Homeowner’s association (HOA) boards are critical to the success of their communities, ensuring they are safe, well-maintained, and harmonious. However, well-intentioned volunteers new to serving on a community association board of directors may encounter potential pitfalls. Here are some common mistakes that boards should avoid in order to cultivate effective governance and community trust.

1. Not Reading and Following the Governing Documents

Governing documents, such as bylaws, covenants, conditions, and restrictions (CC&Rs), are the foundation of community operations. Board members must adhere to these provisions strictly. Ignoring these parameters can result in legal issues, financial penalties, and loss of community trust. It is imperative that every board member reads, understands, and follows the governing documents to avoid potentially serious consequences. Are you stumped by a question? Refer to the documents first!

2. Working Outside Board and Scope of Authority

Each board member has a defined role and responsibilities. No single member should act on behalf of the entire board without consensus. Actions taken outside the scope of authority, especially those prohibited by governing documents, can lead to significant problems. Board members should avoid having one-on-one meetings with members, vendors, or others that could lead to unauthorized decisions or perceptions of favoritism.

3. Allowing Conflicts of Interest

Board members should avoid situations where personal interests might conflict with their duties to the HOA. Hiring friends or relatives, for instance, can lead to biased decisions and mistrust among community members. Maintaining transparency and objectivity in all board activities is crucial to prevent conflicts of interest. Full disclosure up-front is the only course of action if even the slightest perception of a conflict of interest exists.

4. Inadequate Communication

Effective communication is key to a successful community. Allow owners the opportunity to participate in community meetings, invite inclusion via surveys or polls, and use various channels to disseminate information. Update the membership promptly on important matters and share information before implementing changes that will impact owners financially or otherwise. Proper communication fosters transparency and keeps the community informed and engaged.

5. Not Collecting Assessments and Fees

Timely collection of assessments (sometimes called dues) and fees is vital for the financial health of an HOA. Delayed or inconsistent collection can disrupt financial planning and give the impression of board ambivalence. Ensuring a fair and consistent fee collection process helps maintain the association's operations and financial stability. In the board member’s role as a fiduciary of the association, following the delinquency policy serves the interest of the community as a whole while exercising common sense when circumstances dictate that reasonable accommodations apply to a situation.

6. Neglecting to Perform an Annual Insurance Review

Insurance coverage is a critical component of risk management for your community. Insufficient coverage can lead to substantial financial burdens in case of unexpected events. Boards should review their insurance policies annually and verify renewals, coverage amounts, and the claims process to ensure adequate protection for the association.

7. Inconsistent Enforcement

Enforcement of rules and regulations should be consistent and impartial. Allowing personal feelings or friendships to influence enforcement decisions can lead to uneven application of rules, causing resentment and disputes within the community. Consistency in enforcement upholds standards and maintains community harmony by observing the rules and restrictions in place and honoring the spirit of the declaration that established the community.

8. Repeating Past Mistakes

Last but not least – learn from your mistakes! Learning from past mistakes is essential for continuous improvement. Regularly reviewing resources, like previous meeting minutes and decisions, helps board members avoid repeating errors. This practice also allows for reflection on what strategies worked and what didn’t, fostering better decision-making processes in the future and ensuring consistency in the association's operation.

In conclusion, serving on a community association board requires a commitment to fairness, transparency, and adherence to governing principles. By avoiding common mistakes, board members can ensure effective governance, maintain community trust, and promote a positive living environment for all residents.

About Community Association Management Services

In business since 1991, CAMS is North and South Carolina’s premier community management company. With experienced local managers in each of its nine regions, CAMS provides innovative solutions to the community associations it serves. Additionally, CAMS was featured on Inc. Magazine’s 2022 Inc. 5000 list of the fastest-growing private companies in America. To learn more, visit www.camsmgt.com/choose-cams.