Anyone who has been involved with their homeowners association would likely agree that there is no shortage of complaints about Homeowners’ Associations (HOAs) and their boards, however, some are inherent to the nature of the relationship between HOA Boards, HOA Managers, and Homeowners while others may be signs of something more nefarious. It’s crucial to differentiate between genuine problems within an HOA or its board of directors and those common pain points inherent to running a homeowners’ association. As a homeowner or board member it can be difficult to distinguish between the two. Common complaints tend to be about rules enforcement, collection of assessments, HOA Board transparency, and HOA elections so using these exactly I will illustrate when complaints escalate from ordinary points of friction to red flags indicating intervention may be necessary.
Differentiating Between Minor and Major HOA Issues
From extensive experience dealing with thousands of HOAs, there are several factors to consider when evaluating if a board’s behavior is a minor nuisance or indicative of corruption or danger. However there is one core issue that is generally present with a bad board or bad board members which is a desire to maintain control and the extent to which they may go in order to maintain this.
Red Flag 1: Control Over Elections
A typical “bad board member” prefers to be surrounded by other board members who are uninvolved or overly deferential. A telltale sign of problematic boards is their extreme control over elections and election processes in order to achieve this. Over the years, we have found that such boards often exert considerable effort to prevent open elections or bar others from joining the board. This is evident in the imposition of overly stringent criteria for board nomination, including making it difficult or impossible for members to be included on community wide ballots, and attempts to disqualify proxies or ballots for various reasons. Often these fall under the guises of protecting election integrity. Additionally, these boards may make achieving a quorum difficult through hosting meetings at inconvenient times or locations, not following notice requirements or sending with the bare minimum notice, which often leads to self-perpetuation of Boards. In more severe cases, they fail to hold annual meetings or elections, requiring substantial effort from homeowners to compel board action. Another example we tend to see from “bad HOA Boards” is that when attempting to fill a board vacancy, they will seek to cherry pick replacements versus inviting community wide participation. This typically comes from a desire to maintain the balance of control on the Board fearing that those with differing viewpoints or strong personalities will upset the balance of power within the board.
Red Flag 2: Disregarding Professional Advice
Boards that refuse to follow professional advice, especially from HOA managers, HOA management companies or HOA attorneys, present another red flag. This red flag is rarely visible to the homeowner because management, as the agent of the homeowners association, will not tend to publicly undermine the Board of Directors however board members and HOA managers will be best positioned to identify this behavior. Such boards often vilify or terminate professionals whose advice contradicts their views, including attempts to discredit attorneys or management companies. A symptom of this may be evident to homeowners in the form of frequent changes in HOA management companies or legal representation and indicates an unwillingness of the Board to consider opposing viewpoints. Increasingly so HOA managers who have spent years developing their craft and expertise are increasingly unwilling to work with boards who refuse to heed prudent advice.
Red Flag 3: Weaponization of Enforcement and Collections
Red flag number three of a truly bad HOA board is the weaponizing of enforcement and collection actions against particular homeowners. Unreasonably high and egregious application of fines can indicate arbitrary or discriminatory enforcement by the board. Reasonableness in this context may vary depending on a lot of factors so it can be difficult to define however patterns which focus on specific homeowners rather than specific issues tend to be a tell tale sign of underlying malintent. This may include targeting of community members who are vocal or disagree with board decisions, using fines, enforcement actions, or even letters from the HOA’s attorney as a form of harassment. Boards might also show favoritism when making decisions on payment arrangements or compromises.
Red Flag 4: Keeping Other Board Members in the Dark
When one or two board members monopolize communication and information, excluding other members from the decision-making process, it raises concerns. Now this one’s tricky because often you’ll find that there’s one or two board members who have more time to give and are better positioned for regular communication and interaction with the community and management- and this is quite normal. However, where it becomes problematic is when those one or two board members use their position in the information distribution chain to omit material information from what is conveyed to the rest of the board. Worse still are when those Board Members begin to make decisions unilaterally which should be board decisions and keeping those decisions out of the view of other board member. Most often we find other board members may not even be aware that this is happening which is why it’s important for management to send communications to the entire board even if one or two function as the spokesperson. Most recently we saw an example of a Board Member making a unilateral change to the Association’s insurance broker in favor of a close acquaintance. The move ended up costing the Association over $100,000 as the new broker was not adequately familiar with HOA or Condominium insurance and likely would not have been selected had the entire board been made aware.
Red Flag 5: Lack of Transparency
A lack of transparency, particularly in failing to comply with open meeting requirements, is a significant concern. While executive sessions are necessary for confidential matters, their overuse for even routine decision-making can be a cause for concern. Board meetings are intended to be open in order that members may have transparency into matters of the association which they are entitled to. So when very few decisions are in fact made in open session this may point to intentional omissions or the avoidance of introducing information to members this begins to erode certain fundamental rights to information. Generally the HOA board should regard the Open Meetings as an opportunity to inform and apprise the community of updates rather than a nuisance activity periodically required.
Conclusion: Not All Issues Are Problems
As we started this article, the nature of homeowners associations draws scrutiny from nearly any party whose individual interests run counter to that of the homeowners association. You can expect members who are subject to enforcement or collection actions may vocalize their dissatisfaction, however, not all complaints are problems. These sorts of complaints can be expected and so long as enforcement and collection actions are reasonable, consistent, permitted by the HOA’s rules and regulations, are nondiscriminatory, and generally made with the best interest of the Association in mind then these may not be cause for alarm. However, persistent patterns like those described in this article can lead to severe consequences for the community, potentially indicating the need for a change in leadership. If one or more of these red flags are present in your community association, it may be time for a frank conversation or intervention.
