There are times when homeowners associations need to find new HOA management. After all, not all management companies are good. Some perform poorly or simply don’t meet an HOA’s needs. When is it time to change, and how should you go about it? Let’s find out. 

When Should You Change HOA Management Companies?

Communities that experience a problem with HOA management companies they hire shouldn’t always jump to termination. After all, terminating an agreement can lead to serious consequences. It may also sour the working relationship, leading to other complications. 

However, there are also times when the problems are too big and cannot be dealt with. What are the signs you need new HOA management? Here are some red flags that should alert your community.

1. Low-Quality Performance

One of the biggest reasons for switching management companies is low-quality performance. The HOA is pouring thousands of dollars into their management contract. It’s a waste of money if the HOA management company doesn’t properly care for common areas, enforce rules, or handle member communications.

This is especially problematic when the HOA management company needs to provide better services when it comes to financial and legal matters. These two aspects of community management are crucial to community success. A change is worth considering if the management company cannot answer basic questions, makes sloppy mistakes, or creates problems.

2. Lack of Communication

Communication is critical to proper community management. The HOA manager should regularly communicate with both the homeowners and board members. They should also coordinate with the vendors, staff, and other personnel so the HOA runs smoothly.

However, a lack of communication signals it might be time for a change. Keep an eye out for management companies that never or rarely answer calls or reply to emails. The community can’t be left hanging, especially during emergencies. 

3. Incomplete Projects

The management company should complete all their small and large community projects. This includes everything from changing light bulbs to replacing common area roofs. They should produce high-quality, concrete results to ensure the community is well-maintained.

If the management company fails to finish projects, it’s best to ask them if there’s a problem first. There may simply be an issue or company change that’s hindering progress. However, this becomes a problem and may be grounds for termination if it’s frequent.

4. Hidden Fees

Homeowners associations should watch out for management companies that habitually charge hidden fees. The best HOA management companies are transparent about what’s included in the contract and what incurs extra charges. They should all be listed in the contract and not come as a surprise to the board. 

5. Resident Complaints

It may be a red flag if the residents complain about the management company. That’s because the HOA manager may act agreeably in front of the board. However, they may show a different face to the homeowners. 

The HOA manager may make excuses or hide their tracks so the board doesn’t notice. Hence, the board must consider the residents’ complaints and give them weight, especially when they pile up.

6. Inconsistent Enforcement

One of the perks of having an HOA management company is that they’re unbiased and consistent. However, it can be a big problem if the company is inconsistent with enforcing the rules. This can lead to a lot of conflict within the community and may result in liability.

7. Financial Instability

A good HOA management company is supposed to help the community stay financially stable. This means they should help the board make financial plans and decisions that lead to financial success. 

However, if the community is financially unstable, it could be a sign that the company needs to be more competent or neglectful. Look out for reduced income or financial losses due to poor management. 

8. The Board Is More Burdened Than Relieved

An HOA management company is supposed to take care of the board’s operational duties. This relieves the HOA board of the burden of collecting dues, enforcing rules, or handling member communications.

However, it’s not a good sign if the management company’s presence gives more work to the board members. It may be time to change to new HOA management if the work isn’t easier for the board. 

How to Find New HOA Management

If the signs are clear, it’s time to switch to a new HOA management company. But how does a homeowners association do this in the first place? Isn’t it a breach of contract? If you’re unsure how the process works, here are some steps you can take to find new HOA management.

1. Check the Agreement

The first step is to review the management contract. Check the date of expiration and auto-renewal clause. If the expiry date is near, waiting until the contract expires may be better. This gives the board time to look for a replacement. It also helps them avoid the consequences of early termination.

If the HOA can’t afford to wait, it’s best to review the contract’s cancellation policy. The HOA may need to pay a penalty for early termination. Keep this in mind and ensure enough funds to cancel the agreement. Otherwise, the board may be forced to wait until the expiry date.

2. Inform the Management Company

If the board wishes to terminate the contract, they should give advanced notice to the management company. The service agreement often requires this. However, if there are no requirements, a good rule of thumb is to provide notice 30-90 days beforehand.

3. Consult With an HOA Attorney

It’s best to proceed with legal advice if the board considers contract termination. The attorney can review all the clauses and terms, specifying which ones to watch out for. They can also help the HOA find ways to terminate the contract without problems.

4. Inform the HOA Members

The board should inform the community of their decision to terminate the contract. Keep them in the loop so they don’t mistakenly coordinate with the existing management company on community matters. It also helps them understand why the board is making this decision and what they can expect in the near future.

5. Look for a Replacement

Once finalized, the HOA board should begin to look for a replacement. Doing this early is best so the community can transition things smoothly. Moreover, remember to keep homeowners informed and ask for their input. 

The Best Choice for Your Community

Terminating a contract and looking for new HOA management is a big decision. It can disrupt community operations and even cost the association money. However, it’s also a good choice if the current management company provides insufficient or poor service.

If you need a qualified HOA management company in San Mateo, look no further than First Equity Property Management. We can run your community like a well-oiled machine, ensuring a smooth transition process. Call us today at 650.349.7233 or contact us online for more details!

Homeowners associations consider hiring an HOA management company all the time. This is because hiring a professional organization helps in several different ways. Let’s discuss all its benefits and how your community can hire an HOA management company.

Reasons for Hiring an HOA Management Company

Why hire a HOA management company? Professional management companies take over most of the board’s daily responsibilities. Hence, there are many benefits to hiring an HOA management company, including the following:

1. Complete Focus on the HOA 

Self-managed associations consist of a board of directors who work on a volunteer basis. While this may be effective for smaller communities, it can be difficult when an HOA has many residents and amenities. The board may only sometimes have the time to focus on the association as they have their own lives to worry about.

In contrast, HOA management companies work full-time and can give the community their full attention. It’s their role to handle the community’s daily operations. Hence, they’re usually available round the clock to handle emergencies or urgent concerns. With a management company, the HOA won’t miss a beat or forget to handle any community issue.

2. Better HOA Systems

The HOA board must implement efficient HOA systems to help the homeowners association run without a hitch. However, most board members must have the right background to implement these kinds of systems. They won’t always know what services, vendors, equipment, or software they need.

This is where hiring an HOA management company comes in. That’s because management companies often have years of experience handling communities. They know what communities need and the resources that might help them. 

