Homeowner Associations: From Zero to Board Member in 60 Seconds
Congratulations! You have been “elected” to serve on your Homeowner Association (HOA) Board. So, what does that mean? What are your responsibilities? What should you do?
The typical HOA Board is made up of four officers: President, Vice-President, Treasurer, and Secretary. The President typically prepares the meeting agenda, presides over meetings, appoints committees, execute contracts, and act as a spokesperson for the HOA. The Vice -President typically steps in for the President when the President is not available. The Treasurer focuses on the HOA’s finances, prepares budgets, develops investment strategies, oversees tax filings, and reports to the rest of the HOA regarding the HOA’s financial condition. The Secretary maintains membership lists, gives notice of mailings, keeps meeting minutes, maintains HOA correspondence, and preserves association history. If the HOA has a professional property management company, some of these duties are handled by the property manager and/or a bookkeeper rather than the Board members. Besides the four officers, there are typically several other general Board members who may or may not be assigned specific responsibilities.
New HOA Board members should read the governing documents and recent meeting minutes. Governing documents include the Declaration and all amendments, Bylaws, and Policies & Procedures (i.e., the rules). The Declaration is a crucial document that is recorded with the county clerk and recorder. That document “runs with the land”. Running with the land means that anyone who buys real property within the HOA is automatically subject to the Declaration. The Declaration is not a contract that can be accepted or rejected. If you bought the house within the HOA, you are probably subject to the Declaration, Bylaws, and Policies & Procedures.
Bylaws tend to include more day-to-day procedures regarding the HOA than the Declaration. For example, the Declaration will state that there is to be a homeowner association. The Bylaws flesh out how the association is formed, how officers are elected, and how meetings are conducted. Bylaws can be easily amended. Amending the Declaration tends to be much more difficult and expensive. While there is broad latitude in drafting and amending Bylaws, the source of authority for a specific Bylaw must flow from either the Declaration or Colorado law.
Policies and procedures are the detailed rules for running the HOA. The Declaration typically authorizes the imposition of HOA assessments and so does Colorado law. The policies and procedures set forth the procedure for fairly enforcing the assessments. For example, to go to court and collect unpaid assessments, Colorado requires a written collection policy be in place. The collection policy would flesh out what must occur before a collections lawsuit is filed. Another example would be a Declaration that prohibits certain activities like parking junk cars in driveways. The policies and procedures would set forth the details like a definition of a junk car, required notice of a violation, and uniform hearing procedures before imposing a fine. Much like the Bylaws, the authority for a specific policy or procedure must flow from the Declaration or Colorado law. A policy or procedure cannot simply be adopted because the HOA Board determines it is a good idea.
Depending on what services the HOA provides, an HOA may have contracts with various service providers. If the HOA provides road maintenance, snow removal, landscaping, and/or trash pickup, the HOA probably has a contract with a third party to provide these services. Board members should read these contracts. If the HOA has a property manager, the contract between the HOA and the property manager is probably the most important contract for a Board member to review. For a productive working relationship between the HOA and property manager, it’s crucial that both parties are on the same page regarding responsibilities.
Third-party professionals make any HOA more efficient and less taxing on the Board members. The tradeoff is expense. Aside from a property manager, the HOA may have an attorney. The HOA attorney can make sure that assessments continue to be collected, the HOA’s rights are respected by all homeowners, and that the HOA avoids unwanted liability. Having an attorney available to to answer questions as they arise can often nip problems in the bud, creating a smoother, more efficient HOA.
Serving on an HOA Board is a commitment that involves some homework. However, if you make sure to review your HOA’s documents and work with experienced professionals, anyone can go from zero to Board member in a short period of time.
