Untangling HOAs

BY DEREK MOBRAATEN

The history of homeowner associations (HOAs) goes back to the 1960s when approval was received from local governments to build communities that could be completely selfsufficient. In other words, these communities would be maintained and governed not by tax dollars from cities and municipalities, but rather by assessments paid by the homeowners of the community. The ideal presupposed board would be educated enough to manage an association. Each HOA would need a board of directors that would, in most cases, volunteer their time, often unwillingly, to serve on the board and make expert management decisions.

Fast-forward to today: HOAs are here to stay, and in fact, the industry is growing! With such growth, the demand for boards to acquire a vast knowledge of building maintenance, corporate finances, insurance and risk management, political and people skills, etc., is only getting more challenging. HOA boards are exposed to ever-increasing risk, both personal and community risk. The ability to wear all these hats well is an additional requirement. It goes without saying that every board member needs tools in their tool belt. These tools are

the professional service providers and the advice given by them. It is up to the board to know when to seek expert counsel. When a board or board member decides not to take the recommendation of an expert or a professional, the board or board member accepts this risk of liability.

Many boards seek to lower assessments and take on projects themselves to save money. This is like self-representation in a courtroom – highly risky. Board members won’t be remembered for keeping assessments low and using less expensive, or even unlicensed, vendors. They will be remembered for maintaining good property values and the building envelope of the HOA. Not every homeowner will understand this, but eventually most do. Gone are the days of self-managed HOAs that can skate by with assessment collection, scant board meetings, and a $100 line item in the annual budget for legal expenses.

HOAs are complex, and state legislatures are only making things more complicated with frequent changes to HOA law and how a board is allowed to do business. In this increasingly complicated world, it is important for boards to ask for help and listen to the professionals and experts in the myriad fields required to run a well-managed HOA community.

Derek Mobraaten is the author of “So You Bought a Condo”, an easy-to-read guide on working for an HOA and making the HOA work for you. Derek grew up in the Bay Area and was raised learning about HOAs. He owns and operates Hudson Management Company with his wife, Kaley, and has written several articles for the Echo Journal. To learn more, visit www.hudsonmgmt.com.

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