Building a Strong HOA Board

Key #1 for HOA Success: A Strong Board

Countless HOA board members and community homeowners erroneously believe the management company runs their HOA. HOA Boards and homeowners mistakenly blame their management company when things go wrong. Here are 3 keys for HOA success that will help your community get back on track.

By Nevada State Law, the homeowner association executive board is charged with running the HOA and is delegated fiduciary responsibility for the well-being of the community.

NRS 116.3103Specifically empowers the HOA executive board to act on behalf of association. By law, this empowerment is not granted to a management company. Volunteer board members are fiduciaries (persons who [legally] act on behalf of others to manage assets). They are charged with the duty of caring for the community and its assets. HOA board members are required to apply sound business judgment and avoid conflicts of interest. Failure to do so has landed many HOA board members in hot water or even worse --prison.

More Specifically, NRS 116.3103 states:

1.  Except as otherwise provided in the declaration, the bylaws, this section or other provisions of this chapter, the executive board acts on behalf of the association. In the performance of their duties, the officers and members of the executive board are fiduciaries and shall act on an informed basis, in good faith and in the honest belief that their actions are in the best interest of the association. Officers and members of the executive board:

(a) Are required to exercise the ordinary and reasonable care of officers and directors of a nonprofit corporation, subject to the business-judgment rule; and

(b) Are subject to conflict of interest rules governing the officers and directors of a nonprofit corporation organized under the law of this State.

Key #2 for HOA Success: The Buck Stops at the Executive Board

It is critically important that HOA board members clearly understand it is their responsibility to manage all facets of their community.

HOA executive boards may hire a management company, an attorney, a collection agency and other vendors to carry out professional, maintenance and other tasks as necessary. They may delegate tasks. However, they are not absolved of their responsibilities.

In short, the buck stops with HOA Executive Board of Directors. They are required to make informed, reasonable business decisions on behalf of the homeowners association.

Do not blame the management company. They work for the HOA Executive Board.

The HOA board’s job is to build and manage professional collaboration amongst community vendors, including the management company they have chosen to hire on behalf of the association.

Blame the HOA board if the community goes bust, loses money, fails to collect HOA fees, does not respond to homeowner complaints and concerns, allows delinquent vendor accounts, overlooks green pools and spas, turns a blind eye to landscape needs. It is the HOA Executive Board members who are accountable.  How they accomplish their task is up to them.

The HOA board is tasked with managing the performance, hiring, firing and over-all welfare of the association and all aspects of the community.

Obviously a smart HOA board will select and hire the best professionals the association can afford. Still, it is the board’s responsibility to manage each vendor, including the management company.  A well run HOA is the result of informed teams working together and appreciating each others important contributions.

Key #3 for HOA Success: HOA Board Members Must Be Informed

Poorly informed or lazy board members sometimes delegate the majority of their responsibilities to others in hopes they will not be blamed for disastrous results. This is one of the worst sins of HOA boards.

In Nevada, HOA board members are required to sign Form 602 within 60 days of their election. Here each board member individually swears they have read and understand to the best of their ability all the governing documents (CC&Rs, Bylaws, Rules and Regulations and all of NRS 116). If they have not done so, they may be held legally liable.

Unfortunately, many HOA board members have not so much as made a good faith effort to read any of their association documents. Signing and swearing that they have done so is a poor start to a bad ending.

All too often HOA board members do not read the governing documents or the state law governing homeowner associations. 95% of home buyers sign and accept HOA governing documents they have not read prior to purchasing a home in their community association.

Uninformed HOA board members make homeowner associations vulnerable and unwittingly make associations victim of well-intentioned management companies.  In these cases, communities become neglected and home values decline.

Here’s the HOA Rub

Many homeowners are unaware of their signed agreement to abide by the governing documents and complain bitterly when active HOA boards begin to enforce the rules.

Only by reading and understanding to the best of your ability can any HOA board member protect and care for their community and help educate homeowners.

The governing documents were written to establish and maintain a way of life –the very reasons most homeowners found the community attractive and inspired them to buy their home in the first place. Without compliance with the governing documents most communities decay, squatters move in and risk to HOA board members increase.

Harassment in an HOA Setting is a Crime

When homeowners are confronted with living by association rules, which every homeowner acknowledged and accepted with their signature, they may become hateful.

Some homeowners become angry, lash out and become offensive. A few homeowners may harass and falsely accuse HOA board members, management company staff or attempt to boss service vendors. These negative action must be stopped before they drive good homeowners from the community.

Although usually avoided due to cost and frustration, court action can be taken against abusive homeowners and HOA board members.

Only by knowing, adhering to and enforcing the association governing documents and Nevada State law can any HOA board increase home values and improve the lives of those living in their neighborhood.

These 3 rules for HOA success can help your HOA board and your community build a better future. It is a lot of hard work.  It can saver your community.  It can increase home values. It can make HOA board work a whole lot easier.

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