Friday, June 28, 2013

Homeowner Associations: Good or Bad? Pt. 1

The customary notion of a Homeowners Association (HOA) Board is of a group of cranky old grayhairs with nothing else to do sitting around a table thinking of ways to bust individual home owners for violating rules no one knew about, and aided by a steel-spined, squint-eyed property manager who levies fines and tells you that you can appeal at the end of a two-hour meeting next month.

The fact, though, is that a HOA Board is of a group of cranky old grayhairs with nothing else to do sitting around a table thinking of ways to bust individual home owners for violating rules no one knew about, and aided by a steel-spined, squint-eyed property manager who levies fines and tells you that you can appeal at the end of a two-hour meeting next month.

Seriously--should Christopher Guest ("Best in Show," "Mighty Wind") do a movie about a community, its HOA and its HOA Board? With Willie Nelson, Eli Wallach and Gene Hackman playing the board of directors, and Jane Lynch in a supporting role as the property manager? Well, maybe.

The problem for homeowner associations is that the work really is specialized, technical and kind of hard. And a lot of it isn't very interesting, unless you like to spend hours reading insurance policy fine print and then arguing over it. Yet board members come from a variety of backgrounds--education, health care, civil service, whatever--few of which have anything to do with property management: Contracts, real estate law, landscaping and property maintenance. 

It's not rocket science, but it's hard and usually unfamiliar. A neighborhood of two hundred homes, with a playground, clubhouse and a swimming pool could well have an asset worth $1 million or more. If you think of a board managing a pricey asset, the prism you see them through changes, too. The prime directive of any HOA board is to preserve and, if possible, enhance, individual owners' property values through property management.

Consider owning a home. It's so cool when it's new, but over time, the trim cracks, the paint fades, the water heater conks out, the a/c condenser dies and so on. And you, the owner, has to pony up for repairs and maintenance. Wouldn't your life be easier if you calculated the life of every task or repair and saved something every month to pay for it? That way, when you needed to repaint the house for $6,000, you'd already have the money in the bank and not have to worry where you'll come up with it.

That's pretty much what your HOA dues are for. Some of the dues is for repair and replacement of common area property that deteriorates over time. The rest pays for ongoing maintenance and for the property manager, who knows all when it comes to, say, getting the Ph balance right in
the pool, shaving sidewalk heaves, nursing trees back to health, watering the grass without having sprinklers go on during a rainstorm, and so on. They also handle property transfers, code invoices  pay the monthly bills, manage operating and capital funds, collect from delinquent owners, pull their hair out over short sales and foreclosures and deal with hundreds of emails daily.

Why are board members so weird?  First of all, it's the personality who wants to serve on a board: He or she is the type who wants to get involved, with the hint of righteousness that attends that personality type. But HOA volunteer work is the only volunteer work where the beneficiaries could care less. Board members often feel as though they work in a vacuum, since neighbors never will know how many hours it took board members to come to a consensus in order to save each owner three dollars a month.

Contracts are a huge part of board work--contracts for community management companies, contracts for landscape companies, contracts for building repair and so on.  As lay people, each board members' impulse is to interview different people and companies to see whom they like. A professional, on the other hand, carefully lays out detailed criteria for the job and has companies bid. The criteria sheet later serves as a measuring stick for contract compliance and accountability. Think of the plans and specifications, for example, a building contractor uses to bid a job.

There's no "That's not what I thought you meant," or "We seem to be having a communication breakdown" with a proper contract bid sheet. And lay people are not prepared or qualified to create these. When things break down, as they inevitably will, contentiousness ensues, with the board members fighting and blaming each other while the property manager looks at the ceiling.

No one likes C C&R Nazis, the cranky neighbor who hides behind the juniper shrubs and looks for off-leash dogs. But no one likes a cyan house with Christmas lights in June in an earth-tone neighborhood. For the most part, C C&R's have to do with how the neighborhood looks. Weak or non-enforcement of CC&Rs is a huge responsibility, first because it's so necessary and second because it's so personal. Board members are neighbors, too.

Neighborhoods with a strong board are immediately obvious. The landscaping is trimmed, the the fences are fixed, no derelict vehicles are in driveways and the aphids have moved on. It may be an imperfect way to do things, but it's the best there is.

Part 2 will follow next week.