Ask the HOA Expert: Qualifications To Serve On The Board

By Realty Times Published Jan 6, 2023 03:48 pm Updated Jan 6, 2023 03:51 pm

Question: There is a couple who lives in our HOA and only one of them is listed on the property title. Does the other one qualify to serve on the board or a committee?

Answer: Unless the governing documents allow otherwise (rare), only property owners are allowed to serve on the board. The board may appoint anyone to a committee since they aren’t elected positions and subject to oversight by the board.

Question: Our HOA fees have been $180 per month for the past seven years. The current board has proposed a budget that is calling for a $40 increase per month along with an additional $500 special assessment. I understand the importance of maintaining the buildings and providing adequate reserves for future capital projects but at what point do increased fees have a negative impact on the market values?

Answer: Assuming that $180/month was adequate to pay the bills and reserve requirements seven years ago, the effects of inflation alone would indicate $220/month today is more than reasonable. But since past boards have kept the fees flat, inflation has eroded the value of the monthly fees and reserves have been starved. The lesson here is clear: The board should at minimum increase fees each year at least the amount of prevailing area inflation. That way, the buying power of the dollars remains competitive.

Even better, each year the board should analyze the most recent 12 month’s expenses, consider increased costs of contract services (management, landscaper, etc.) and utilities plus review and revise the reserve study (your HOA has one right?) to determine the proper fee level. This is how successful HOAs are run. Yours has been running on empty for years and you finally have a board with enough gumption to face up to it.

An HOA with proper budgeting and funding is much more attractive to buyers than one whose fiscal head is in the sand. Buyers are willing to pay more for this kind of property because the HOA has the funds to do proper and timely maintenance and the property shows it. When the property shows it, it will sell for more money and faster than those that don’t. There is no free lunch. If you starve the HOA budget, you starve your own property value.