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Expected Upkeep Enforced by our Community Association Management Firms

The staff or volunteers you occasionally see walking around your community with clipboards or tablets are your association’s covenant enforcement officers. They’re inspecting the property to ensure that everything is working properly, that conditions are safe and that nothing is reducing property values or the quality of life in your Carolina community.

In short, they’re making sure policies and rules are being followed—from pet behavior, parking and unkempt lawns, to improper exterior modifications and more. They field complaints from fellow homeowners and, if necessary, remind you (or your neighbor) when a rule has been overlooked.

The officers report their findings to the Carolina Home Association board with photos and detailed notes. Most violations are easily resolved without board action. If not, the next step is a hearing before the board—we want to hear your side of the story. Those who continue to ignore rules may be fined or taken to more extreme measures. The most serious cases may end up in court, though we try very hard to never get to that point.

Your association’s covenant enforcement officers perform a vital function, so please treat them with courtesy and respect. If you have any questions about the rules, the officers can explain them to you. Your association manager and board members are happy to listen and respond to any concerns.

When you purchased your home in one of our common-interest communities in the Carolinas, you became contractually bound to abide by the covenants that protect your association. Please review them and ensure that you are in compliance. You can find them on our website.

Why are Quorums Important to HOAs?

A quorum is the minimum number of North or South Carolina homeowners who must be at a meeting before business can be discussed. State law tells us what that minimum number is for our associations. It’s relatively low, but we still have a tough time reaching our minimum. This is a common problem in many homeowner associations.

Meetings that don’t reach a quorum must be adjourned and rescheduled at a later date. This costs the association money and creates more work for their teams. Further, achieving a quorum at a second meeting—if we couldn’t get one the first time—is even harder.

So, why bother to try again? The Home Owners Association board is legally obligated to conduct an annual meeting and it’s an important part of conducting association business. During the annual meeting, new board members are elected and the coming year’s budget is presented to the Carolina homeowners for approval. No quorum means no election and no budget. This means the current directors will have to continue serving until an election can be conducted. It also means that last year’s budget will remain in effect until a valid meeting can be held to approve a new budget.

Good news: You can be “at” a meeting in the Carolinas and across the country at the same time by signing a proxy! That’s how you assign your vote, in writing, to another person. Proxies count toward the quorum, so they’re very important to the association.

We ask you to complete a proxy form even if you plan to attend the meeting. That’s just in case something comes up that prevents you from attending. When you do attend the meeting, your proxy will be returned to you.

Since proxies are so important to achieving a quorum, you may find us knocking on your door, calling on the phone or even stopping you in the common areas asking you to sign a proxy form. We’ll do anything to achieve a quorum. Without it we can’t do business, and eventually that affects you, the Carolina homeowner.

The Responsibility of the HOA Board

Community associations are more than just a neighborhood. In many ways, it’s a lot like a business. Collectively, regular annual assessments amount to tens of thousands of dollars that need to be budgeted carefully and spent wisely. And neighbors who have volunteered and been elected to serve on the association’s board are responsible for making critical decisions—on the homeowner’s behalf—about managing the community and money.

An HOA board also develops long-range plans—like when the parking lot will need to be repaved and when the elevators will need to be replaced—about the parts of the community that are shared property. The board must set aside funds so that these kinds of projects can be accomplished on schedule or even ahead of schedule in the event there’s an unexpected breakdown.

The board also sends out requests for bids and contracts with vendors to do the work necessary to maintain our shared amenities. Board members decide who will do the best job of replacing the roof at the best price or who will be the most reliable company to hire to mow the grass and remove dead tree limbs.

The board’s decisions can have a significant impact on the community’s appearance and, consequently, on our property values. Regardless of our professional manager, the board ultimately is responsible for overseeing community association operations. Be sure to communicate with the board regularly, observe board meetings, and attend annual meetings to elect responsible board members and to participate in the conversations about significant community issues.

What is this Thing Called Fiduciary Duty?

