But to be truly in charge, the Board must be informed and have a plan aka "getting organized". A good way to focus on this is to schedule a Board Retreat. The Retreat is designed to share ideas, discuss strategy and get informed on the HOA management process. It’s extremely important that the Board get its bearings before charging off like Don Quixote to right all wrongs. (Look what happened to him!) Understanding the process means grasping the basics of board authority and what makes the HOA tick. A Retreat is like Spring Training for HOA Boards. It prepares the Board for serious play action by learning to work as a team.

Retreats can be accomplished in a morning and/or afternoon session depending on the size and complexity of the HOA. Understanding what the job description entails should come first. This is also a good time to dispell myths (what Boards are not supposed to do). The Board should adopt the role of executive directors of a multimillion dollar corporation. Here is a good series of topics for discussion:

• Contractor Supervision. The Board was elected to supervise hired contractors that perform a variety of tasks like management, accounting, landscaping, pool maintenance, building maintenance and window washing.
• Quality Control. It is the Board’s job to hire professionals that are properly licensed, bonded and insured for the work they perform. (Sorry, the treasurer’s 13 year old nephew Billy doesn’t qualify).
• Financial Oversight. Managing the HOA’s money is a top priority. This means the Board should be receiving monthly financial reports that compare actual to budget income and expenses and preparing an annual budget which provides adequately for services and maintenance.
• Long Range Planning. Since renovation projects are expensive and complex, they should be planned for years in advance. Using a professionally generated Reserve Study, the Board can project funding needs and scheduling out 30 years in advance.
• Rules Enforcement. Rules in HOAs should be few and necessary. Not all rule breaking is the Board’s to enforce. The police should be used whenever possible since they are trained to deal with loud parties, domestic disturbances, violence and theft. That leaves issues like parking and pets for the Board to oversee.
• Architectural Design. Protecting the look of the community is an important charge. In common wall communities, the HOA generally maintains the grounds and building exteriors but certain owners are inclined to "improve" the look with storm doors, awnings, fences, patios, sheds and decks. The Board can generally make decisions on these requests or, better, establish standards for members to follow. In single family HOAs where members maintain their own homes, it’s more a matter of paint and roofing colors and architectural design of homes or additions. This often warrants hiring the services of a consulting architect who can properly evaluate the proposed additions.

Officer Roles. Officers are appointed by the directors to serve as President/Chairman, Treasurer, Secretary and, possibly, Vice President.

• President/Chairman runs the meetings and is the "go to" person between meetings to make decisions that are in keeping with the budget, governing documents and Board policy; signs checks.
• Treasurer oversees the bookkeeper (usually the management company) and accountant. It’s the Treasurer’s job to deliver financial reports, approve bills for payment, sign checks and reconcile the bank statement.
• Secretary records minutes of the meetings and oversees preparation and distribution of minutes, newsletters and communications.
• Vice President is one heartbeat away from the presidency and typically is slotted for that role next term. Should be informed and prepared to step in for the President at any time.

Meeting Process. Meetings are where HOA business is transacted. Board meetings should be at least quarterly and scheduled a year in advance so the directors and members know when and where they will happen. Meetings should be held in visitor friendly locations, the more professional the setting the better. Avoid holding meetings in member homes since they tend to be too small and prone to disruptions. (Another excellent video titled "Meetings" is available in the Regenesis.net Video section. Buy it and and view it at the Retreat).

Board Operations Manual. This indispensable tool should be assembled before the retreat for each director. It contains the essential information that a director should have on hand to keep abreast of HOA business like governing documents, site maps, vendor lists, member directory, rules, approved budget and recent financial statements. All should be logically grouped by labeled page dividers for ease of access (For a comprehensive list of what to include, see Regenesis.net Planning Tools section).

Review the information section by section to become familiar with it, particularly the governing documents. Highlight sections that are particularly important. This is an extremely important exercise since the governing documents may contradict common practice or logic. The Board is bound to follow them unless amended by the members.

Prioritizing Issues. Now that the basic organizational tasks are covered, it’s time to prioritize and discuss the issues, including:

The Board Retreat is invaluable for getting the Board off to a running start. While a brand new director will profit enormously, old hands can use a refresher course and add their perspective to the process. Take the time to get organized and informed before tackling business. Use a Retreat to move forward.  BACK

Standardizing Design
Many HOA Boards struggle with the issue of architectural standards and their enforcement. While virtually all Boards are empowered to control the look and feel of the buildings and grounds, the governing documents are often silent as to what that look should be. Staying with the status quo is easy, but getting locked into a dated look erodes market value of the homes or units. Changing with the times helps retain the highest market values.

