Have you ever seen a spinning plate act? This is where someone sets a bunch of plates spinning on poles. The more the plates that start spinning, the more frantic they become to keep them aloft. Once misstep and the entire rig comes crashing down. In some ways, that’s what your homeowner’s association is doing. In this scenario the “plates” are all those items they need to maintain or “keep spinning” in order to insure a high standard of living. This in turn can translate into high property values. If any of those “plates” are neglected, the entire community suffers. This makes your HOA a genuine partner in protecting your real estate asset. The interior of your property is your responsibility to maintain in order to increase your resale value. The challenge is to make sure you’re both living up to the goals of that partnership.
HOA Staying Ahead of the Curve
Every community has a “to-do” list. Whether these are condos, high rises, or townhomes there is plenty to do each month to keep the common areas maintained. A properly working HOA will be managing those tasks, paying the contractors, and seeing to it that everything is kept up to code. As a homeowner you have vested interest in making sure the HOA does just that. In fact, your active participation on the HOA board could make a huge difference when it comes to how conscientious an HOA is with regard to that “to-do” list.
Not only does the HOA have to oversee the ongoing responsibilities but they also have to take a view of the “long game.” How is the roof holding up? What about the pavement in the courtyard? Is the swimming pool in need of repairs? These could be big ticket items that could be covered through a reserve fund study and would need to be implemented at the right time. Is your HOA proactive in this regard or do they wait until disaster strikes and then clean it up? Obviously, you want a proactive HOA that stays ahead of the curve.
At any given time, your neighbor could put their property up for sale. You also have that option. There should be no surprises for a potential buyer to uncover with regard to the HOA and its finances. You’re well within you rights to keep the HOA in check. This is especially true when your community is taking on a new project involving outside contractors. Any contractor who isn’t paid can slap a mechanic’s lien on the property which will impact all the property owners. You can protect yourself by requesting a lien waiver.
Additionally, your HOA should have some other safeguards in place to make sure they will always be on sound financial footing. These measures can include:
- Restricting the check writing responsibilities to the President and Treasurer.
- Requiring additional signature/approval on checks over a certain amount.
- Having a CPA conduct a complete audit at least every three years.
- Keeping blank checks locked up and never pre-signing blank checks.
- Making sure the accounts are balanced on a monthly basis.
Protecting your real estate assets go well beyond your four walls. Working with your HOA is the best way to insure your property values will always be at premium.
Do you live with a proactive HOA? How involved are you with keeping them in check? Let us know.
This article is provided by The Management Trust.