From time to time you may hear that the board of the homeowners association operates in a fiduciary capacity for the homeowners. Or you may read about the board’s fiduciary responsibility in the governing documents. Just exactly what does this mean?

Fiduciary duty simply means the board has an ethical and legal obligation to make decisions that are in the best interests of the entire HOA. That’s a small explanation for a very big responsibility.

Fiduciary duty includes a duty of loyalty to the homeowners association, which means that board members should never use their position to take advantage of the association. They should never make decisions for the association that benefit themselves at the expense of the association and its members.

Fiduciary duty also includes the duty to exercise ordinary care. This means board members must perform their duties in good faith and in a manner they believe to be in the best interest of the association, with such care as an ordinary prudent person in a similar position under similar circumstances would use.

In short, boards must act in the best interests of the association and act reasonably.

Board members fulfill their fiduciary duty by:

  •  Developing and using a formal budgeting process.
  •  Establishing and adhering to budgetary guidelines.
  •  Making sure the budgeting process reflects the wishes of the association members.
  •  Promoting understanding and acceptance of the reserve accounts among the members.
  •  Collecting sufficient fees to adequately operate the association.
  •  Soliciting bids and negotiating appropriate contracts.
  •  Authorizing expenditures.





What Your Association Board Does for You

A community has a board to help the HOA run smoothly. The board is comprised of resident volunteers who accomplish a wide variety of tasks you may not be aware of; however, their work affects every single resident.

One of the most important things the board does is create and implement the community association rules. While some residents may not like being told what they can and can’t do, ultimately the board is looking out for the best interests of the entire community. By enforcing the rules, the board is doing its best to keep property value up and conflicts down. Of course, the board wants to make sure the rules are beneficial for the majority—and hopefully all—residents. You are welcome to raise concerns about the fairness of rules at open board meetings.

Another notable responsibility of the board is to collect HOA fees from homeowners. Collecting this money is important for the stability of the homeowner association, because the fees, also called assessments, pay for the common amenities enjoyed by all residents. Assessments also help to replenish the reserve funds, which pay for any major repairs the association may need. The board is entirely responsible for the association’s finances, and collecting assessments is how it ensures that the association remains stable.

Finally, the board acts on behalf of the association by hiring attorneys, contractors and managers, like Southern Community Services, who help better the association. Board members also help develop and carry out many of the projects that will improve the HOA.

While it’s a substantial job, board members are happy to serve the residents and make the community a great place to call home. So why not learn more about what these volunteers do by talking to your board members, attending an open board meeting or even running for a seat on the board during our next election? The more people being active members of the community, the stronger it will be.



Fiduciary Know-How

The mere mention of fiduciary responsibility may scare some homeowners away from community association board service, but it shouldn’t. Managing the association’s finances is one of the board’s most important duties, but it doesn’t have to be complicated.

Fiduciary duty means protecting assets, budgeting responsibly, planning for the future, investing wisely and observing laws and regulations that affect association resources. Fiduciary duty requires the board to ensure that the homeowners association fees you pay are used properly to maintain the community and cover insurance, contracted services, utilities and other needed materials and services. The board is obligated to make ethical and legal decisions that best serve the entire association.

Board members fulfill their fiduciary duty by:

  • Establishing and adhering to a budget. A good budget is developed through an objective, step-by-step process based on historical data and careful research.
  • Reviewing financial statements regularly. The statements include a balance sheet, budget comparison report, income report, check registry and more.
  • Putting policies in place to reduce the risks of fraudulent activity. These include, for example, requiring two signatures on checks, not signing blank checks and sending payment only when an invoice is received.
  • Hiring an accounting firm to perform an annual audit. An auditor will look for missing check numbers, missing bank statements, duplicate payments, payments to unfamiliar vendors or suspicious journal entries.
  • Adopting an investment policy. A good investment policy protects principal, liquidity and yield.
  • Conducting a reserve study and updating it regularly. A reserve study identifies the expected remaining life of each major component, estimates the cost to replace it and the amount that should be saved on a monthly or annual basis.