Achieving Transparency in HOA Boards

Transparency in HOA boards is all about homeowner trust. And they believe board transparency is a key to a healthy community and worry free living.

Once residents see how their dues are managed, that decisions are fair and just, and that the board is accountable, they tend to be confident that the HOA is being managed well.

Confusion, doubt, worry, complaints and friction tend to dissolve confidence and good will. Whether residents are doubtful or not, HOA transparency is a good thing.  With transparency, some major losses might be prevented.

Have you been struggling with the issue and about how to provide transparency to homeowners?  Let's take a closer look at the opportunity to create improved transparency for HOAs. 

Fraud is an Unfortunate Problem

A number of cases of fraud within HOAs and COAs have occurred across the US. In some of them, tens of thousands to millions of dollars have been lost, misappropriated or outright stolen. Add that to the usual cost overruns and other spending, and you see why homeowners may lose confidence in how their HOA is being run.

And in some of these situations involving fraud, the HOA board or HOA manager were completely opaque in their operations from communications, budget planning, managing vendors, service provision to managing funds.  Residents didn't have a chance to see the thefts happening until it was too late. Homeowners are left with the bill.

Until it's Too Late

In one recent case, in Dunedin, Florida, a woman who managed a 400-unit condo community was arrested and charged with one count of scheme to defraud and one count of grand theft.  She was accused of stealing a little less than $25,000.

In yet another case from nearby St Petes in Florida, a woman was arrested and charged, accused of stealing over $228,000 from three HOAs while working as an accounting manager at an association management company. She was managing 58 organizations bank accounts and took $521,000 in checks and credit card payments from 13 organizations, bringing the total alleged loss to over $750,000.

And a few years ago, an HOA manager in Mississippi was charged, convicted and sentenced to 5 years in jail. He used his position as a property manager to defraud homeowners associations and the Community Bank of Mississippi. The accused defrauded the HOAs by making withdrawals from HOA bank accounts and converting them for his own use.

Trust -- The Expectation of Professional Behavior and Good Judgement

When residents entrust not only funds, but also legal liability to an HOA manager and elected board, they are acting in good faith that individual managers have the integrity, intent, and tools to manage well. This is their good will, not something to abused.  Given hired managers might be under personal financial pressure, they could succumb to desperation or greed and commit a crime.

Transparency is the Issue

In fact, when boards and residents don't agree, transparency, openness and disclosure between them may erode. 

As a result, modern boards should make transparency a project or priority by becoming available, creating a standard of disclosure, communicating clearly without fear, and making information available online.

Once an open door policy is made, resident's suspicion of what's going on behind closed doors dissipates. Then the intrusion some boards fear won't actually happen. Once trust is established, they let you do your business -- fully confident in your board and management team.

What Exactly are Homeowner's Issues?

What do you think homeowners concerns are?  You might want to scrutinize these matters:

Financial Transparency:

• Budget Allocation
• Reserve Funds
• Assessments and Increases

Decision-Making Processes:

• Board Decisions
• Conflict of Interest

Communication and Engagement:

• Meeting Accessibility
• Information Dissemination

Maintenance and Project Management:

• Project Transparency
• Quality of Work

Rule Enforcement:

• Consistency
• Fairness

Election and Voting Processes:

• Election Integrity
• Representation of Homeowners

What Will "Glass House" Management do for You and Residents?

• Transparency fosters trust among homeowners via understanding the management and decision-making processes. When they can access association information on projects and accounts, they are more likely to trust the board's actions.
• Transparent communication keeps homeowners informed about board activities, thus they're more likely to participate in meetings, vote, offer feedback in polls, and even volunteer for community initiatives, and not be a source of friction and misinformation to others.
• Transparent decision making informs homeowners of the rationale behind decisions thus they feel the association is being run professionally and they feel less alienated and disempowered.
• Transparent policies hold the board accountable to residents and in compliance with governing bylaws. By openly sharing information about financial matters, projects, and policies, the board demonstrates they are accountable for their actions and are being fair in decisions.
• Transparency added to value generating practices means the association is a valued part of the community and protects homeowner's property value. Being open and transparent builds confidence in residents and creates willingness to pay dues and abide by HOA rules and regulations. 

How can Boards and HOA Managers Operate more Transparently?

1. Hold Open Meetings: Hold regular open meetings where homeowner residents can attend, observe, and participate in discussions. Ensure that meeting agendas and minutes are published in advance, allowing residents to stay informed about topics being discussed.
2. Make Documentation Accessible: Make key documents, such as budgets, financial statements, and governing documents, readily accessible to residents. Utilize digital platforms like the community website, resident portals, or email newsletters to distribute these documents.
3. Distribute Board Policies: Distribute proposed policies which might affect lifestyle and ownership responsibilities to home owners for feedback/response/questions prior to enactment.
4. Communicate Consistently: Establish clear channels of communication with residents through newsletters, portal accounts, emails, or social media updates. Provide clear, easy to understand regular updates on board activities, upcoming projects, and important decisions.
5. Enable Feedback: Encourage resident feedback and input on important decisions. Use polls and let homeowners vote on matters just to get their real views.  Create avenues for residents to voice their opinions, such as suggestion boxes, surveys, or designated feedback sessions during meetings.
6. Post Transparency Policies: Implement transparency policies outlining the board's commitment to open communication and accountability. Clearly define procedures for sharing information and making decisions in a transparent manner.
7. Seek Professional Assistance: Consider enlisting the help of professional community management companies, professional accountants, and legal experts specializing in HOA governance to ensure compliance with transparency regulations and best practices. 
   
   A nice benefit of a modern HOA management software platform is the accuracy of association accounting, financial reports, centralized communications, resident portals for alerts and documents, and promotion of meetings to encourage member awareness, if not attendance.

With trust established, your HOA board or your HOA management company is able to operate more fluidly to serve resident's interests well. You'll find fewer dues delinquencies, any costly assessments will be foreseen, and the association can operate hassle-free.

Find out more about how to launch an HOA or POA in Tennessee, Florida, Georgia, North Carolina or South Carolina.

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You'll be better informed for your discussion with our association sales pros. Reach them at 415 800 1245.

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