Category: Articles

What is Selective Enforcement

Selective enforcement involves enforcing some rules more strictly than others or targeting specific homeowners while ignoring others’ violations. This can lead to a sense of unfairness or inequity and ultimately undermine homeowners’ trust and confidence in their HOA.

Enforcement Overview

Owners purchase properties within homeowners’ associations under the expectation that the governing document provisions are being fairly and consistently enforced with all members alike. One of the Board’s primary responsibilities is enforcing the association’s governing documents. Keep in mind that if an HOA is inconsistent in its enforcement of specific rules, in the eyes of the law, it may have waived its right to enforce the rule in the future.

Community governing documents should include procedures for enforcing rules and restrictions that apply equally to all members. Governing documents granting authority to discipline members are crucial for the Board to effectively fulfill its enforcement responsibilities. It is recommended that the Board of Directors establishes and adopts rules/guidelines for all members to abide by and an ‘enforcement policy’ outlining what actions the Board may take to gain compliance.

Enforcement Procedures

There are several ways HOA Boards can choose to manage the enforcement process:

1) The association will investigate, verify, and act on a rules violation only upon receiving a formal written complaint from a member.

2) A designated Board or Committee member(s) performs their own periodic reviews of the community and provide written reports of violations to management, and letters are sent out requesting compliance.

3) The Board instructs the Community Manager or other designated representative to perform routine inspections of the community and record the violations, then send letters requesting compliance. It is recommended that photo documentation be included in the compliance letter.

All methods described are acceptable if the process is administered fairly and all actions taken strictly adhere to the association’s adopted enforcement policy.

The Role of the Board

Another important consideration when it comes to selective enforcement is the role of the board of directors. The HOA board is responsible for ensuring that rules and regulations are enforced fairly and consistently across the community. To do this effectively, board members must be knowledgeable about the rules and regulations, as well as the processes and procedures for identifying and addressing violations.

The Board actions should not be viewed as “arbitrary and capricious” in nature when administering the association’s policies. Failing to enforce rules consistently could lead to a lawsuit for ‘selective enforcement’ against the association and management.

Board members should avoid hasty decisions on violations and enforcement, first reviewing the situation and evaluating the facts collectively. The Community Manager can assist the Board with the investigation and gathering information for the Board to review (photos, witness statements, etc.).

The Board members can prevent an accusation of selective enforcement resulting in a potential lawsuit by following these steps:

• Set an example and follow the rules as a member of the association and Board representative.
• Exercise due diligence by gathering facts and evidence of alleged violations and reviewing all details before deciding on enforcement actions.
• Treat all members with the same respect and dignity when corresponding and interacting with members regarding violations.
• Appoint a few Board members to meet with the violating member(s) in good faith, aiming to resolve the situation amicably.

The Board of Directors must determine if a violation exists and decide the appropriate action to ensure compliance. If all enforcement efforts fail, the association’s attorney may need to advise the Board on the next steps.

Finally, it is important to remember that selective enforcement is not just a legal issue but also a moral one. Homeowners who feel unfairly targeted may resist complying with HOA rules, potentially leading to more significant issues later on. Prioritizing fairness and consistency in HOA enforcement fosters trust and cooperation among homeowners, ultimately creating a stronger, more vibrant community.

With the cooler temps, what better time to get together for community activities? There is much to do during the fall months, no matter where you live. Let us talk about some fun events HOA Boards could offer in your community this fall and, most importantly, how to execute them effectively!

Getting outdoors is ideal for the fall months, so what are some activity ideas?

1. Outdoor concert or movie
2. Chili Cook-off
3. Fall Festival or Oktoberfest
4. Farmers Market
5. Outdoor fitness, organized community run/walk, goat yoga, obstacle course, etc.

Successful HOA events all come down to planning. The more you plan, the better the execution of your events will be. Below is a checklist or guide of items you can do before the day of your event to ensure success.

