A board of directors typically manages HOAs, but what happens if an HOA does not have a board? Does it still count as an HOA?
What Happens If An HOA Has No Board?
Like other organizations, the board of directors manages a homeowners association (HOA). This board comprises individuals from within the community that the HOA handles. In most cases, this involvement is voluntary and based on votes.
That being said, the HOA board plays a central role in HOA management. The HOA must have a board to govern it.
The responsibilities of the HOA board
The HOA board has critical responsibilities for the HOA to fully function. Here are some duties that the HOA must fulfill.
Make sure that the HOA members are compliant.
One essential task the HOA board must fulfill is to make sure that the members of the association are compliant with governing documents.
With this, the board must be well-familiar with the association’s governing documents. The directors must know what the local, state and federal bodies say about HOA management and communities.
Enforcing compliance is not meant to serve as a punishment; it is geared toward promoting the community’s well-being and preserving the value of properties. Given this, such responsibility is one that the entire HOA should not take for granted.
Maintain the community, especially the shared areas
The maintenance of personal and private areas is the duty of specific property owners, but the HOA board is in charge of handling common spaces within the community. The community’s public and shared space can be a common area. The following are examples of shared spaces.
- Entrance signs
- Private streets
- Amenities (gyms, clubhouses, playgrounds, pools)
- Sidewalks
- Courts
- Community parks
Maintaining these areas is vital because the maintenance and quality of these shared spaces could affect the community’s overall feel and even the value of properties.
Keep the HOA’s finances in check.
Like every other organization, an HOA has funds to handle. Managing these funds is another vital role the board must play so that the HOA can function optimally.
Financial management, as a whole, covers several tasks. This includes the following.
- Drafting budgets
- Approving budgets
- Monitoring collections
- Sustaining reserve accounts
- Updating records
- Implementing policies
- Handling financial accounts
While this is a pivotal task for HOAs, it can be a gruesome and challenging duty for the HOA board, especially if financial management is not their expertise. In this case, the HOA can partner with an HOA property management company to ensure that these tasks are taken care of.
Though there are other tasks that an HOA board must fulfill, these are some key and significant responsibilities. It is no doubt that the board is critical when it comes to HOA operations.
What if there is no HOA board?
While it is ideal for the HOA board to always be there to fulfill the responsibilities, this may not always be the case. What happens if there is no one to fill in? What happens if all directors resign without any successors?
If this happens, you may expect that the HOA’s operations may not be as good. The association may not be able to function the way it should. When no one is to serve as a board member, there will be no one to execute the vital responsibilities.
In this case, an HOA creditor or member can process a lawsuit against the association. When it is decided that no one is authorized to be the HOA’s legal representative, the court may appoint a receiver whose responsibility would be to do business on behalf of the community. Given the costs of having a receiver, this may not be an ideal option.
To avoid this situation, it is essential for HOAs to actively prevent this from happening altogether. The HOA board may partner with an HOA property management firm and use tools and systems that make board service enticing. All in all, the current HOA board should ensure that there will be a team to take on the HOA management tasks before they step down.
