Every new year comes with its own set of challenges. And while 2020 was particularly difficult due to the COVID-19 pandemic, 2021 brings hope for homeowners associations. Start the new year right by administering an HOA annual checkup.
What to Include in Your HOA Annual Checkup
Just as our bodies require yearly health checkups to stay in good shape, homeowners associations require annual examinations, too. The best time to conduct an HOA annual checkup is at the beginning of every year. But, what does such a checkup usually involve anyway?
1. Inspect Assets
It is good practice to inspect all of your association’s buildings on an annual basis. Anything your HOA is responsible for maintaining should make it on the list. This way, you can gauge the health of your assets and plan for necessary repairs or maintenance. You might also recommend improvements or upgrades. Regular inspections ensure your buildings remain in excellent condition and prevents surprise malfunctions.
2. Prepare Common Areas and Amenities
As the winter season comes to a close, the start of the new year is the best time to schedule delayed maintenance. This is so you can prepare community amenities such as pools and tennis courts for springtime use.
Many new communities form every year, and 2020 was no different. If you have a younger community, you should make sure the common areas were deeded to the HOA. This eliminates any problems for your association in the future in terms of taxes and foreclosures. If some common areas have yet to be deeded to the association, contact the developer of the community so that they can get started on the process immediately.
3. Update Insurance
Insurance is an association’s first line of defense against liability. Therefore, it is imperative that you review your insurance policies and update your coverage if necessary. Make sure to talk to your HOA’s insurance provider to see if anything requires updating.
A particular policy you might want to take a closer look at is your Directors and Officers insurance. Many HOA boards have found themselves on the receiving end of homeowners’ frustrations due to the pandemic. It has even resulted in an increase in threats of lawsuits against board members. As such, it is a wise move to expand your D&O insurance to get more protection for the board.
4. Review Finances
There are a number of financial tasks you should undertake at the beginning of every year. For one thing, your board should prepare an annual budget and present it to the membership. In some states, like North Carolina, HOAs are required to hold a meeting to ratify the budget.
You should also take the time to review your finances, specifically when it comes to your financial reports, delinquencies, and reserves. Evaluating your financial reports will allow you to identify any gaps that require remedy. For instance, you might have spent more money than you had the previous year.
It is also worth maintaining delinquencies below 5 percent. Finally, when it comes to reserves, you must make sure the association has enough funds to cover the cost of future replacements and repairs. For this, a reserve study comes in handy.
5. Evaluate Vendor Contracts
Contracts have fixed durations. Therefore, you should routinely check your HOA’s vendor contracts to see when they are due to expire. This way, you can avoid lapses in services. Some contracts also renew automatically if you don’t terminate by a certain date, which can make things unnecessarily complicated for the HOA if you had planned on ending those contracts.
It is helpful to create a calendar with the renewal and expiry dates of vendor contracts. In doing so, you can start looking for new vendors ahead of time and meet the “terminate by” dates to avoid penalties.
6. Hold Virtual Events
Although it is currently impractical to hold in-person meetings, your HOA annual checkup should still include socialization opportunities. This is where virtual meeting platforms come in. Virtual meetings allow you to hold online meet-and-greets for new members of the community or simply to socialize with your neighbors. Members are likely looking for new activities to do while staying at home, and your HOA can certainly help with that.
7. Recruit New Committee Members
It is always a good idea to encourage community participation, and one of the ways you can do that is by recruiting new committee members. Of course, since you can’t gather physically yet, you can hold recruitments virtually for now. The winter season is a great time to ask for volunteers and set long-term goals for each committee.
The Key to a Healthy Community
Many homeowners associations fall victim to issues with maintenance, finances, insurance, and vendors. Most of these problems, though, stem from a lack of planning and preparation. You can easily avoid them by performing an HOA annual checkup. In doing so, you can maintain a healthy and working community.
Juggling these management tasks is often hard to do, particularly if you have little to no time or experience. Thankfully, an HOA management company like Cedar Management Group can step in to ease the burden. Give us a call today at (877) 252-3327 or contact us online to request a free proposal.
RELATED ARTICLES:
- Everything You Should Know About HOA Committees
- HOA Insurance Policy: Why Your HOA Really Needs One
- What’s The Importance of Vendor Contracts For HOA Projects?