 

1. Choosing a date/time 

When choosing an event date/time, avoiding scheduling multiple events on the same day or time is essential. Also, be sure to check your local happenings, such as city, state, and neighboring communities. It may not always be possible to avoid planning events on the same day as others, but try your best not to schedule “like” events on the same day. For example, if your city has a Fun Run, don’t schedule a community Fun Run around the same time.

2. Know your Association

Know your Association. What exactly do we mean by that? If you plan an event in a multi-generational community, there are better options than weekdays or weeknights during the school year. Family communities offer events on Friday evenings or the weekends to maximize attendance. If your community is Active Adults (55+), do most of your residents still work? If so, then weekday or weeknight events may also not be ideal. However, if your association comprises a majority of retired residents, you may have more flexibility when offering events. Knowing your community can ensure the most attendance at your events.

3. Know your budget

Defining and sticking to your budget is crucial for planning successful events by reducing the stress of going over budget and having to cut corners to make the event happen. Knowing your budget for each event will ensure a successful year of events!

4. Booking your vendors for HOA events

Be sure to do your due diligence when choosing your vendors, whether a band, a caterer, or a performer. Please do your homework, get referrals, check YouTube videos, or call a colleague who may have used them. Knowing what you are getting upfront will help you have a successful event.

5. Building your team 

Build your team! Putting on a successful HOA event is not a one-person job and requires a team, and every team needs a leader and support behind them. So, whether your team is supporting staff or volunteers, be sure to equip them with the tools they need. Timelines and job assignments with detailed information will allow your team to help you be effective. Plan accordingly with team meetings leading up to your event, and always have a post-event meeting. There is always room for improvement, so post-event discussions are a great tool for continuing to plan successful events. 

6. Promoting your event

Utilize your team to promote your events. It is important to ensure that event details are adequately promoted. Create flyers, announce them in community newsletters, send emails, add them to your website, and mention them at Board meetings. The more ways you can inform the members of your HOA, the more successful your event will be.

HOA events are a lot of work but can certainly help build a stronger sense of community and increase overall resident satisfaction. Events are also a good time to activate homeowner participation by creating a Social Committee to help the Board plan and execute community events. Learn more about Building HOA Committees. Use this information provided to get inspired, organized, and ready to execute successful events for years to come.

When it comes to helping Boards and residents get the most out of their HOA, AAM is here to help. Communities under our care benefit from the direct support of a lifestyle team that serves as AAM’s global resource for community events and lifestyle programming. The team is also responsible for ensuring that all programs, services, and events are conducted and fulfilled in a manner consistent with the community’s goals and objectives and remain compliant with local, state, and federal regulations.

Understanding the significance of HOA reserve funds is crucial for effective homeowners’ association management. These funds, unlike daily operating funds, are set aside for essential repairs and replacements within the community. This guide covers the importance of HOA reserve funds, smart investment strategies, and ensuring financial preparedness for the future.

HOA Reserve Funds: Why They Matter and Smart Investment Strategies

Managing an HOA requires understanding and effectively handling reserve funds. These funds cover major repairs and replacements of common areas, distinct from daily operating expenses.

Why Are Reserve Funds Essential?

Reserve funds ensure long-term financial stability, maintaining common areas like roofs, elevators, pools, and parking lots without sudden financial burdens. They also help preserve or enhance property values, keeping the community attractive and functional.

How Much Reserve Should an HOA Have?

Determining the right reserve fund amount can be challenging. A comprehensive Reserve Study estimates major repair and replacement costs. The Study assumes a conservative interest yield of 1-3% on reserve balances.

Every HOA has unique needs, so reserve fund requirements vary. A reserve study every 3 to 5 years helps the board allocate appropriate funds and anticipate potential cost spikes.

The Risks of Underfunded HOA Reserve Funds

An underfunded reserve fund poses significant risks to an HOA. Unexpected costs may force sudden dues increases or less efficient funding solutions. This could cause financial stress for community members and potential discord within the community.

Investing HOA Reserve Funds: Key Considerations

Choosing the right reserve fund investment requires considering return reliability, risk level, investment duration flexibility, and competitive interest rates. CDs offer guaranteed returns, low risk, and FDIC insurance up to $250,000 per depositor per insured bank. Their flexible investment durations and generally higher interest rates are additional benefits.