Moreover, they have established technology, systems, and a network of professionals. Implementing these systems is often a breeze when an HOA management company is involved. The HOA will start running in no time at all.

3. Professional Financial Management

One of the hardest parts of running an HOA is financial management. It’s not everyone’s forte, as not all the board members or homeowners will have the right experience. One wrong move in this aspect can result in devastating financial consequences. If the board doesn’t plan well, they may need to hike fees, impose special assessments, or take out a loan.

That’s why many communities outsource at least their financial management needs to a third party. An HOA management company can help as they’re experienced with HOA-related transactions. They know what to budget for and how to avoid financial disaster.

Moreover, having a management company eliminates the awkwardness of having the board collect dues directly from homeowners. This reduces the risk of souring relationships and minimizes favoritism. Furthermore, management companies are better able to track accounts and delinquencies. 

4. Neighborhood Appeal

Homeowners associations are responsible for enhancing property values by keeping the community well-maintained. They often have better aesthetic appeal as they provide more amenities and well-kept common areas.

However, this can be hard to manage if the HOA is big or has many facilities. An HOA management company can help by caring for the community’s repair and maintenance needs. They can hire vendors for landscaping, cleaning, and performing routine maintenance. 

Furthermore, they can help the HOA search for necessary vendors more easily. This is because management companies often have a list of reputable vendors they’ve already worked with. HOAs can often find a reliable vendor from this list of contractors.

5. Legal Experience

HOA board members need to be more well-versed in local or state legislation. That’s why it can be useful to hire an HOA management company. They can help the community comply with the law as they should know which ones apply to HOAs. Moreover, they stay on top of any new legislation.

Apart from this, HOA management companies may also have a network of lawyers and legal advisors they can refer to. As a result, they can recommend the best legal professionals for the HOA to work with.

6. Fair and Consistent Enforcement

HOA management companies are more consistent when it comes to rule enforcement. That’s because it’s their job to familiarize themselves with the governing documents. Moreover, their dedication to the HOA means they pay more attention to potential violations. 

Apart from this, they’re less likely to be biased regarding enforcement. Unlike the board, the homeowners are not their friends or neighbors. They have no connections that may lead to favoritism or selective enforcement. The HOA management company won’t feel shy or apprehensive about giving out violation notices or charging fines.

How to Hire an HOA Management Company

Hiring an HOA management service company can be a daunting task. After all, associations that have never hired one often don’t know where to begin. How can you go about this process? Here are some steps you can take.

1. Consult With the Community

The homeowners association members must be notified about the HOA’s intention to hire. They have a right to know the board’s plan, as it could affect their monthly fees. Schedule a meeting to discuss the decision with the homeowners. 

Moreover, make sure the homeowners have an opportunity to voice their thoughts and opinions. Hiring an HOA management company is a community decision. If the homeowners don’t have a say, it may lead to resentment.

2. Decide on Necessary Services

Each HOA will have different needs. However, they must decide which services they want to avail of when hiring an HOA management company. The most important ones include accounting, collections, community maintenance, vendor management, legal advice, and rule enforcement.

However, some may provide extra services like automated work orders, website management, digital payments, and board education. Make sure to list down which services are optional and which ones are non-negotiable. 

3. Narrow Down the Choices

Once the non-negotiable services are set, it’s time to canvas for HOA management companies. HOAs can do this by conducting a quick Google search or looking through online directories. It’s best to narrow down options based on location since nearby companies are more readily available.

Once the board has a list of 4-5 companies, reach out to each and ask for quotations or packages. Ask questions based on the list of necessary services. Afterward, they should reply and give the board an idea of their focus. Review their answers and pick three of the best options.

4. Finalize an Agreement

To finalize an agreement, asking for a list of expected costs from the management companies is important. This can help the residents understand how the money is being used. Also, review the list and ensure they meet all the community’s needs.

Afterward, it’s best to review the agreement with a legal advisor. Remember to understand both parties’ obligations and responsibilities clearly. The board can also negotiate some of the contract’s terms if necessary. Once the contract is finalized, it’s time for signing. 

The Key to Successful HOA Management 

Hiring an HOA management company takes a lot of work. There are a lot of factors to consider and options to choose from. The board chooses wisely, as contracts last for at least one year. Otherwise, it may be a waste of HOA funds.

Are you looking for a proven HOA management company? You can’t go wrong with First Equity Property Management. Call us now at 650.349.7233 or contact us online to request a proposal!

A reliable HOA manager is vital to communities. They must be responsible and familiar with all aspects of community management. They can be detrimental to community health without proper knowledge, skill, or experience. Conversely, good managers can also bring about success.

What Is an HOA Manager?

An HOA manager is the person who handles everything related to the community’s daily operations. They are often employed by HOA management companies and assigned to specific communities. However, they may sometimes also be employed by homeowners associations themselves. 

Responsibilities of an HOA Manager

An HOA manager must be a jack of all trades. That’s because they need to handle almost all of the issues and procedures within the HOA community. What does an HOA manager do specifically? Here are their homeowner association management responsibilities.

1. Financial Management

HOA managers are involved in financial planning and budgeting. They provide advice and help the board draft plans to help them meet their short and long-term financial goals. Moreover, they are in charge of maintaining and keeping financial records.

Apart from these, HOA managers collect community fees, follow up on late payments, track accounts, and deal with delinquent homeowners. This frees up the HOA board’s time as they don’t have to go door-to-door to collect dues. Furthermore, the HOA manager’s job entails promptly processing all payments. This ensures the HOA is financially healthy. 

2. Rule Enforcement

HOA managers are often involved in drafting community policies with the board. They know how communities work and which policies work best to ensure peace and order. Moreover, they enforce the rules and policies that come into effect. As a result, they are also in charge of sending violation notices and coordinating with homeowners. 

In addition, HOA managers are in charge of inspecting properties. They do this to ensure everyone complies with the community’s architectural standards. HOA managers also coordinate with the architectural review committee to accomplish this task.

3. Common Area Maintenance

HOA managers are responsible for the upkeep of the community’s common areas. As a result, they must regularly inspect the community’s shared spaces and equipment. When a problem arises, they often work with vendors and send service requests to address it. They may also alert the board of any major problems requiring tapping into the reserve funds.

Sometimes, HOA managers may also hire staff in-house to maintain common areas. On certain occasions, they may complete the maintenance duties themselves. However, regardless of who fulfills the job, the HOA manager often oversees the maintenance work. This allows them to assess vendor performance and ensure high-quality work.

