Why Homeowner Associations Get into Trouble

Following are the ten most common causes of trouble for homeowner associations:

  1. Inadequate assessments and reserves over a long period of time;
  2. Delinquencies leading to a loss of revenue;
  3. An inexperienced developer leaves the association with an inadequate budget;
  4. Prior boards have made a poor choice of hiring contractors resulting in wasted money;
  5. Prior boards have failed to get legal advice before making important decisions leading to costly errors;
  6. Prior boards have made poor choices in hiring management companies who have provided poor advice to the board resulting in expensive mistakes;
  7. Prior boards have made costly errors in purchasing insurance coverage for the association which has resulted in not maximizing coverage;
  8. Prior boards have deferred maintenance work which has resulted in more expensive, unnecessary repairs;
  9. 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
  10. 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?