A Well-Designed HOA Investment Policy

For HOAs with substantial reserves, developing an investment policy is beneficial. This policy should outline financial goals, risk tolerance, and cash management procedures, including guidelines for permissible investments and approved financial institutions.

An effective investment policy should focus on Safety, Liquidity, and Yield (SLY). Before formulating the policy, review your association’s documents for any specific requirements.

Need Assistance with Reserve Funds? We’re Here to Help

If you want to learn more about managing your community association’s finances and making smart investment decisions, contact us. Our experienced team can help you navigate the complex world of HOA finances and ensure the long-term financial health of your community.

To create your HOA’s annual budget, review and follow the timeline for Board completion and approval. This ensures you meet the distribution requirements outlined in the HOA’s governing documents. For example, some CC&Rs require mailing or delivering the approved budget to homeowners 30 days before the effective date or year-end.

While keeping these critical deadlines in mind, consider the following items to help make the budget preparation process successful:

Review the governing documents

• Look for specific requirements for preparing and distributing the HOA’s budget.
• Be aware of any recent changes to State Statutes.

Be sure to prepare both

• An operating budget and a reserve budget.
• Include the final budgets as agenda items for approval during an open Board of Directors meeting.

Review the reserve study.

• Review governing documents to confirm if they require an annual reserve fund analysis.
• Determine how much money the association should have raised for replacement costs and other contingencies.
• Determine the percentage funded in reserve.
• Make sure you have planned for adequate cash flow for upcoming expenditures.

Analyze expenditures

• Pinpoint assets that may need replacement or upgrades for the current year.

Review existing contracts and anticipate fluctuating costs

• Contact utility companies to confirm their price rates for the following year.
• Reach out to active vendors and ask about service costs for the following year.
• Consider requesting RFPs from potential vendors.

Examine each category

• Projected Revenue – Assessments
• Operating Costs – Maintenance, supplies and utilities
• Fixed Costs – Taxes, insurance, status filing
• Administrative Costs – Bank fees, management, legal, website, office expenses
• Review each line item to account for increased costs. 

Necessary assessment increase

• Divide the total projected costs among the number of homeowners to determine whether an assessment increase will be necessary to cover expenses.
• Compare the recommended funding in the reserve fund to the current actual funding level to determine whether an assessment increase is needed.

Include a narrative

• Always include an explanation of how each income and expense item was determined.
• Financial prudence is one of your top responsibilities as a board member. This is why investing time and starting early on creating an annual budget will set your HOA up for financial success.

If you want more HOA budgeting tips, check out our Guide on 7 Tips to Prepare Your Community’s Association Budget. 

OA demands can easily rope Board members into a full-time job. On the flip side, HOAs must find the right balance of value and cost when they turn to an outside provider. So, how do you know when it is time to hire a professional management company? Consider these major benefits:

Minimizing Stress and Reducing Demands on Board Members.  

Consider turning over responsibilities like handling owner calls, complaints, unpaid assessments, website updates, communications, compliance, and financials to a community management company if your Board members are maxed out. Hire an HOA management team to help alleviate the tedious day-to-day operations of an association.

Accessing Technology Efficiencies and Easier Processes.  

Suppose your Board members do not have time to stay on top of communications, reporting, or task management. In that case, it might be time to find a management partner that can provide secure and innovative technology to increase the efficiency of vital HOA needs significantly. HOA Management companies invest heavily in tools, software, and security protocols to ensure the ultimate homeowner experience. Reliable management companies offer Board portals, mobile apps, community websites, electronic voting, and messaging services.

Acquiring and Maintaining the Required Level of Industry Expertise. 

Hire a professional HOA Management company to create a symbiotic relationship with the Board of Directors still at the helm. A professional management company will know the ins and outs of collecting unpaid assessments, legal matters, maintenance issues, etc. Additionally, a reputable management company invests in SSAE-18 audits to confirm its internal controls mitigate client risks.