If the vendor or staff performs poorly, the HOA manager may recommend certain resolutions to the board. The board may then choose to keep, replace, or speak with the maintenance person or company.

4. Dispute Resolution

HOA managers are in charge of mediating disputes between residents. They handle complaints by investigating and speaking with the involved parties. HOA managers may also issue fines for violations or use other resolution means.

5. Resident and Board Communication

HOA managers often bridge the gap between the board and HOA members. Hence, they’re responsible for disseminating information and announcements to the homeowners. These include any announcements related to upcoming events, new policies, or community reminders. They are also available to receive feedback and complaints from the homeowners.

Apart from this, the HOA manager may even act as a liaison for the board members. The board members are only sometimes in contact with each other. Thus, the HOA manager coordinates board meetings and other correspondence. 

6. Records Management

HOA managers are responsible for keeping the community’s records, including member lists and governing documents. The documents must be complete and organized. They must also be available for inspection upon request, as most state laws require this. For example, the state of California has provisions that allow members to inspect records for a proper purpose. 

7. Insurance Management

Homeowners associations often require ample insurance coverage to remain financially stable. There may also be legal requirements that they have to follow. The HOA manager must understand the HOA’s needs and potential issues well. Afterward, they must help the board obtain and maintain the necessary insurance to cover the HOA.

8. Meeting Management

The HOA manager often attends board meetings with the homeowners. During these meetings, they take minutes, organize agenda items, and facilitate discussion. They also send meeting notices and make sure the meeting constitutes a quorum.

9. Community Guidance

The HOA manager must be an expert on all things related to community management. With their expertise and experience, they can provide proper guidance to the board and homeowners. They can help resolve community issues by offering policy or procedural suggestions. 

Benefits of Hiring an HOA Manager

Why should any homeowners association hire a professional community manager? There are several reasons why it may be a good idea. Here are some advantages a dedicated manager provides:

• Efficient Operations. An HOA manager’s knowledge, experience, and resources often provide structure to HOAs. This allows the HOA to operate efficiently, making up for the board’s lack of expertise.
• Professional Financial Management. Most self-managed associations don’t know the first thing about accounting or financial management. A professional HOA manager on board allows the community to keep its finances and financial records in order.
• Better Community Appeal. HOA managers raise the community’s appeal. This is because they make the community run more smoothly and ensure that common areas are well-kept. As a result, homeowners are more likely to be satisfied. The HOA will also attract more potential buyers.
• Legal Knowledge. HOA managers might not be lawyers, but they may be familiar with local laws and ordinances. This allows the HOA to comply with legislation and avoid liability. They can also navigate legal issues more confidently. Moreover, HOA managers often have access to a network of legal professionals they can contact.
• Better Focus for the Board. HOA managers take care of all the nitty-gritty details involved in operations. As a result, the board can focus on more important matters like decision-making, policy drafting, and project planning. 

Reliable Community Management

A good HOA manager makes communities better. They help ensure that the HOA fulfills its role: to enhance or maintain property values. Hiring a professional might be costly, but it’s worth the money if the community cannot self-manage. 

Are you in need of an HOA manager? First Equity Property Management has just the right people. Call us today at 650.349.7233 or contact us online to learn more!

Incoming and existing board members should understand their roles and responsibilities in an association. HOA board duties encompass several tasks, with some varying depending on the position you hold.

What Are HOA Board Duties?

An HOA board governs every homeowners association. This board consists of homeowner volunteers from the association elected into office by the members.

The HOA board is responsible for managing the association, which includes a variety of specific tasks and functions. It is important to understand these responsibilities to carry them out and bring success to the association properly.

Here are the duties of the HOA board of directors.

Board Meetings

Board members must conduct regular meetings as stipulated in the association’s governing documents, specifically its bylaws. The bylaws lay down how often the board should hold meetings and how they must be held.

In California, board meetings must be open to all association members. The only exception to this rule is if the meeting is an executive session. There are also certain notice requirements that California’s homeowners associations must follow. According to the Davis-Stirling Act, boards should give at least four (4) days’ notice of board meetings unless the bylaws provide a longer notice period.

Dues Collection and Financial Management

Dues collection and financial management are among the most important HOA board duties. An HOA runs on homeowners’ dues, using these funds to pay for the community’s expenses. An HOA would have no way to sustain itself without proper dues collection. Of course, the board must perform collection actions in accordance with both state laws and the HOA’s governing documents.

Additionally, HOA boards are in charge of managing the association’s funds. This includes planning the annual budget, maintaining books and records, preparing financial reports, and filing taxes on behalf of the association. The board must also plan for and maintain a reserve fund if required.

Rule Enforcement

An HOA always has CC&Rs and operating rules to uphold. It is the job of the HOA board to enforce these covenants and rules and hold homeowners accountable for any violations. Proper rule enforcement is paramount to maintaining the standard of living within the community.

Of course, the HOA board can’t simply enforce the rules without care. The board must always act within its scope of authority. If a rule does not exist or is improperly enacted, the board cannot enforce it. Furthermore, board members must consistently and fairly enforce the rules. Selective or arbitrary enforcement can render a rule void and expose the association to liability.

Regarding HOA board responsibilities, proper and consistent rule enforcement can be tough. It requires a thorough understanding of state laws as well as the governing documents of the association.

Common Area Maintenance

Common area maintenance is one of the primary HOA board of directors responsibilities. After all, an HOA’s objective is to enhance curb appeal and preserve property values. Those are impossible to accomplish if an HOA lets its common spaces fall into disrepair.

The HOA board should still clean areas and repair fixtures themselves. The board should rely on a licensed and insured vendor to carry out these tasks.

Insurance

Homeowners associations should have proper HOA insurance policies in place. It is the board’s responsibility to procure and update these policies regularly. Specific requirements, though, such as the amount of coverage necessary, will depend on state laws and the association’s governing documents.

HOA Board Roles and Responsibilities

Within an HOA board, certain officer roles must be filled. These are the roles of the president, the vice president, the treasurer, and the secretary. What exactly does each position entail, though?

Here are the individual HOA board member duties you should know.

1. President

The president is in charge of running the show and overseeing the decision-making process. They preside over meetings and lead the rest of the board. Since the president is the head, they must have excellent leadership, communication, and delegation skills. 

