Obligations of small HOAs
One of the most frequent questions we hear is, “Our HOA is so small! What do we really have to do?”
Small or large, all homeowner associations share obligations and responsibilities to the owner members, the state and federal governments, and to the healthy financial and maintenance operation of the association.
The value of every owner’s property, and often the ability to sell or refinance your HOA property may depend on keeping up with these obligations.
Assessment collection: Set up regular billing and process for payment of owner assessments; deposit funds; collect delinquencies.
Bill payment: All association bills, such as insurance, landscaping, or utilities, needs somewhere to send a bill and someone responsible for paying it.
Bookkeeping: Association financial records must be kept beginning with turnover.
Common area maintenance: Maintain grounds and buildings as defined in declaration; maintain, repair, and replace the common elements of the association.
Reserve study: A plan for how to fund the repair and replacement of shared elements may be required by your bylaws and some states.
Resale reporting: Processing of financial and other reporting for resale/refinances in the community.
Budgeting: A community budget should be made prior to the beginning of the next fiscal year. Any changes to expenses should be included.
Insurance: Insurance policy for the association is required by state law and the association bylaws, and must be renewed annually.
Annual meeting: A minimum annual meeting to record association business and governance decisions. By law, meeting minutes and association records must be accessible by owners.
Record keeping: All association business records, communication, meeting minutes, and contracts must be kept and available for owner inspection upon request.
State registration annual renewals: Secretary of State business registration.
Other required renewals: Some states have additional required reporting for HOAs, no matter what their size.
Compliance: Maintaining compliance with HOA bylaws and state laws, including new statutes that affect HOA governance.
Tax filing: Federal tax filing annually.
These are the fundamentals of HOA operations, although your state may---and likely will---have additional obligations. Find a list of requirements specific to your state here.