These three benefits alone create an attractive scenario and help decide on whether or not to hire an HOA management company somewhat easier. However, HOA Board members need to also know that it will not be a hands-off relationship. Hiring a professional HOA Management company is meant to be a symbiotic relationship but with the Board of Directors still at the helm. However, your management partner will help streamline operations and improve productivity.

Homeowner Association Boards interested in partnering with a professional HOA management company should consider AAM. Feel free to contact us for a free quote, call us at 833.745.6446, or fill out a quick request HERE. 

HOA Preventative maintenance refers to the routine maintenance tasks performed on the Association’s physical assets and mechanical equipment components. It helps extend the life of the different assets and equipment within the community’s property, decrease repair costs, and prevent the likelihood of equipment failure and unplanned downtime. 

Why is Preventative Maintenance so Important?

Many associations offer impressive amenities and services. Examples include large recreation centers, buildings, clubhouses, fitness centers, swimming pools, rooftops, and other specialty facilities.  Maintaining the value and aesthetics of the association amenities and the facility equipment is an important part of the management company’s services. A comprehensive Preventive Maintenance Program is a key component to a successful partnership.

Reactive vs. Proactive Maintenance

Reactive Maintenance is when maintenance on equipment is not performed adequately until the equipment breaks or fails. This strategy has several adverse results:

• It reduces the life expectancy of the assets and mechanical equipment components.
• It makes it difficult to effectively budget for repairs and maintenance, resulting in unexpected repairs or costly replacement costs.
• It creates additional expenses, such as after-hour service fees.
• Unexpected amenity closures typically result from repairs, and extended closures may occur while waiting for parts.
• It could cause last-minute closure notifications to owners, disrupting their plans and triggering frustration.

Proactive maintenance routinely addresses concerns and ensures equipment upkeep to prevent major failures. This strategy includes regular inspections and performing routine maintenance tasks, which has many positive results:

• It helps to extend the life expectancy of the assets and mechanical equipment components.
• Reduces unexpected amenity closures for needed repairs.
• Allows owners to receive timely notifications for scheduled upcoming closures.

Who is responsible for HOA Preventative Maintenance?

Preventive maintenance for master-planned communities, condominiums, and high-rise buildings is handled differently.

• Large master-planned communities typically have onsite staff responsible for preventative maintenance, for the onsite maintenance staff handles some items, inspection, and maintenance. In contrast, other items are scheduled to be inspected and maintained with the appropriate vendor. The maintenance staff should follow the Association’s preventative maintenance schedule and regularly meet with the onsite manager to report findings and address areas of concern. The onsite manager ensures that preventative maintenance inspections are performed.
• Preventative maintenance for condominiums and high-rise buildings will be a little different. Owners are responsible for items inside each unit, such as filter changes, cleaning condensation lines, and replacing batteries in fire alarms. Depending on the Governing Documents, the Association is responsible for the preventive maintenance of building equipment like roofs, exteriors, and plumbing.
• Condominiums with on-site staff would be responsible for preventative maintenance in the same manner as the master-planned community. If a condo has no on-site staff, the community manager would be responsible for the inspections and scheduling of vendors.

How to Create an HOA Preventative Maintenance Program 

When creating a preventive maintenance program, include all assets and mechanical equipment components and establish inspection and maintenance schedules. Below is a step-by-step process for creating an effective preventative maintenance schedule.

• Start by making a list of all the assets and mechanical equipment. This will be your inventory list.
• Next, compare your list with the component list in the Reserve Study. This is an excellent way to ensure you have included everything. In addition, you can check the Reserve Study to confirm if any new assets or equipment need to be included when the Reserve Study is updated.
• Create frequency-based inspection schedules from the inventory list. When determining inspection frequency, both manufacturer recommendations and equipment age and condition should be considered.
• After completing the preventative maintenance schedules, the next step is to assign the tasks to the appropriate team members. This assigns responsibility and allows you to determine staff workload. 
  For inspections and services requiring a vendor, assign an onsite team member to schedule the inspection or service, confirm maintenance completion, and submit a vendor report.
• The final component of a preventative maintenance program is establishing a system for recording and maintaining the data from the inspections and services. Historical data is important for future reference. This data specifies expenditure details, issues with equipment under warranty, and new assets needing inclusion in the next Reserve Study update. Keeping accurate records will save time and headaches later.