2. Vice President

The vice president takes over the role of the president should the latter become unavailable. As such, the VP must understand the responsibilities of the president. When the president is around, though, the VP acts as support, assisting the president.

3. Secretary

The secretary is in charge of all documentation and records. They are responsible for taking the meeting minutes, providing notice to members, and distributing pertinent information. The secretary and the president also handle all legal compliance requirements related to official documents.

4. Treasurer

The treasurer primarily manages the association’s funds. They are in charge of invoicing, billing, and collections. They also disburse funds, which often requires the signature of the treasurer and the president. Other duties of the treasurer include budget preparation, reserve planning, and financial reporting.

Lead With Purpose

Understanding HOA board duties is the first step in proper governance. If you don’t know what you’re supposed to do, it is impossible to fulfill your obligations well. Of course, not all HOA boards are equipped to handle everything that comes their way. In that case, hiring an HOA management company is the best solution.

Navigating the ins and outs of HOA documents can come as a challenge. Let First Equity be your guide. Call us today at 650.349.7233 or contact us online to learn more!

All homeowners should familiarize themselves with the different HOA documents. Understanding these documents is a crucial step toward a harmonious and problem-free experience in an association.

What Are HOA Documents?

Homeowners associations are governed by a set of documents. Collectively, these documents are referred to as the governing documents. However, each document plays a critical role in the operation of an association. These documents also conform to a hierarchy, which dictates precedence.

It is paramount that homeowners and board members understand how each document affects the HOA and themselves. Because these documents lay down the foundation for any association, they often contain guidelines and requirements that should be addressed. Most of the time, associations must record their governing documents with the state or county recorder’s office to make them enforceable.

Here is the hierarchy of HOA governing documents.

1. Federal, State, and Local Laws

While not technically a “recorded document,” the laws of the land take precedence over everything else. There are federal, state, and local laws that govern the actions of associations.

Two foremost examples of such laws are the Fair Housing Act and the Americans With Disabilities Act. Other federal laws that affect HOAs include the Fair Debt Collection Practices Act, the Freedom to Display the American Flag Act, the Over-the-Air Reception Devices Rule, and the Servicemembers Civil Relief Act, among others.

States also have their own laws governing associations. For instance, in California, these are the Davis-Stirling Common Interest Development Act and the California Corporations Code.

The latter takes precedence if an association’s rules conflict with federal, state, or local laws. However, there are times when the law will defer to an HOA’s governing documents.

2. Community Plat

The community plat or map is a recorded document showing the plan of the entire subdivision or association. It displays property locations, establishes boundary lines, and clarifies maintenance obligations. It also presents each property or unit’s exact measurements and dimensions, including any setback requirements or easements.

Other things you may find in the community plat include:

• Specifications for trash enclosures
• Access restrictions for vehicles
• Handicapped parking spaces
• Parking restrictions
• Landscaping restrictions
• Areas for future development

3. CC&Rs

The CC&Rs are perhaps the most comprehensive among the many homeowners association documents. Short for the Declaration of Covenants, Conditions, and Restrictions, the CC&Rs dictate the rights and responsibilities of both the HOA and the homeowners.

Common provisions you will find contained in the CC&Rs include:

• Assessment or dues obligations
• Maintenance responsibilities
• Enforcement authorities
• Dispute resolution processes
• Violations enforcement

Simply put, the CC&Rs lay down what homeowners should and can’t do. This document often contains architectural guidelines and property use restrictions. More often than not, homeowners need to secure permission from the HOA to make modifications or improvements to their properties or units. This is to maintain the community’s consistent character and aesthetic.

Apart from this, the CC&Rs also present the possible penalties for violations. These penalties and the process for issuing them can vary from one association to another.

4. Articles of Incorporation

An association’s Articles of Incorporation contain pertinent information such as the association’s legal name and corporate status. It may also contain the basic functions of the association. 

This document does not affect the rules of the association. However, it plays a vital role in the establishment of the HOA. Associations must typically file this with the state. More often than not, HOAs are formed and operated as nonprofit corporations, though that does not automatically mean they are recognized as such by the IRS.

5. HOA Bylaws

If the CC&Rs have more to do with the rights and obligations of the HOA and its members, the bylaws are more concerned with the association’s operation. The bylaws contain essential information on how the board should run the community.

Common provisions you will find in the HOA bylaws include:

• The number of board members at any given time
• The frequency and proper way to conduct board meetings and membership meetings
• Voting rights of homeowners and board members
• Election procedures, including candidate qualifications and nominations
• The term of office for each board member, including term limits
• The roles and responsibilities of each officer or board member

6. HOA Rules and Regulations

Finally, the homeowners association rules take last place. Rules differ from the CC&Rs in that they function more to clarify or build upon the covenants and restrictions. An association’s operating rules cover more of the day-to-day aspects of the association.

While rules can differ from one HOA to another, they often cover the following topics:

• Noise or noise levels
• Pet restrictions, if any
• Parking rules
• Rental restrictions
• Architectural or landscaping rules
• Use of amenities

Boards should exercise care when enacting or enforcing the rules of the association. While rules serve an important purpose, boards can’t simply create rules on a whim. Boards should make sure they have the authority to enact these rules. Failing to act within the board’s scope of authority may result in liability issues.

Where to Find HOA Governing Documents

Most of the time, an association’s governing documents are filed with the county recorder’s office. However, homeowners may also request a copy of HOA documents from the association itself. Typically, this means going through the HOA board by completing a form, writing a letter, or fulfilling other procedural requirements.

Remember that most states give homeowners the right to inspect and copy these documents. In California, the governing documents are a part of the “association records” under Civil Code Section 5200 that are subject to inspection. Apart from requesting the board, homeowners may find the governing documents online through the community website, if any.

Buyers are also given a copy of the governing documents before purchasing a home in an HOA. Buyers need to review these documents to determine if they are a good fit for the community. Some buyers dislike the idea of being confined by rules or paying dues. Thus, they may prefer living in something other than an HOA-managed community.

The Final Word

As you can see, HOA documents contain a lot of critical information regarding the rights, responsibilities, and operations of an association. Therefore, homeowners and board members should understand these documents and what they entail. In doing so, they can foster a harmonious community for everyone.

Navigating the ins and outs of HOA documents can come as a challenge. Let First Equity be your guide. Call us today at 650.349.7233 or contact us online to learn more!

