Common Mistakes HOAs Make About Money

One of the key tasks of an HOA board is to handle the community’s money. It comes in via dues, but the board has to decide how best to spend it for the good of the entire community.

However, sometimes board members don’t know how to best spend the money they are entrusted with, or they make mistakes in the process. Here are some of the most common mistakes and how to avoid them.

Not Knowing Their Rules

Most HOA boards have specific rules about how money must be spent. This includes things that the board can spend money on, but may also include rules about getting quotes for services, choosing amongst the quotes received, and more.

All board members need to be familiar with the rules around finances before they make any decisions. If the rules are difficult to read or interpret, the board may want to pay a lawyer to make a guide in layman’s terms, so everyone is on the same page.

Not Collecting Fees

HOAs are due certain monthly fees, as well as fees from special assessments, late fees, and more. If they don’t collect on all of these fees, even when it is difficult because homeowners give pushback for late fees, etc., they will not have the money they need to operate properly.

Outsourcing fee collection can make it easier. If your board is struggling with this, reach out to us at AMI to learn about a variety of possible solutions today.

Not Communicating About Fees Properly

HOAs need to make sure that their members understand what fees are due, why they are being assessed, and what the deadline is for paying them. That way, there won’t be any misunderstandings and everyone can contribute to the community.

Letters, phone calls, social media posts, and more can all be used to facilitate this kind of communication. The key is to get the information out there in a variety of ways so people can access it in a way that is meaningful for them.

Improperly Filing Tax Documents

Understanding tax filings for an HOA can be difficult, unless one is a tax professional trained in that area. Ensure that all taxes are filed properly by working with a pro or making sure there is always one on the board. The penalties for misfiling taxes can be steep, so HOAs should make doing this properly a high priority.

Acting Without Legal Counsel

If there are any questions about how money should be spent in an HOA, it’s important that the board members consult a lawyer before they make any decisions. A lawyer can clarify the rules or help an association figure out how, when, and where they are allowed to spend money on things that are not specified in their governing documents.

If your HOA board needs help with finances, call Advanced Management Inc today. We’ll work with you to help you find the solutions you need so your board can spend wisely and well.