Why Homeowner Associations Get into Trouble
Following are the ten most common causes of trouble for homeowner associations:
- Inadequate assessments and reserves over a long period of time;
- Delinquencies leading to a loss of revenue;
- An inexperienced developer leaves the association with an inadequate budget;
- Prior boards have made a poor choice of hiring contractors resulting in wasted money;
- Prior boards have failed to get legal advice before making important decisions leading to costly errors;
- Prior boards have made poor choices in hiring management companies who have provided poor advice to the board resulting in expensive mistakes;
- Prior boards have made costly errors in purchasing insurance coverage for the association which has resulted in not maximizing coverage;
- Prior boards have deferred maintenance work which has resulted in more expensive, unnecessary repairs;
- Poor management decisions have resulted in the loss of existing insurance coverage and the need to acquire replacement insurance coverage from a second or third tier company at substantially higher premiums; and
- Poor decisions have resulted in the association paying expenses that should have been paid by an owner or owners.
Do any of these points apply to your association?
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