A successful HOA preventive maintenance program requires preparation, planning, and proactive scheduling. A professional management company can assist in creating a successful program customized to your Association’s assets. 

HOA Committees can be a valuable resource to the Homeowners and Board members they serve. They help complete specific tasks that might otherwise be overwhelming for a typical Board to take on as an additional responsibility. This article will explore the roles and responsibilities of Committees, the types of Committees an HOA can benefit from, and how to solicit volunteers to serve on Committees.

Roles and Responsibilities of Committees

Homeowner volunteers who live in the community make up the HOA Committees, and the Board of Directors appoints them.

Your HOA’s governing documents might include guidelines for forming a Committee. However, some documents may only address one type of Committee and have parameters for creating new ones.

Each Committee should maintain a charter outlining its members’ roles and responsibilities. Below are a few tips for creating charters for new Committees:

• Create an outline that provides structure and direction. The outline can be used when the Board passes a resolution to create the Committee.
• Have a statement of purpose – What is expected of the Committee? Clarify if they have the authority to make decisions or are gathering information and providing recommendations.
• Identify how many members should make up the Committee and how they will report to the Board.
• Will there be a Budget for the Committee? If so, clearly identify what the budget will be.
• How long will the service term be for volunteers?
• Identify a Committee name. (i.e., Social Committee, Decorating Committee, Safety Committee, etc.)
• List the Committee members’ names and identify their positions. The Chair and Co-Chair will take responsibility for the Committee’s actions and report to the Board. The Secretary will keep records and documentation of the Committee’s meetings, tasks, and progress. If there is a budget, the Treasurer will ensure the Committee stays within the budget limits.
• Encourage Committee members to exchange information and meet regularly to discuss the goals of the Committee.

Types of Committees

• Executive Committee: Made up of the Community’s Board of Directors.

• Non-Executive Committee: This committee is made up of homeowner volunteers. Depending on the governing documents or state statutes, certain Committees may exclude Board Members from positions. In other cases, the bylaws may require a Committee to have at least one Board member.

• Standing Committee (Continuous tasks): Architectural, Finance, Events, Social, Landscaping, Welcome, Block Watch, Communication.

• Special Committee (Specific project tasks): An advisory committee may be tasked with researching vendors to identify possible candidates to submit RFPs to. For example, the Playground Committee can be tasked with purchasing new playground equipment.

Over the years, Boards have created various Committees—such as Community Service, Block Watch, Beautification, and Communications—to serve specific community needs.

Most Common Committees

Below are the top five most common Committees within an HOA and some duties they could be charged with through the charter.

• Architectural Review: The Architectural Review Committee can review and approve exterior changes and ensure that all changes comply with the Design Guidelines and the CC&Rs.

• Financial Advisory: The Financial Advisory Committee could be tasked with reviewing and monitoring the HOA’s finances to ensure the financial position remains strong and operates responsibly. Additionally, they may also be tasked with obtaining and reviewing a reserve study prepared by a third-party vendor contracted by the association.

• Welcome Committee: This group warmly welcomes new homeowners to the neighborhood. Members may also provide information about meetings, events, or neighborhood practices to keep new homeowners informed.

• Social Committee: The purpose of the Social Committee is to assist the Board in creating social and recreational events geared toward the community’s interests and needs.

• Landscape Committee: The primary role of the Landscape Committee is to keep the board abreast of the community’s needs. This may include conducting inspections on the grounds of the community to look for ways to enhance common areas and identify potential landscape improvements and possible maintenance concerns to make recommendations to the Board.

Can a Committee meet without notice of a meeting?

A review of that state statute, governing documents, or Committee charter will assist in determining if notice of the Committee meeting must be provided to all members of the Association. 

