BIGGEST MISTAKES 6Board Members Make...and how to avoid them

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1 BIGGEST MISTAKES 6Board Members Make..and how to avoid them

2 What You Don t Know Can Hurt You And Your Community Leading your community responsibly isn t an easy task, especially when you re keeping up with board meetings, buzzwords and best practices. While board members often put forward their best effort, sometimes they still make big mistakes that can lead to serious repercussions for themselves, the board and the community itself. Our professionals have learned this truth and many more through years of experience working with boards like yours and becoming experts in the community management industry. While what you don t know can hurt you, their knowledge will help you discover how to avoid the most costly mistakes and become a more effective board member in the process. We asked our leaders and community association managers, or CAMs, from around the globe to tell us the biggest mistakes they see board members make and here s what they revealed.

3 1 Not knowing your community s governing documents. Governing documents are the documents that establish how a community must run: what s allowed, what s not allowed and how to make changes to the rules. The governing documents are comprised of three key sections: Bylaws, Rules and Regulations, and Covenants, Conditions and Restrictions (CC&Rs) and they are all unique to your community. They include important information like who s responsible for property maintenance, pet regulations, parking and more. Acting before checking your governing documents can be hazardous. I know of a board that approved a community association bank loan to build a new structure. After they spent considerable association funds, they applied for the loan, only to discover the documents required a community majority to approve the loan. When the membership didn t approve the loan, they were left with an incomplete structure and quite an eyesore. Luckily, when we took over the account, we were able to convince owners to approve the bank loan to complete the project. But, this could have been disastrous. I took over management of another association where the board of directors voted for a dues increase in June. After the notices were mailed and coupon booklets were ordered and received by members, the increase was challenged because their governing documents didn t allow a midyear increase. Once we took over management, we suggested the board change the dues increase into a special assessment and this corrected the error. But, it took a while for the board to regain the confidence of the members. These are just two examples of what can happen when boards react to solve a problem without consulting the governing documents. Lisa Drobney, CMCA, AMS, Homeside Properties, Inc. An Associa Company! Not sure where to find your governing documents? Here are 5 Places to Look.

4 2 Money matters. Two very popular community association board practices landed on the community managers list of major no-no s and they usually go hand-in-hand: not raising assessments and deferring maintenance. While no one likes making the unpopular decision of raising the assessments, as a board member you are elected to make the tough decisions to promote, maintain, and enhance the community. As your community ages you need to set realistic repair and maintenance budgets to take care of the little things as they break down. Proactive maintenance, such as caulking and roof inspections, ensures that you catch problems when they are small before they turn into water damage inside a home. Neglecting this leads to deferred maintenance and more costly repairs. Jesse Dubuque, CMCA, Associa Minnesota! Read more from Jesse s blog post, The Truth about HOAs: Low Assessments Can Come at a High Price.

5 3 Letting personal agendas get in the way of community agendas. We polled more than 1,000 of our community managers and one of the recurring board mistakes mentioned was board members using their board position to carry out personal agendas. This includes hiring friends as vendors, making decisions that only benefit their home or their friends homes, and taking feedback personally. A community association is a corporation and it s designed to function as a business. It s important to keep the association s not your own goals in mind. Diversity of thought is a positive addition to any association board, so separate yourself from any potential conflict of interest and listen to your fellow elected board members. Sandra Vela Mora, CMCA, AMS, PCAM, Associa Hill Country

6 4 Selective enforcement. Another common practice that is detrimental to a community association s success is selectively enforcing association rules. Selective enforcement can occur because of favoritism towards owners or in more subtle ways, like not consistently monitoring violations. In Jesse Dubuque s article, Don t Blame Governing Documents Blame Inconsistent Enforcement, he paints a very clear picture of why this is a problem. Imagine that instead of consistent and fair enforcement, a community checks for trash can violations only once a year, then sends out a bunch of violation letters, and doesn t follow up until next year. Most homeowners upon receiving the letter will comply and follow the rules. But, when they see their neighbor across the street leave their trash cans out ALL YEAR and never receive a second letter, they re going to think, Why do I have to follow the rules and they don t? It s easy to see how quickly a normally-satisfied homeowner could become disenchanted with the community if this happens frequently. No one enjoys citing violations, but remember, everyone who lives in the community agreed to the rules when they joined, and consistent enforcement of those rules is essential to keeping the community running harmoniously. Jesse Dubuque, CMCA, Associa Minnesota

7 5 Not delegating properly. The association board is run by volunteers who are also homeowners in the community, so it can get a bit complicated when board member duties conflict with neighborly niceties. Addressing issues with homeowners that should be handled by a community manager often creates anxiety for the board members. Letting professionals manage the business of the association isn t just a deterrent for hurt feelings, it s also a great way to avoid a conflict of interest when it comes to money management in an industry where fraud can occur. Successful boards benefit from the assurance that comes with delegating financial management, violations and record-keeping to a proven community association management company. You avoid conflict with neighbors and all community members don t have to wonder whether their dues are being handled objectively. Dana Stout, Community Association Solutions of Indiana An Associa Company

8 Inaction. 6 No matter what type of community you choose, the role of the community association board is the same: to make decisions that help the community thrive. Rule enforcement, maintenance, assessments, and communications are all done to ensure the community s value is enhanced. That s why our community managers cite inaction as one of the biggest mistakes a community association board can make. You are elected to make decisions. No one is going to get it right 100% of the time, but you should at least try to make a difference because sitting stagnant doesn t help your community. Juanita Seekins, Associa Hill Country

9 Community. Insights. Associa. Developed by industry professionals. Designed for association board members. For nearly 40 years, Associa has been the partner of choice for some of the most complex, innovative and amenity-rich properties in the world. Our bestin-class technology, products and services are designed to add value to your community. And, you ll find that nobody has the expertise that we do when it comes to helping you achieve your community s goals. Because of our commitment to community, we ve become an industry leader positioned to provide actionable insights that deliver results for our client communities. What really differentiates us, though, is our people. With nearly 300 employees holding their PCAM the highest professional recognition available to community association managers you can trust that your Associa team has the knowledge and resources to help your community plan, manage, maintain and grow. From our community managers and service partners to our financial professionals, executives and many more, we are committed to helping you achieve your community s vision.! Click here to Request a Proposal.