The Board’s design oversight power must be exercised with prudence and restraint because the HOA is composed of different personalities which need personal expression. Standards the Board enforces should have a degree of flexibility whenever possible.

Design restrictions should be based on maintaining structural integrity and curb appeal. So, if a member proposes an exterior change that does no harm to the structure, can’t be seen from the street and the immediate neighbors don’t mind, it should pass muster. Avoid the hardline approach because it defies logic and makes the Board appear dictatorial.

For common architectural requests like storm/screen doors and privacy fences, standards should be approved that maintain high quality, attractive appearance and consistency. The standards should be of average cost so that the average member can afford them. Besides brand and model, a color standard is very important.

When the HOA controls exterior painting, color options should be reviewed every paint cycle since consumer tastes change. For this, use the free color consultant services offered by virtually every paint supplier. Not only can they provide a number of contemporary trim and body color options, they provide a contractor quality inspection service if the HOA uses their paint to ensure proper application.

Roofing styles, quality and colors change as well. If your shingles are coming due for replacement, take advantage of products alternatives to increase fire safety, ease maintenance and reduce reserve fund needs. For applications like siding, fence and decks, there are a variety of synthetic or recycled material options that significantly reduce maintenance and cost. Vinyl siding reduces or eliminates painting, one of an HOA’s biggest expenses. Vinyl fencing is an affordable and easy to maintain option. Recycled deck boards are easier to clean and don’t rot. When using synthetic materials, choose color carefully since it will be around for 30-50 years.

When it comes to establishing architectural standards, it’s best to let the members choose by poll or vote. This is a great way of including them in the process. The results needn’t be unanimous but there should be a clear majority that favor a particular standard.

For older HOAs trying to establish standards after the "horse is out of the barn", the first order of business is to compile information about existing changes and violations by address. Use a camera and notepad to make a record of each modification. Write a description of each item, its condition, its location and overall attractiveness on a scale from 1 (Hideous) to 5 (Stunning). That exercise will give the Board the scope of changes and examples of what works and what doesn't. Sometimes, the best standards are right there in the community just waiting to be recognized.

Defining architectural standards is an important task. Once done, the look, feel and value of the property will be significantly enhanced. The Board should identify those things that members are most likely to want some customization on and figure out how they can have them without causing harm to home values. Remember:

HOA standards make sense
Aside from the dollars and cents
Awnings and fences
Should not give offenses
But have a judicious pretense    BACK

Going Against the Grain
Years of inaction, unenforced violations, deferred maintenance and too little money to get the job done takes its toll on an HOA. A sense of "muddle by" permeates the Board and meetings are more gossip than work sessions, if held at all. There you sit, the new kid on the Board, knowing that something’s gotta give. This place is going down the toilet and you don’t want to get flushed with it. What to do?

Change comes hard to an HOA in trouble. Members are conditioned to expect little and the Board feels helpless to do anything about it. Failure becomes habit and the vision dims. Camelot is just a dream. Let’s just keep our heads down and maybe no one will know the difference.

But they do know. Silent but angry, frustrated and disgusted, members watch as the neighborhood slides toward the abyss. A few harangue and harass the Board but most shake their heads knowing it’s useless to complain to the deaf.

Hope is looking past what is to what could be. Every new day has a dawn and another chance for change. If your HOA is floundering, here are some strategies for regaining the high ground:

Meeting of the Minds. Before change can take place, the Board must be of one mind (or at least of majority mind) that change is needed. This is the starting or sticking point. If a majority are agreed that things have got to change, good. Skip to the next step. If not, some road blocking directors must first be replaced. This will take a bit longer to encourage new candidates to step forward and to rally support for them from the electorate. But nothing worth doing is ever easy. Keep focused down the road, not the potholes in front of you.

Define the Issues. Once the Board is of one mind, it’s time to identify areas of change. They come in all shapes and sizes and from "can wait" to urgent. First, compile the list. Second, prioritize the list according to urgency and funding requirements. Research the cost and implications of implementation. For example, deciding to bring all architectural violations into compliance this year could be an enormous and volatile task.

Devise a Plan of Action. With your priorities lined out, lay out a one to five year plan of action. Keep in mind that volunteers will be needed to get some of it done so don’t drown them before the swim meet starts. Pace, pace, pace. Overly ambitious and expensive changes will be met with proportionate resistance. Most of these problems compounded over years. Unraveling them takes time. Start slow to build credibility with success.

Cast Your Bread on the Waters. Hold a special meeting to roll out the proposed 1-5 Year Plan to the membership and ask for feedback. Expect challenge and thank them for it because it shows they’re paying attention. Promise to take the feedback to heart and find a way to make it part of the plan. That way, the membership is invested in the outcome.