An HOA special assessment can be a useful financial tool for a homeowners association. However, it is something that associations should charge with seriousness and frequently.

What Is an HOA Special Assessment?

A special assessment is an extra fee that a homeowners association may charge in addition to the regular dues that members already pay. In an HOA setting, homeowners pay regular dues to fund the community’s expenses. These dues are calculated based on the annual budget, which includes anticipated expenses for the year.

There are instances, though, wherein a homeowners association special assessment may be necessary. In such instances, the HOA board will issue a notice letting homeowners know they must pay an extra fee.

The need for a special assessment will depend on the specific circumstances of an HOA. More often than not, it stems from a budget deficit due to the board’s incorrect anticipated costs or many delinquent homeowners. Sometimes, it can arise from unforeseen expenses, such as roof repairs brought on by an uninsured natural disaster. An association may also charge a special assessment to cover the cost of upgrading or adding an amenity.

The Importance of HOA Special Assessments

Special assessments play an important role in an HOA community. They provide an additional source of income for the association and can help the HOA in times of crisis. They prevent the association from falling into financial ruin.

Without special assessments, the HOA board would struggle to seek additional funding. Amenities that require immediate upgrades or repairs will remain inoperational. Certain expenses would have to be cut, resulting in a decline in the quality of life in the community. Before long, homeowners will notice the negative impact of insufficient funding.

Of course, apart from special assessments, the HOA board can also seek funding through a loan, provided governing documents permit this route. A loan still needs to be paid back – and with interest. This would mean raising regular dues by a significant amount to satisfy the loan.

Special assessments provide the association with a way to secure more funds in a pinch. While they are undoubtedly crucial, homeowners should not worry too much. With a competent board, sound financial management, and properly funded reserves, homeowners won’t need to pay special assessments very often.

Can All HOAs Charge a Special Assessment?

Two things determine whether or not an HOA can charge a special assessment: state laws and the HOA’s governing documents. More often than not, though, associations do have this ability.

Both homeowners and board members should read through their governing documents carefully. The CC&Rs, in particular, outline the conditions that an HOA must meet to levy special assessments. For instance, there may be notice requirements to follow. 

Typically, the CC&Rs use vague language when discussing the conditions and requirements surrounding special assessments. This intentionally gives boards broader power when it comes to charging the fee.

HOA Special Assessment Limit

Apart from the authority to charge a special assessment, state laws and governing documents may also contain limitations. For example, in California, Civil Code §5605(b) requires an association to seek approval from most members before levying a special assessment that exceeds 5% of the budgeted gross expenses. Anything below that, though, does not require a vote.

Similar limitations exist in other states, too. Moreover, an association’s governing documents may also contain special provisions that restrict the power of the board to levy an HOA special assessment. This is to prevent the board from charging unreasonable assessments. It also works to keep the board in check and exercise financial control.

How Often Should an HOA Levy Special Assessments?

In general, a homeowners association should rarely levy special assessments. If the board is competent and manages the HOA’s finances properly, there would be no need to charge special assessments often or at all.

Homeowners associations should budget for large projects, improvements, and emergencies. They should do this as part of their annual budget planning process. Boards should ensure that their operating and reserve funds contain enough money to cover all expenses. This would make it unnecessary to charge special assessments regularly.

Boards should also remember that not all homeowners have the financial means to pay the assessment in one go. If the assessment is too expensive, boards should consider spreading payment terms over several months. This would minimize homeowners’ financial burden while maintaining a consistent flow of revenue.

If an HOA charges special assessments often, it might signal an incompetent board or mismanagement. Homeowners can investigate by requesting to view the association’s financial records and asking the board questions about the assessment. It is best to consult an HOA manager or attorney when in doubt.

Penalties for Failing to Pay the HOA Special Assessment

Like regular dues, nonpayment of special assessments can lead to certain penalties. The exact penalties can vary depending on state laws and the governing documents. However, they typically cover the following:

• Late fees or interest;
• Temporary suspension of member privileges (such as access to amenities and facilities, voting power, etc.);
• A suit in small claims court;
• Attachment of a lien on a homeowner’s property and/or,
• Foreclosure

While not all homeowners associations can foreclose on a lien arising from special assessments, some have this ability. As such, a homeowner can lose property ownership if they fail to settle their assessments with the HOA.

The Bottom Line

An HOA special assessment can be a way for an association to secure additional funding. Associations, though, should exercise proper budgeting and financial management to avoid levying special assessments. If a special assessment is necessary, boards should follow due process as provided by state laws and the governing documents. This way, they can avoid exposing the association to potential liability.

Navigating the ins and outs of special assessments can come as a challenge. Let First Equity be your guide. Call us today at 650.349.7233 or contact us online to learn more!

What is an HOA fee? It can be hard to grasp the concept of HOA fees if you’re unfamiliar with homeowners associations. Even those who live in planned communities might not always know what they’re for. Let’s break down what these fees are and what they’re for.

What Is an HOA Fee?

Homeowners associations will often ask for HOA fees. But, what are HOA fees anyway? Moreover, what are HOA fees used for? 

Put simply, HOA fees are the amount homeowners association members need to pay. It’s similar to condo association dues and co-op association maintenance fees. They’re often paid monthly or quarterly to the HOA. The HOA manager or board collects these fees to help with common area maintenance and general operations. 

What Do HOA Fees Cover?

Each homeowners association will have different responsibilities and duties they must fulfill. For most HOAs, a big part of their duties is maintaining common areas. These include maintaining and repairing pathways, sidewalks, roads, elevators, and street lamps. It may also entail maintaining amenities such as parks, swimming pools, or clubhouses.

In addition, homeowners associations can offer various services. Many offer garbage collection and snow removal services. Some may also handle utilities like water, internet connection, and electricity. 

However, these services often require professional help. After all, the HOA board members cannot do these tasks themselves. Thus, they hire third parties for janitorial services, tree trimming, pressure washing, and more. How do HOAs fund them? Through HOA fees.

Apart from repairs, maintenance, and services, HOAs will also use HOA fees to cover the cost of insurance. This may seem unnecessary to some, but insurance helps keep the HOA financially healthy. At times, it may also be required by law. For instance, California requires some level of Directors and Officers (D&O) insurance for certain associations.

