Many people don’t think much about their homeowners associations until they have a problem. Your HOA might be strict on home improvements or yard appearance. More significantly, HOAs can manage large amounts of money when they are responsible for maintenance and common community assets.
The NC Homeowners Alliance encourages you to get to know your homeowners association. Are its finances in good shape? Is it taking care of the property and planning for the future? What are its bylaws for neighborhood oversight? Is it operating transparently?
The best way to ensure good answers to these questions is through transparency and oversight by the neighborhood residents. You can take a few easy steps to better understand your own HOA.
Examine the financials
Contact your board leadership, or the property management company, and request the following information:
- Balance sheet
- Reserve study (if there is one)
- Delinquency rate
It is good to know where the HOA is spending its money. The most important numbers to look for are reserves. If the HOA is responsible for major maintenance of either common areas or housing units, there should be plans for the future.
A reserve study outlines expected repairs and maintenance along with cost. If the HOA reserves are falling below 30 percent of the study benchmarks, then there is cause for concern. An underfunded reserve can lead to big fee increases or assessments.
Know the leadership
HOA boards are elected by the homeowners. Yet many people do not even know who their elected representatives are. You should be able to contact your HOA elected leadership when needed.
Attend board meetings
Many boards will have a larger annual meeting where they discuss the budget and big items for the community. A good idea is to ask for a copy of the bylaws and covenants to become familiar with them. Are the board members following the bylaws? What are they spending their time discussing? As a homeowner, you have a right to know.
Understand what your HOA does
HOAs vary in terms of the scope of their authority and the budgets they control. Much of an HOA’s work is mundane in terms of approving contracts and working out individual challenges with delinquent homeowners. But the board members often control significant amounts of member money. So transparency is key.
Always remember -- you have every right to ask for information, understand the HOA’s governing documents and view financials.