Soliciting Volunteers for the Committee

Now that the Board has identified the need to establish a new Committee, you must find reliable and helpful volunteers. Here are a few tips that will help you attract the right volunteers and make the Committee successful.

Consistent and clear communication is Critical.

There are many ways to communicate the need for Committee volunteers. Please use multiple communication channels to ensure the community receives this message. E-blasts, newsletter announcements, Board Meeting announcements, flyers, and good old-fashioned word of mouth are all great ways to share your message with the community.

Talk to active members.

As a Board member, you probably notice which HOA members regularly attend Board meetings. Building relationships with attending members of your HOA meetings is good practice. Speaking with homeowners one-on-one will make them feel more connected and possibly encourage participation.

Consider creating an application.

If your HOA is fortunate to have multiple people willing to volunteer for a Committee position, the Board can create an application. That way, the selection process is fair and open.

The form can ask for name, address, email, information, and whether the candidate served on any other Committees. Additionally, you can include a candidate information section allowing homeowners to share the skills and talents they bring to the table. For instance, someone with an accounting background might be helpful in a finance or budget committee.

Download the Application Example Here

Show appreciation

Reinforce the behaviors you want to be repeated. Show volunteers how grateful the Board is for their commitment, publicly acknowledge their efforts at Board meetings and in community newsletters, or highlight them on the HOA website. This reinforces the volunteers’ loyalty and can attract new volunteers.

Committees provide the perfect environment for members to engage and contribute to the community’s success. If your Board is overwhelmed with projects and tasks, AAM is ready to help with professional management services. We have the experience and processes to help you form the Committees your association needs. 

As an HOA Board Member, you are likely faced with complaints from fellow homeowners.  This can be daunting—especially when the homeowner is perceived as unreasonable or irate.  Below are helpful tips to guide you through the process to achieve a successful resolution.

1. Listen Generously & Pay Attention to the Details:

• Whether you communicate verbally or in writing, acknowledge the homeowner’s concerns and thank them for reaching out.

• Have the homeowner submit their concerns in writing for documentation purposes.

• Ask clarifying questions to ensure you have all the information you need to research and resolve the matter effectively.

• Don’t be dismissive; remember that you do not have to promise anything.

• Keep the homeowner advised when they may expect a decision regarding their complaint/concern.

2. Be Proactive: 

• Review federal and state laws relative to the complaint and your association’s governing documents (Declaration of Covenants, Conditions, and Restrictions; Bylaws, Rules and Regulations, Policies, etc.) to see if any of these address the complaint. 

• Don’t be afraid to check with the association’s attorney.

3. Share the Information & Collaborate:

• You are one of several individuals who comprise the Board of Directors, which acts as a whole. Add the complaint to the next meeting agenda and share it with the rest of the board.

• The Board should discuss and examine the matter to find the best solution.

• In some cases, further investigation is needed to work towards a resolution.

4. Deliver Results: 

• After the board has discussed and decided, it’s time to inform the homeowner. 

• Share the why, speak straight, let the homeowner know how the decision was reached, and remind them that the Board acts in the community’s best interest. 

5. Be Process Oriented: 

• Having a clear protocol for members to submit complaints.

• Outline a specific process in how the Board will investigate and respond. Defining a strategy from start to finish will help you consistently address homeowner grievances.

6. Use Your Community’s Management Company to Your Benefit! 

• Professional management companies—like AAM, LLC—provide full-service management, which includes proficiency in addressing and resolving homeowner concerns. 

If you read our article “HOA Board of Directors Roles and Responsibilities,” you already know about the typical roles. These roles are crucial to your HOA’s Board of Directors. However, the role and duties of “Members at Large” might not be as self-explanatory. In this article, we will answer the question: What is a Member at Large? How are they selected, and by whom? What are some of their duties? And, is there a difference between Member at Large and Director at Large?

Director at large meaning:

Members at Large are HOA homeowners who serve on the Board, with voting rights similar to those of other directors. They do not hold officer roles on the Board and aren’t assigned the same duties. The number of Members at Large in an HOA will vary from association to association. Each association’s governing documents dictate the required number of Board representatives. Some may have one or two Members at Large, while others might not have this position at all.