Finally, homeowners associations must also maintain a reserve fund. The HOA’s reserve fund pays for unforeseen or irregular expenses. It’s often used to pay for unexpected repairs due to degradation, accidents, or natural disasters.

How Are HOA Fees Calculated?

What is an HOA fee calculation like? Unfortunately, there’s no straight answer to this question. Each HOA will have a different calculation based on the legal requirements and the provisions within the governing documents. 

However, monthly HOA fees generally fall between the $100 to $1,000 range. They usually cost $200 to $300 on average per month. Nonetheless, the amount can be higher or lower depending on the location and general cost of living.

Moreover, a homeowner’s pay can vary depending on the HOA’s size, amenities, services, and limited common elements. The more perks the homeowner gets, the higher the fees they pay.

Special Assessments and Fines

Apart from standard HOA fees, homeowners may also need to pay other charges. These generally include special assessments and fines. Special assessments are charges made to residents for major projects, non-routine maintenance, and unexpected expenditures. They may also be used to fund the reserves.

Meanwhile, fines are the penalties homeowners must pay when they violate HOA rules. For instance, an HOA may impose fines for violations of their parking rules. Many also impose fines for late or delinquent HOA due payments.

State law may regulate the amount an HOA can charge in special assessments and fines. Generally speaking, these fees must be reasonable and not arbitrary. Furthermore, the governing documents may impose their restrictions and calculations.

What Happens if You Don’t Pay HOA Fees?

The moment a homeowner purchases a home, they agree to be part of the homeowners association the home is in. Hence, they are legally obligated to pay HOA fees, special assessments, and fines. Failure to make these payments can have several consequences.

1. Nonpayment Notice and Late Fee

The first thing homeowners will receive is a notice of nonpayment. This notice may come with a late fee that will be added to the homeowner’s debt. Usually, the notice demands payment within 30 days. Otherwise, the HOA may increase the fine.

2. Suspension of Privileges

Persistent nonpayment may result in the suspension of rights and privileges. The homeowner may lose the right to vote in HOA elections and other community matters. Moreover, they may be temporarily stripped of their right to access community amenities such as the clubhouse or swimming pool. 

3. Legal Action

Homeowners associations often have many legal options to force homeowners to pay. They may put a lien on the homeowner’s property. This can make it hard for the homeowner to sell their home, as it can affect the property title. The lien may also eventually lead to a foreclosure.

Apart from this, the homeowners association may take legal action and file a lawsuit against the resident. This can be expensive for the HOA and homeowner, so it’s often used as a last resort. 

Are HOA Fees Tax-Deductible?

No, homeowners association fees are generally not tax-deductible if the property is the owner’s primary residence. However, they may be deductible if the home is a rental property. This would make the HOA fees a part of rental expenses.

Can Homeowners Waive HOA Fees?

Some homeowners might think they can waive their fees if they don’t use the HOA’s amenities. However, homeowners often do not have the right to waive their fees. They agreed to abide by the HOA’s rules and covenants. Thus, they usually cannot opt out of fees.

On the other hand, some homeowners may opt-out if the HOA is a voluntary association. The downside is that they can no longer access common areas and amenities like community clubhouses and pools.

Every Member’s Obligation

What is an HOA fee? After answering this question, homeowners should have a better idea of what these fees are and how they’re being used. Ultimately, these fees are necessary to maintain the community’s shared spaces and provide services. It’s a requirement for all members— and non-board members alike. 
Does your HOA need help managing its finances? Why not hire a professional management company like First Equity Property Management? We offer industry-leading HOA management services in California. Call us today at 650.349.7233 or contact us online for more information!

HOA management can be a confusing concept, especially for the uninitiated. After all, many responsibilities and tasks fall under it. What is HOA management, and what should homeowners’ associations and their members know about it? Let’s find out.

What Is HOA Management?

Homeowners associations (HOAs) have a wide range of responsibilities. They primarily exist to maintain property values. HOAs must maintain common areas, enforce the community’s rules, and manage the neighborhood’s daily operations to do this. Homeowners associations typically govern planned communities, condominiums, and subdivisions.

Meanwhile, homeowners association management involves the handling or governance of an HOA community. It covers all the activities that a homeowners association must fulfill. This includes financial management, HOA dues collection, common area upkeep, and vendor coordination.

In self-managed communities, the board of directors is responsible for HOA management. However, many neighborhood associations outsource most of these responsibilities to homeowner association management companies. 

This frees up the board’s time as they are primarily made up of volunteers. It allows them to focus on important matters and make big community decisions. Moreover, it helps streamline community association management and makes it more efficient. 

What Do HOA Management Companies Do?

If a community seeks help from an HOA management company, the responsibilities are often divided between the HOA manager and the board. This doesn’t mean the HOA management company takes over all of the board’s power. The board still has the authority to make community decisions.

Meanwhile, the HOA management company’s primary job is to oversee the HOA’s regular operations. They can supervise common area maintenance, track violations, and help with accounting or financial management.

The management company is the helping hand that helps the board fulfill its duties. Here are some examples of services HOA management companies provide:

• Insurance Management
• Legal advisory
• Vendor bid solicitation
• Maintenance and repairs supervision
• Regular community inspection
• Service request tracking
• Community functions and event organization
• Board meeting facilitation and attendance
• Meeting notification and agenda creation
• Minutes of the meeting recordation
• Board member advisory
• Invoice dissemination
• Assessment collection and payable management
• Board and HOA member communication
• Escrow assistance
• Monthly financial reports and statement preparation

Many of these companies have a seasoned expert team that provides all these services and more. However, whether the company provides a full range of services or only a few often depends on the package the community avails of.

Why Hire an HOA Management Company?

Professional HOA management can serve communities in many different ways. Here are some benefits that come with seeking help from a reputable management company: 

• Knowledge and Expertise. HOA management companies often have the right people, skills, resources, and experience to fulfill all of an HOA’s responsibilities. They have financial experts, accountants, lawyers, and access to a list of reputable vendors.
• Delegation of Responsibilities. The HOA board comprises volunteers who might need more time to do everything. They also might lack the manpower even if they hire vendors and staff. Hiring an HOA management company helps the board juggle their workload and allows them to focus on decision-making. 
• Clear Communication. HOA management companies often have the physical and digital resources to streamline communications. This allows HOA members to understand community rules and policies. 
• Fairness. HOA management companies are third parties. Therefore, they can enforce the rules impartially as they don’t have ties to the community. This ensures each homeowner is given equal opportunity to be heard. Likewise, everyone will be penalized fairly.
• Increased Homeowner Satisfaction. Proper HOA management means everything is clear, streamlined, and efficient. This reduces the number of homeowner complaints and increases their satisfaction. Good management also means the board fulfills all its duties, including community maintenance. As a result, homeowners are satisfied with their living conditions. 

