Essential HOA Professionals
The board of a homeowner association is charged with making informed decisions. To make informed decisions requires consulting with knowledgeable professionals when the topic exceeds the board's experience. Professional relationships that every HOA board should have include an attorney, CPA and insurance agent.
The Attorney. Only work with an attorney with expertise in HOA law. Typically, there are very few such attorneys and some specialize in working with developers. Look for those that work with HOA boards. Ask local HOA management companies for references. Do not use an HOA member attorney since there is an unavoidable conflict of interest. Designate one board member to interact with the attorney, usually the board president. This not only controls costs, but eliminates confusion and miscommunication. The HOA's attorney is legal counsel to the homeowner association. He does not represents the board, a board member or general member. Here's what a typical attorney does:
- Review governing documents, proposed rules or amendments and service provider contracts.
- Provide legal opinions on HOA matters.
- Answer questions concerning legal concepts and governing documents.
- Collect delinquent assessments by demand letters, filing liens, processing foreclosures and litigating.
- Enforce deed restrictions by demand letters and litigation.
- Legally defend the board.
The Certified Public Accountant (CPA)
- Audits, Reviews & Compilations (three levels of financial review).
- Budgeting assistance.
- Expert testimony and litigation support.
- Tax returns.
- Accounting policies and procedures.
- Design and implement systems for internal control.
- Formulate investment policies.
- Evaluate, select and install accounting software.
- Train bookkeepers and other accounting staff.
- Prepare monthly or quarterly financial statements.
- Make recommendations for interviewing and hiring accounting staff.
- Educate and train board or committee members on technical matters.
- Assist in obtaining financing.
The Insurance Agent
- Review the governing documents to determine insurance requirement and recommend additional coverage that might be appropriate.
- Inspect the HOAs common elements and identify risk exposures that need to be addressed.
- Verify the property replacement costs.
- Review the Fidelity Insurance to ensure that those with access to the HOA's funds are included in the coverage.
- Obtain premium quotes and recommend the program that best suits the HOA's needs.
- Educate the board about coverages being offered as well as the exclusions and limitations of each option.
- Explain where the HOA's coverage stops and owners' responsibility begins.
- Offer unit owners special coverage and reduced rates.
- Provide certificates of insurance or evidence of coverage to lenders.
- Assist the board in drafting a resolution stating how claims deductibles will be processed.
- Create a claims procedure manual.
- Customize a risk-management program.
- Review claims annually and recommend how claims can be reduced.
Having a team of these three professionals will serve the HOA's core and essential needs. Identify those experts in your area and put them to good use.
SOURCE: Richard Thompson
The Regenesis Report