When running a HOA, you often have to make a lot of decisions about how to upkeep the neighborhood - without building the kind of resentment that gives HOAs a bad name.
Overall landscaping of the neighborhood is something everyone notices. HOA landscape guidelines should balance the needs of the community between aesthetics and harmony. Landscaping common areas should be done in a professional way which looks good and supports your goals - goals such as guiding foot traffic away from private areas, allowing the landscape to flow and providing space for, for example, dog walking areas and children's playgrounds. Landscaping also has to fit with local conditions and laws - for example, it is illegal in California to ban the use of drought-resistant landscaping.
Some HOA boards try to make these decisions while relying on the expertise they already have on hand - that is to say, on who happens to be on the board. A better way is to consult outside experts on these matters. There are several experts you should consider talking to:
1. A lawyer familiar with state law on HOA regulations - things like the landscaping issue mentioned above. In Texas, HOAs and POAs cannot take action to resolve problems without sending a notice first - this includes actions other than suing for anything other than paying dues, charging for property damage or fining. As state law can be complicated, HOAs should always have a lawyer on retainer. The lawyer should also look over the contract homeowners sign and any changes that are made to it to make sure it is watertight and fair. He should also go over contracts with vendors.
2. An expert landscaper who can go over any guidelines issued to homeowners and make recommendations. Landscape guidelines should be neither non-existent nor excessively detailed. If you have a landscaper hired to handle common areas, then talk to them about guidelines, as they are aware of where you are trying to go. Make sure that you hire somebody who knows local conditions and how to create landscaping that is less water- and labor-intensive than what is often "fashionable." This will save you money on maintenance of common areas, that can then be spent on more important things.
3. An accountant. You have funds, you spend money, and...you have to file taxes. A lot of people don't know this - including some people who end up on HOA boards. Although you will have an elected treasurer, it's advisable to hire a CPA to advise on the finances and help with tax preparation. A few HOAs may qualify as tax-exempt, but most don't. The good news is that most HOAs make very little profit - and your accountant or if you have a professional HOA management company can advise you what to do with excess funds. Asking for a tax extension is a good idea so that you don't have a problem getting your taxes done on time, and as your association likely owes little or no money, the interest is not an issue. There is a special tax section for HOAs - Section 528 - which has a higher rate but doesn't count assessments as income, but some associations are better off filing as a company. You need a good accountant to make this decision. Before making major changes, you should consult your accountant on the best way to handle the funds without increasing your tax liability.
HOA boards should consult outside experts when needed - particularly when it comes to changing landscaping or landscape guidelines. For more information, contact GrandManors.
