so you can grab your package as soon as it is dropped off
- Set up a vacation hold if you will be going out of town for the holidays, or ask a neighbor to keep an eye out on packages and bring them inside if they see any
- If you were struck by a porch pirate, call your local police department
As you create your HOA’s 2021 budget, make sure you plan on having more than enough money in both your reserve and operating funds. Having both funds full is important to maintain the upkeep of your community. But what is the difference between operating and reserve funds? And why can’t you just use one fund instead of two? Let’s break it down.
Operating Funds are what is used for normal, day-to-day expenses such as lawn care, snow removal, repairs & maintenance, and more. The services classified as operating services are set by governing documents, so while there may be some variation as to what your HOA offers, most of them are the same.
Reserve funds are funds used in an emergency, like storm damage. Most associations hire a professional to come and develop a reserve study, looking at your buildings and pavement and estimating when maintenance and replacements will need to be made. HOAs can then set a budget off of these estimates; if you will need a new roof in 2 years and new siding in 5, put more of your reserve funds into the “roof” section and less in the “siding” section since you will need your roof done sooner than your siding.
Operating and reserve funds are just like checking and savings accounts. Most of your expenses will be paid via your checking account, but when there is an emergency like a major hailstorm or pavement damage, you dip into savings account. Having your money separated into these two accounts will help keep you within budget and spending money on the things that your HOA community needs to operate.
As a member of your HOA’s board, you have many of duties. The most important of them is fiduciary duty.
Fiduciary duty requires board members to stay objective, unselfish, responsible, honest, trustworthy, and efficient. Board members, as stewards of public trust, must always act for the good of the organization, rather than for the benefit of themselves. They need to exercise reasonable care in all decision making, without placing the organization under unnecessary risk.
The duty of care is the duty to make reasonable and informed decisions. Instead of going with the first contractor you come across, shop around. Is there anyone more qualified? Less expensive? If so, go with them. Part of your job as an HOA member means choosing the best option for your community, not the easiest.
The second duty is the duty of loyalty; the ability to set aside your personal interests for the good of the HOA. Don’t hire your friend as a contractor if they aren’t the best person for the job. If you want to spend money on a new project, ask yourself if it is a personal interest or a community interest. If the community would not benefit from, say, a new hot tub or upgraded gym, scrap the project.
If you have questions contact Sharper Management – we are always here to help!
According to Stanford University, 42% of the American workforce is currently working from home. If this applies to you, we have few ideas that may help.
Have a designated workspace. While the kitchen counter may seem like a welcoming home office, it is recommended to carve out a space that is specifically for work. Having a specific workspace will help maintain the mental separation of work and home, and will also make it easier to stay organized.
Set ground rules with loved ones. It’s easy for your family to think you’re “home” when really at “work”. Setting a few ground rules like, “If my door is shut, don’t disturb me” can help keep you stay focused.
Maintain your regular work hours. Dedicated work hours are a great way to keep family time and work time separate. Resist the urge to pop into your home office to do a “couple of quick things”. Often times those quick things turn into a few hours instead.