How do Homeowners become Members at Large?

• The Board elects them through elections. Members elect directors, who then decide which will serve as officers, usually including a President, Vice President, Secretary, and Treasurer. Those who do not become officers among the elected become Members at Large. To learn more about the specific roles of Board officers and their responsibilities, check out our article on the Roles of HOA Board Members. Elected terms can vary from HOA to HOA. Always check your governing documents. 

• The Board directly appoints them. It is common for the Board to invite a homeowner to join as a Member at Large, not an officer. This person serves the association under guidelines provided by the Board and according to the bylaws. This often happens when a homeowner’s expertise benefits the Board or the entire association. For instance, an architect homeowner might be appointed to support the Board during a community remodeling project.

• The Board demotes them from their officer roles. The Board can remove the President or any officer from their role through a vote from other directors. However, this doesn’t remove them entirely from the Board. They would instead become Members at Large. Since the entire membership elected them, only a majority vote from the membership can fully remove them.

What are the duties of a Member at Large?

The primary role of a Member at Large is to support the Board and act as a liaison with homeowners. The association’s current needs likely determine their varying duties and responsibilities. They are expected to attend all Board meetings to stay informed and understand the community’s goals and plans. They are encouraged to participate and share knowledge to inform and educate other Board representatives. Additional duties, like special projects, overseeing committees, or mentoring membership, will be assigned as needed by the Board.

What does “at large” mean? “At Large” means the position has no specific assignment, and duties can vary. 

Is there a difference between Member at Large and Director at Large?

“Member” and “Director” are interchangeable terms. Therefore, there is no difference between a Member at large and a Director at large.

Homeowners Associations (HOAs) are increasingly popular among homebuyers in the United States. These communities offer residents access to amenities such as swimming pools, fitness centers, and gated security. HOAs also have strict rules and regulations that homeowners must adhere to, and failure to comply can result in fines or legal action.

If you’re buying or selling a home in an HOA, you may have heard the term “HOA estoppel” come up. An HOA estoppel is a crucial document that provides vital information about the property’s status and the homeowner’s financial obligations. In this article, we’ll examine what an HOA estoppel is, why it’s essential, and how it affects you as a homeowner.

An HOA Estoppel provides all fees that must be collected upon the successful closing of a resale property. The Estoppel is also known as a demand statement, certificate of assessment, resale statement, or closing statement, depending on the state. It includes fees like delinquent amounts from the seller, attorney fees for collections, working capital, transfer, reserve fund, and community enhancement fees. Fines for compliance issues may also be listed. The document also includes any fees owed to the managing agent. Most of these fees are payable only if escrow closes.

The document will include any special assessments due at closing or afterward, ensuring the buyer is aware of future obligations. It also provides a brief description of the assessment’s purpose. The document may also list compliance issues, ensuring the buyer knows what needs correction to comply with governing documents.

The Purpose of HOA Estoppel

An HOA estoppel aims to protect the buyer and seller in a real estate transaction. The document informs the buyer of the exact HOA fees and outstanding debts they must pay before closing. It also protects the seller from being held responsible for any fees or fines after selling the property.

What does it cost?

The cost for preparing this statement varies by state. Some states cap the fee, governed by state statutes or HOA Acts. Typically, the managing agent receives the fee, as outlined in the management agreement with the association.

Who orders an Estoppel?

The “Estoppel” request is usually ordered by the title company or the closing attorney, depending on the state. In rare cases, the seller can also order it, who will then provide the title or the closing attorney. The title company or the closing attorney professionals should complete the request since they will be handling the closing documents. If AAM manages the community and you have questions about preparing or ordering this document, email AAM’s Disclosures team at disclosures@AssociatedAsset.com.

In Summary

An HOA estoppel is a crucial document for buyers and sellers in real estate transactions. As a buyer, you need to know the HOA fees and any outstanding debts before closing the property. As a seller, an HOA estoppel protects you from being responsible for any outstanding fees or fines after the sale.