Question: Our current landscape committee chair has offered to take over the landscape contractor’s job and save the HOA money. He has run his own business in the past but has never been in the landscaping business. Would it be prudent for us to enter into such a contract with a owner?

Answer: It is bad business to hire an HOA member to do HOA work because there is a clear conflict of interest even if the member is competent to do the work. And if the member turns out to be incompetent, the board will end up firing him and likely create a long term enemy. Unless this person provides a service that is unavailable elsewhere, stick with outside professionals.

Question: What approaches have you seen to boards take to inform their members about other members who are in arrears? Our board likes to post names and amounts in arrears as well as put the information in the minutes.

Answer: Do not post delinquent member names! And get rid of that stock and pillary! The board should refer to a collection only by the amount owed, time past due and status of the collection process. Naming names is a sure way to alienate neighbors and trigger litigation for defamation of character. Besides, all collections are not created equal. Some may have a legitimate reason for not paying (disabled, unemployed), others don’t pay because of a matter of principle: “I’m not paying until the board (fill in the blank) and some may simply be jerks.

To avoid favoritism, the board should institute and use a Collection Policy which is uniformly applied to all members, including themselves. Even better, that Collection Policy should be enforced by a hired professional manager since no board member should be put in the position of personally enforcing collections on other members. There is a sample in the Policy Samples section of Regenesis.net.

Question: Our board had a professional reserve study done four years ago. The board has been updating the reserve study itself ever since. Are there any down sides to doing this?

Answer: Some boards may be tempted to do annual reserve study updates "to save money". This can possibly work if there is a board member that specializes in construction cost estimating. However, for others (read “vast majority”), the results will be shooting in the dark.

There are a number of good reasons for having a qualified professional do the annual reserve study updates:

1. Component cost changes that happen frequently can dramatically change the reserve study projections. A reserve study professional tracks these cost changes and adjusts the components when indicated.

2. Changes to state statute can affect how the reserve study is done. For example, several years ago, Oregon mandated the addition of a Maintenance Plan with the reserve studies.

3. Periodic site inspections by a qualified professional are critical to maintain accurate useful life projections. When a reserve study is originally performed, each component is assigned a life expectancy base on site conditions, quality of installation and effects of weather. However, all components need regular and adequate preventive maintenance. If it is not done, life expectancy can drop dramatically. For this reason, site inspections are highly recommended at least every three years.

4. Lenders require a current reserve study. FHA, Fannie Mae and Freddie Mac underwrite the majority of homeowner association loans. As a condition of loan approval, they require a reserve study current within 12 months. If the board cannot provide it, members run the risk of having their refinance or buyer loans denied.

5. For in-house updates, the board bears personal liability for the results. Does the board really want to shoulder this responsibility?

6. Annual reserve study update costs are reasonably priced. Considering that the results are professional, informed and accurate, why would the board not want to take advantage of a service provided by a qualified professional?

For more innovative homeowner association management strategies, see Regenesis.net.

Published: December 15, 2010

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Richard Thompson owns Regenesis, a management consulting company that specializes in condominium and homeowner associations. He is a nationally recognized expert on HOA management issues. Regenesis publishes The Regenesis Report, a monthly newsletter for HOA boards, developers and managers. To subscribe, go to Regenesis.net. He can be contacted by email at .