Overcoming Unique Challenges as a Self-Managed HOA President
Self-managed HOAs are associations run entirely by members of the association. Many condo groups and neighborhoods may start their HOAs as completely self-managed groups to retain control of the community, stay involved in the day-to-day operations of the HOA, and ensure association fees are spent based on the community's preferences.
However, as the president of a self-managed HOA, you'll regularly encounter difficulties regarding member participation, conflicts of interest, and mounting tasks that involve time, paperwork, and money. Take a closer look at some of the challenges most self-managed HOA presidents must handle — and how a management company can help you resolve them without sacrificing control.
Self-Managed HOA vs. HOA Management Company
Many communities have self-managed HOAs: associations where community members fill up the board and take on the management positions for running meetings, allocating funds, ensuring compliance with HOA policies, and managing community resources.
Having a self-managed HOA grants your community more autonomy and can save your community money, so the funds go where they're needed most. However, those same benefits can present dangerous risks; autonomous boards are more vulnerable to mismanagement and corruption. Also, a community-run HOA may accidentally fail to comply with state and local laws.
HOA management companies are third-party services that handle the tasks of managing and operating HOAs. This can include collecting HOA fees, managing finances, complying with local laws, and being the point of contact for complaints, emergencies, and ongoing concerns. They can handle the heavy lifting of HOA management while allowing community members to vote, bring up points of interest, and advocate for changes or priorities in the community.
Challenges You May Face
As a president of a self-managed HOA, you prioritize the needs of your community. However, there are several hurdles that can interfere with your plans. Some of the biggest challenges HOA presidents see are:
Lack of Interest
As far as donating time to the community is concerned, serving on the board of an HOA can be one of the most thankless options. Homeowners are quick in expressing their frustrations or some shortcomings of the community, but if you ask that same homeowner to volunteer on the board, you'll see them run for cover.
Conflicts of Interest and Legal Liability
When community members run the association, there is a significant risk of conflicts of interest. Depending on which state the community is located in, there is a legal standard that courts use to determine the correct conduct of volunteer HOA Board Members. Duty of Care is the most common.
Simply put, if a board member makes a decision based on the best interests of the community and that decision comes under legal challenge, that board member will be immune from personal liability, and only the HOA itself can be found at fault. As long as the board exercised its Duty of Care (this essentially means that each board member acted in the interest of the community and did not act in self-interest), only the HOA itself could be found legally liable.
Here is a real-world example. Homeowner A has a 3-foot knee wall in the front area of the home due to the lot elevation increasing from the street. The wall was installed by the builder when the house was built. Homeowner A is now president of the HOA Board.
Homeowner B, who lives in the community, decides to build a 3-foot knee wall in his front area in order to enclose an area in the front of his home for a porch. Homeowner B does not fill out any architectural form for the HOA. When Homeowner B receives a letter from the HOA asking him to submit for HOA architectural review, Homeowner B attends a board meeting asking for permission, and he justifies his request as he is building a wall with similar specifications as Homeowner A's wall.
While the Board considers the request for Homeowner B, the best way to mitigate a possible challenge to the HOA decision would be for Homeowner A to abstain from any vote on Homeowner's B project. If the other board members then decided not to approve Homeowner B's new front porch, they would presumably only consider factors related to the community and no factors that only impacted their own interests.
Ways to Improve
If you identify any of these challenges within your own self-managed HOA, partnering with an HOA management group can help alleviate some of the roadblocks. Partial services can handle the paperwork and operational concerns while still leaving your board in control. Full management services can also carry on with managing and maintaining the community if internal enthusiasm continues to wane.
Consider the following improvements a management group can bring to your association:
Remove Potential Conflicts of Interest
Let's return to our previous scenario about knee walls.
This is a situation where a management company can be very helpful. By giving the HOA Board Members a third-party perspective for approving or denying the homeowner's request, the HOA is more safely able to navigate these potentially sticky community issues. (Member A would still have to abstain from the vote per board best practice.) Since there are many issues that fit into this general scenario where the Board must decide issues on behalf of the community as a whole, many self-managed communities turn to a management company for insight and support.
Ultimately, volunteer boards face statutory regulations that can, at times, place boards in precarious situations from a legal standpoint. One advantage of hiring a third-party manager is being able to better navigate that area between boards and residents.
Introduction of a Neutral Third Party
State legislatures understand that HOA boards are voluntary; after all, who would sign up to be a board member if they were held personally liable for their decisions? This is where a Management Company adds one more layer of protection. By providing third-party oversight of many of the HOA's activities, Boards are provided additional protection from any claim of self-dealing.
Ultimately, presidents need to act in the best interest of the board and the community as a whole. Are the operational and compliance components of the HOA becoming unmanageable? Are conflicts of interest interrupting improvement opportunities or causing discord? Turn to HOA Management Solutions for a full-service solution customized for your community.