How Much Are HOA Management Services?

HOA management can be costly if communities avail of full-service packages. Professional services can cost $10 to $20 per home monthly. However, this can change if a community avails of add-ons or only avails of a few services. 

Moreover, many management companies impose other charges like exit and initiation fees. These can cover initial transition costs, start-up expenses, bookkeeping, and file transitions. They may also charge communities separately for extra services. For example, they may attend more than the required monthly meetings if the community pays extra. 

Should You Consider Self-Management? 

Self-managed HOAs are those that accomplish everything without hiring an HOA management company. This means the community utilizes the board, committees, and volunteers to do the work. They collect the fees, enforce rules, inspect the community, hire vendors, and manage meetings.

While this may be more difficult, self-management makes sense if the community is small. It’s also much cheaper because the community doesn’t need to pay a third party. The board members are often unpaid volunteers, so self-management doesn’t raise HOA dues.

However, it might only be viable for some communities. This is because the board members often have day jobs and roles in their homes. They will only sometimes have the time to dedicate themselves to community matters. As a result, the HOA might not be able to maintain common areas, enforce rules, or manage community meetings as efficiently. 

In addition, the board may need the right expertise to fulfill all its duties. For example, they may not know accounting or financial management. HOAs also have many legal obligations to fulfill. This can be hard if the board doesn’t have legal help. 

Ultimately, self-management may be best reserved for small communities. It may be hard for larger communities to self-manage as the responsibilities often scale with size. Nonetheless, there is no right or wrong answer to this question. It depends on your community’s needs, resources, and capabilities. 

Hire an HOA Management Company Today

HOA management entails a lot of things. The board must check for violations, conduct reserve studies, collect dues, and hold regular meetings. Doing all these tasks yourself may be doable, but hiring a professional HOA management company can make things much easier.
Are you looking for an experienced HOA management company? Look no further than First Equity Property Management. We offer premier HOA and property management services around California. Call us today at 650.349.7233 or contact us online to know more!

Moving into an HOA community is a big step you should not take without proper research. Homeowners associations offer plenty of benefits, but they are not for everyone. As such, it is important to familiarize yourself with how HOAs work before deciding.

Everything You Need to Know Before Moving Into an HOA Community

Homeowners associations are very popular in the United States. The number of HOAs in the country has been steadily increasing since the 1970s. Given the advantages of HOA living, it is easy to see why they have become the prime choice for many homeowners. However, not everyone is cut out to live in an HOA.

Here’s what you need to know before moving into an HOA community.

1. They Serve a Good Purpose

Homeowners associations have the primary purpose of preserving property values. These associations achieve this by enacting and enforcing rules that maintain curb appeal and a high standard of living. Regular dues also play a big role in helping keep the community clean, safe, and operational.

2. Membership Is Usually Mandatory

While there are a few voluntary associations, membership in HOAs is typically mandatory. That means people who buy a home in an HOA automatically become members. Membership comes with certain responsibilities, including paying dues and following the rules.

3. They Have Great Amenities and Services

Most associations offer excellent amenities and facilities that only members can use. These can include but are not limited to swimming pools, fitness centers, clubhouses, private parks, golf courses, playgrounds, tennis courts, and walking trails. Associations also provide convenient services ranging from trash removal to landscaping.

4. You Need to Pay Fees

Homeowners associations have amenities to maintain and services to deliver consistently. They can’t do that without funds. An HOA’s main source of revenue comes from regular dues, which are fees that homeowners must pay to the association. Fees can vary depending on several factors, though average fees fall between $200 and $300 a month.

5. There Are Rules to Follow

Homeowners associations have rules and regulations that residents must follow. These rules can vary from one community to another, though they often cover topics such as noise, pets, rentals, and parking. By joining an HOA, homeowners agree to abide by these rules and accept the consequences of breaking them.

6. You Need Permission to Modify Your Home

Most HOAs have architectural standards or guidelines that homeowners must adhere to. These standards dictate what owners can and can’t do with their properties. For example, an HOA may only permit certain colors or certain types of materials. More often than not, homeowners need to secure approval from the HOA to make any additions, alterations, or improvements to their homes.

7. There Are Social Events

Homeowners can look forward to social gatherings or events in an HOA. These events bring people together and instill a sense of community in members. Social events can take many forms, including block parties, dinner parties, donation drives, fundraisers, festivals, and even physical activities.

8. You Have Maintenance Responsibilities

Homeowners have a duty to maintain their homes. This obligation is typically outlined in the governing documents of the association. Maintenance responsibilities cover a number of things, including landscaping or lawn maintenance, repainting, trash disposal, roof maintenance, and even driveway maintenance. In general, homeowners are responsible for their homes, while the HOA is responsible for common area maintenance.

9. Violations Come With Penalties

Associations typically have the authority to penalize homeowners who violate the rules. State laws and governing documents permitting, an HOA may charge a fine for these violations.

The penalties that come with nonpayment of dues are usually more severe. Associations may start with a late fee followed by a suspension of your privileges. In some cases, associations may even place a lien on your home and subsequently foreclose on that lien. It may seem harsh, but the reality is that you could lose your home if you fail to pay dues.

10. Special Assessments Are Possible

In addition to regular dues, homeowners can also face special assessments. Special assessments are additional or extra fees that an HOA may charge under certain circumstances. Typically, boards only levy this assessment in an emergency or if it is needed. Keep in mind that special assessments are unusual, and state laws and your governing documents may have provisions limiting them.

Tips for Moving Into an HOA Community

Navigating the ins and outs of homeowners associations can be tricky. Fortunately, there are some things you can do to make living in an HOA community easier. 

1. Familiarize Yourself With the Governing Documents

First, familiarize yourself with the association’s governing documents, particularly the bylaws and CC&Rs. The bylaws dictate how an HOA should operate and cover topics such as elections, voting power, board terms, and meetings. On the other hand, the CC&Rs stipulate the rights and obligations of both HOAs and homeowners.

