6 HOA Terms Every New Board Member Should Know
Accepting a position on a homeowner’s association (HOA) board is just the beginning of an exciting new journey. Even if you have served as a board member for another organization, serving on an HOA board is a different, very rewarding experience. One that includes managing a community, assuring that common areas are well-maintained, and that the overall culture remains healthy and positive. In addition to new responsibilities, there are several HOA terms that are recommended to understand, for every board member, new and seasoned.
We’ve outlined the six most important HOA terms to familiarize yourself with below.
- Governing Documents
Every HOA is required to have governing documents, which include the by-laws, operation rules, articles of incorporation, declaration, and any additional documents that outline how the board should run the association. Governing documents are used by the board of directors to make decisions in the best interest of the HOA community. Board members typically review these documents before requesting bids from vendors if there is a disagreement at a meeting, when a member voices a concern, and before any significant decisions. It’s recommended that every new board member should review and familiarize themselves with the contents.
One of the items the governing documents outline is how many members are required to hold a meeting, known as a quorum. If a quorum is not met, then the board cannot vote on or pass any items at the meeting.
HOAs rely on association fees collected from members, monthly or annually, to continue their operations. Many associations take a portion of the fees and set them aside in a separate account known as a reserve fund. These funds are used for extensive repairs and projects, when necessary, helping to reduce the impact of the expense when they occur.
- Special Assessment
A special assessment occurs when the association doesn’t have enough money to cover unexpected projects and expenses. If a shortage of funds occurs, board members can send a notice to all members requiring they pay a set amount known as a special assessment.
An annual budget is established each fiscal year, outlining projected expenses and income. The budget should be reviewed monthly by board members to gain an understanding of where the money is spent. A monthly review will also help members identify any potential red flags in spending, allowing them to reevaluate before an assessment is necessary.
Serving on an HOA board comes with fiduciary responsibilities, which require you to make decisions in the best interests of the association, looking at the benefits from an overall standpoint.
If you are looking for assistance in managing the daily responsibilities in your HOA – AR Management can help. Call us today to learn more!