A self-managed HOA has many important responsibilities to contend with. Between managing finances, keeping up with community needs, and communicating with homeowners, a self-managed association will have their hands full.
Yet self-management can be a rewarding and enriching experience with the right tools, such as HOA accounting software—and the right approach.
It will also potentially save associations the sizable cost of hiring a third-party property manager, especially when many HOAs are fully capable of handling the day-to-day management of their community.
However, sometimes a self-managed HOA will need to rely on a trusted team of outside consultants to answer questions, make the best possible decisions, and avoid unnecessary risks.
According to Former President Barack Obama, “Asking for help isn’t a sign of weakness, it’s a sign of strength. It shows you have the courage to admit when you don’t know something, and to learn something new.”
Knowing how to find the right consultants for your self-managed HOA—and when and how to rely on them for help—will help make your association as strong as it can be. Here’s how.
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Lawyers: Why Self-Managed HOAs Need One on Retainer
HOAs face a lot of legal scrutiny when it comes to upholding the terms laid out in governing documents like covenants, conditions, and restrictions (CC&Rs), as well as any state or federal laws regulating how an HOA operates. Without a legal expert to advise an association, this adds a level of risk of noncompliance and costly litigation that’s easily avoidable.
Placing a trusted attorney on retainer who specializes in HOA law means taking a proactive approach to preventing expensive legal missteps.
While it may seem like an added expense the HOA can do without, placing a lawyer on retainer saves associations money in the long run. This is true both in terms of paying less in lawyers’ fees when constantly needing to use their services, as well as the savings when avoiding costly litigation from having a proactive approach to compliance.
The right lawyer will be able to guide board members on a number of issues, including:
· reviewing the legality of community documents and records
· preventing or resolving disputes that commonly arise against HOAs
· aiding with the process of collecting unpaid dues or fees
· representing HOAs in preventing or resolving lawsuits
· offering a holistic approach to HOAs in understanding and operating within the law
Frantically calling law firms you’ve never done business with when a dispute arises can be costly and lead to unwanted outcomes. Putting a lawyer on retainer is a critical piece of the puzzle when it comes to building your team of consultants.
Hiring a CPA: Good Financial Sense for Self-Managed HOAs
An HOA Treasurer doesn’t need to have an accounting background to fulfill their role—especially when using digital accounting tools like homeowners association software. However, self-managed HOAs should still consult a certified public accountant (CPA) for important advice when it comes to taxes and other financial management obligations.
An experienced CPA familiar with HOA finances can help with:
· advising for tax filings, such as compiling the right forms and determining tax exemption
· compiling financial statements and documents
· reviewing financial records to provide feedback to the association
· providing an in-depth audit of all community finances once or more per year
Note that, in many states, HOAs have a legal obligation to have an annual audit of their finances performed. In this case, your association must hire a CPA firm.
However, regardless of this requirement, consulting a qualified CPA helps avoid unnecessary financial risks and reveals potential future risks in how the association manages its funds.
HOA accounting software gives you the tools to set and manage a budget and other accounting documents, as well as connect directly with your bank accounts for real-time financial data, and to collect, track, and manage dues payments.
Using this software helps you quickly and easily provide accurate and detailed financial information to your CPA, so they can give you the high quality feedback you need to stay financially healthy.
Reserve Specialists: What Do They Do?
While HOAs with a third-party property manager won’t need to handle reserve studies on their own, self-managed HOAs have an obligation to ensure their reserve funds are healthy and capable of handling potential future expenses.
However, it’s unrealistic to expect board volunteers to have the knowledge necessary for performing reserve studies as part of their management duties.
Reserve studies are a critical part of maintaining your community’s financial health. Some states even legally require that a study be done within a given time frame.
That’s why self-managed HOAs should consult a reserve specialist when it’s time to assess their reserve funds.
A reserve specialist gives an HOA critical feedback about the state of their reserve fund, including:
· the condition of physical assets in the community
· estimates of when assets will need to be repaired or replaced
· the eventual cost of repairs, replacements, or upgrades
· how much of the reserve fund should be dedicated to these needs over time
· an overall picture of the health of the reserve fund
While you don’t need to place a reserve specialist on retainer, it’s important to find an experienced professional you trust to perform a reserve study when necessary.
The HOA Software Advantage
With the right strategy and team in place, HOA software can help a self-managed community streamline and optimize how they maintain and grow the value of their neighborhoods.
PayHOA’s management software provides a holistic approach to HOA management with an all-in-one, AI-driven online hub for all your accounting and community management needs, storing all your community data in one centralized repository that you can quickly and easily access from anywhere.
With tools for financial management, bulk billing and online dues collections, tracking violations and requests, communicating with homeowners, and more, PayHOA helps you bring out the best from your team and focus on what matters most: enriching your community.