Understanding your governing documents will help you adjust to the community quickly. When you know your rights and responsibilities, you can better protect yourself and avoid potential violations.

2. Ask for Financial Records

Before buying a home in an HOA, it is paramount that you review its financial information. Doing this will help you determine where an HOA lies financially. Is the HOA financially healthy? Is it spending its money wisely? This will also give you a better understanding of your potential financial obligations.

As a current member of the HOA, you are also generally entitled to these records. In California, Civil Code Section 5300 dictates the association’s responsibility to provide members with an annual budget report. 

3. Don’t Miss a Payment

Defaulting on your HOA dues or special assessments carries hefty penalties. As previously explained, you may even lose your home. As such, make sure not to miss a payment. Even if your HOA is not performing as well as it should be, refusing to pay your dues as a protest is a bad idea.

4. Follow the Rules

An HOA’s rules serve a purpose. They exist to maintain curb appeal and a community’s living standard. As such, you should do your best to follow the rules, provided they are legal and reasonable.

5. Get Involved

Homeowners associations can’t function without the participation of the residents. Make the most out of your investment by getting involved. Homeowners have a voice and an influence over association matters. Attend meetings, vote on issues, and make your opinions known. You can even take it a step further by joining an HOA committee or the HOA board.

The Choice Is Yours

Moving into an HOA community is a big decision. Before jumping into anything, understand how homeowners associations work and what you can expect from living in one. This way, you can avoid potential disputes and disappointments. When it comes down to it, though, HOAs provide a lot of advantages, so they are well worth the investment.

First Equity Property Management serves homeowners associations in California. Call us today at 650.349.7233 or contact us online to learn more!

What is HOA? Given the prevalence of these planned communities, buyers will undoubtedly encounter an HOA at least once during the search process. Only a few people know what an HOA is and what living in one entails.

What Is HOA? What Does HOA Stand For?

HOA is short for homeowners association, but what does HOA mean exactly? A homeowners association is a private entity consisting of members, i.e. homeowners, in a community. It is often organized as a nonprofit organization, though it does not receive the same tax benefits as a nonprofit organization recognized by the IRS.

What is a property owners association? A property owners association is similar to a homeowners association. It is a private organization of property owners that manages the community and maintains property values.

Every HOA or POA has a set of board members running the show. Homeowners choose these board members through an election process laid down by the association’s bylaws. Board members must serve the association and put its best interests first. The board is responsible for several things, including collecting dues, enforcing rules, and maintaining common areas.

A set of documents also governs every association. These documents dictate how an association should operate, the responsibilities of the association, and the obligations of homeowners, among other things.

The developer of a planned community typically forms a homeowners association. These communities can come in many forms, including condominiums, townhomes, and single-family homes. After some time or following the fulfillment of a condition, the developer transfers control of the HOA to the homeowners.

Can You Refuse to Join an HOA Community?

There are two types of membership in an HOA: voluntary and mandatory. In a voluntary association, homeowners can opt in or out of membership. They can choose not to join the HOA and be exempt from the obligations that come with it. Of course, this would also mean that they would receive different benefits than members of the HOA.

In mandatory associations, membership is compulsory. Homeowners who buy a house in the HOA community automatically become association members, with no way to opt out. Mandatory membership associations are the most prevalent, with voluntary associations being rare.

What Are HOA Fees?

Joining an HOA community comes with benefits, but it also comes with responsibilities. Homeowners who become members of an HOA must pay regular dues to the association.

What are HOA dues? 

Simply put, HOA dues are fees that homeowners pay to the association as part of their member obligations. The association uses these fees for various expenses, including maintenance, insurance premiums, and repair costs. The board determines HOA fees by projecting the association’s expenses through an annual budget.

There is no standard amount when it comes to HOA fees. These fees can vary from one community to another and change depending on several factors. Location, the nature and number of common areas/amenities, and the size of the community are all factors that can influence HOA dues. Economic factors such as inflation and wages can also contribute to changing fees.

That being said, some states have laws that limit the association’s ability to raise dues annually. In California, for instance, the law prohibits HOAs from increasing regular fees by more than 20% of the preceding fiscal year’s fees without obtaining approval from the membership.

If an HOA maintains a reserve fund, a portion of the fees also goes into that account. The reserve fund plays a crucial role in preserving the financial health of an HOA. It is used to pay for major components’ repairs, replacements, and maintenance once they end their useful life.

However, not all associations have a reserve fund requirement. Members must check state laws and governing documents when determining whether an HOA requires a reserve fund. Even if no requirement exists, it is wise for an HOA to maintain a reserve fund.

The Pros and Cons of Homeowners Associations

Living in an HOA community has pros and cons as with most things in life. Understanding these pros and cons will help homebuyers decide whether HOA living suits them.

Benefits of HOA Living

Homeowners associations usually have common areas and amenities for residents. While these amenities vary, they usually include swimming pools, clubhouses, and gyms. Some even have private parks, playgrounds, and golf courses. Homeowners who live in HOAs gain access to these amenities and facilities, usually exclusive to community members.

Additionally, homeowners associations play an important role in enhancing curb appeal and protecting property values. They do this by enforcing strict rules concerning property use, architectural changes, and resident behavior. Homeowner dues also help maintain a high standard of living within the association.

Finally, living in an HOA offers a sense of community that is otherwise hard to achieve. Associations typically organize social gatherings and events that help bring neighbors together.

Drawbacks of HOA Living

Homeowners associations use fees and rules to help boost curb appeal and preserve property values. To some, though, these can be seen as drawbacks.

Members must pay HOA dues to the association, which is an added financial burden, especially for those who have to worry about mortgage or rent. Homeowners may not like the shackles of rules and regulations, as these tell them what they can and can’t do with their homes.

Furthermore, if an association is poorly managed, everyone in the community suffers. As such, it is important to elect competent leaders or enlist the help of an HOA management company.

What Is HOA? Explained!

It is critical to know what a homeowners association is before deciding to buy into one. These associations offer many benefits, but they can also be limiting and demanding. Buyers should keep in mind, though, that the obligations with HOA living will benefit them in the long run. Still, buyers should look for homes elsewhere if fees and rules are non-negotiables.
Managing an HOA is an uphill battle. Fortunately, First Equity Property Management can help. Call us today at 650.349.7233 or contact us online to learn more!