Recall the King. Long entrenched Presidents rarely have the ability to make radical changes. While maybe well meaning and steadfast, they are the roadblock and not the bridge to change. Since the President serves at the pleasure of the Board, the Board can make a change for the good of the order. It should be done with diplomacy and sensitivity but done it should be unless you have that rare exception to the rule.

Worthwhile change is going to be met with some resistance and going against the grain will gather splinters. But keep the long view. If change is going to come, it’s up to you. In the words of Garth Brooks:

If you're gonna make a difference,
If you're gonna leave your mark.
You can't follow like a bunch of sheep
You gotta listen to your heart.
Go bustin' in like old John Wayne.
Sometimes you got to go against the grain.
Nothin' ventured, nothin' gained.
Sometimes you got to go against the grain.   BACK

Manager Mentoring
A professional homeowner association manager serves in many capacities: rule enforcer, money collector, maintenance supervisor, newsletter editor, social chairman and on and on. One of the most important functions is as mentor to the Board. Mentoring provides an informed and objective perspective that is critical to Board decision making.

Much manager mentoring goes on at Board Meetings since that is where decisions are made. Since Board decisions can have sweeping implications, having a manager’s informed input can make all the difference in the outcome. By the same token, the Board needs to seek and hear what the manager has to say. To this end, the manager should jump in where appropriate to assist the Board in coming to reasonable conclusions.

Managers have the benefit of experience and perspective. That experience is grounded in working knowledge of the governing documents, applicable state statutes and good business practices. Both statutes and documents should be kept on hand with important sections highlighted. Good business practices for HOAs include fiduciary duty, clear communications, long range planning, financial stewardship, avoiding conflict of interest and seeking wise counsel for informed decision. In these areas, the manager’s role is key.

Here are some specific areas where the manager should mentor the Board:

Education. Volunteer Boards typically don’t devote a lot of time to getting educated. They tend to be issue oriented, seeking answers as needed. But there are fundamentals that every Board needs to understand: How to run a meeting, how to build a budget, how to deal with conflict, how to run a successful renovation project and how to make rules. Understanding the principles behind these issues will streamline business. The manager should educate the Board and promote educational resources when available. It will benefit both the HOA and the manager’s ability to get work accomplished. The better the Board understands what the manager does, the less time the Board will spend micromanaging the manager.

Avoiding Legal Quagmires. The manager can be indispensable in steering the Board away from legal traps caused by inequitable rules and inconsistent enforcement, poor collection policies, disability access issues and inadequate maintenance planning. The Board can attract litigation by both being overly aggressive and too passive. The manager knows when that risk is likely.

Informed Decisions. Boards meet infrequently and it’s common for directors to show up ill prepared for decision making even when meeting information packets have been provided in advance. Since decisions are called for, directors will make them even when they aren’t familiar with the issues. It’s important that the manager review the issues and make specific recommendations rather than let the Board meander to some conclusion. While the Board may come to a different conclusion than the manager’s, the recommendation should be the starting point since the manager has thought long about what would work best. Having a recommendation also reduces the time spent talking about uncomplicated or straight forward issues.

Pointing Out Conflict of Interest. Conflict of interest is not always easy to detect by those guilty of it. In HOAs, it usually starts innocently enough as a way to save the HOA money or time by hiring a director’s nephew to mow the lawn, for example, or paying a director to oversee a renovation project. It seems logical at the time but sets up the Board for accusations of self dealing. It’s the manager’s job to call a spade a spade and point the Board to alternatives.

Defusing Personality Conflicts. Personality clashes are not uncommon on an HOA Board. The manager can see the ones that are interfering with HOA business and discreetly counsel the offenders. In some cases, a director should be encouraged to step down from the Board if continuing conflict compromises the ability to perform the duties.

Keeping the Meetings on Track. Unfocused and lengthy board meetings are one of the main reasons good volunteers don’t serve as directors. The manager can help keep the meeting productive and short by tracking the agenda, pressing for decisions and pointing out when the discussion is off topic. Manager’s recommendations are invaluable to reaching decisions and keeping the meeting moving.

Mentoring the Board is a high and worthy calling. A good mentor works from the sidelines coaching the team and doesn’t lecture, talk down or be heavy handed. Instead of pushing, the good mentor encourages better performance allowing the Board to take credit for the good results. Success encourages more success. What’s good for the HOA Board is good for the manager.

For more manager hints, see the Article Archive and the Manager Issues section.    BACK

Eye for Compromise
One of the vexing issues a new board has to contend with is lax enforcement of owner additions and modifications by former boards. Lack of enforcement often results in non-compliant decks, fences, sheds and other creature comforts. The violators sometimes claim they got verbal approval from the developer or some long gone board president. Others claim they didn’t know approval was necessary. But for whatever reason, there are now a boatload of violations that need to be reconciled. How should the current board deal with them?

The length of time a violation has been in place affects the course of action. If it's been no more than a year or two, the board's case is stronger. The new board had to displace the old lax board to correct the problem. If the violation has been in place much longer, the owner can make a stronger case that a series of boards consented by silence. But action is still called for or the current board is accomplice to mismanagement.

Send Violation Notices. To begin the enforcement process, violation notices should be sent to every violator with a demand for removal of the offending modification. Some may comply willingly and narrow the list. However, some won't comply so the board must decide how strongly it feels about the violations. In this regard, choose battles wisely. Legal battles are exhausting financially and emotionally.

Agree to Compromise. The idea of a compromise is to permit the violation to continue while the current owner owns the property. Once the property is sold, the offending modification must be removed at owner expense. Further, the current owner must provide for all maintenance and is responsible for any damage it might do to HOA maintained structures (like a deck that leads to dryrot in the siding). It is fairly easy to get an owner to agree to this compromise since it allows the modification to remain, it averts a potential lawsuit and it demonstrates to the other members that the board took reasonable action without going to court.

Written Agreement. Have violators pay to have an attorney formalize the agreement in recordable form which identifies the modification, the legal description of the subject property and the conditions of the compromise. Then date, sign, notarize and have the local title company file it on the public record. This puts all prospective purchasers on notice of the requirement should the owner "forget" to comply with the agreement. Then even if there is a sale, the board can require the new owner to comply with the condition of the recorded document.

Owner Maintenance Responsibility. In the case of owner modifications, all repairs and maintenance should be the owner's responsibility. This too should be described in a recorded document for the benefit of future owners. For ease of tracking, the board should compile a list of such modifications by type, date of installation and location. Ancient history in an HOA is two years ago. This list will prove invaluable over time and keep the board from spending money for something that it shouldn't.

Damage to HOA Components. Repairs of damage caused to HOA components by owner installations should be charged back to the owner. For instance, it's not uncommon for improperly installed deck and privacy fences to cause dryrot or structural problems to the building.

Establish Reasonable Standards. Even if the board approves owner modifications, it is extremely important that they be professionally and properly installed for aesthetics and compatibility with the existing construction. To this end, the board may set reasonable standards such as requiring the owners to:

1. Use only licensed, bonded and insured contractors for the work.
2. Submit detailed plans in advance, say 30 days, so the board can consider the issue adequately.
3. Show evidence of proper permits required for the work.
4. Pay for architect or engineer plan review if the modification is complex or affects structural integrity

No, times have not changed. This is a common complaint raised by board members. "We work hard, the hours are long and the pay is zero. Why not pay us for our dedicated service?"

The first thing that should be done is to review the condominium’s governing documents, the Declaration and Bylaws. The Declaration creates the homeowner association and explains what constitutes the common elements and the units. The Bylaws are the Constitution of the homeowner association. It covers such issues as how many board members there should be, what constitutes a quorum to hold a legal meeting, and how assessments are to be determined. The Bylaws also spell out the rights and responsibilities of the unit owners.

The following language is often found in the Bylaws: "A director shall not receive compensation for serving on the board of directors, but a director may be reimbursed for actual out-of-pocket expenses incurred in the proper performance of board duties."

If the Bylaws contain this prohibition, the board members cannot unilaterally decide to pay themselves. If something is in the Bylaws, it can only be changed by an appropriate vote of the unit owners. Typically, a super-majority vote (66.67-75%) is required to amend the Bylaws. There is a valid reason behind this requirement. Unit owners want the security that the governing documents cannot be changed by a small cabal of owners or by the board of directors. So, it is difficult, often impossible, to amend those documents. Accordingly, if the governing documents contain such a prohibition, the board is acting improperly.

So what can can be done about it? There are several options. First, send each board member a letter and attach a copy of the relevant section of the Bylaws. Tell the board members they do not have the authority to pay themselves or receive gift certificates. If this does not stop and the board does not reimburse the HOA for money already received, reserve the right to take further action.

Next, contact other owners and see if they will join in protesting the board's illegal action. They can send similar letters to the board. They can also initiate a recall petition, whereby the unit owners will seek to throw those board members out of office. The Bylaws will contain language as to the procedure for such a recall.

Even if there is no such prohibition in the legal documents, the board has no legal authority to pay itself without taking a vote of the membership. The board members were elected on the basis that they would serve without pay. Their decision now will cost more money.

While board members may work hard on behalf of the homeowner association, they should serve on the board because they want to do the right things for all of the owners and to protect their own investment. To allow board members to be compensated for their service will open the door to owners who only want to serve for the money and not for the best interests of the homeowner association.