What Happens To An HOA With No Board?

What happens to an HOA with no board? The HOA board plays a critical role in the continued success of an association. When board seats remain empty, the association would essentially stop functioning. This will leave the residents and the community in a dire situation.

The Importance of an HOA Board of Directors

Every homeowners association has a board of directors elected by the members. These board members are community volunteers, meaning they serve their HOA without compensation.

The HOA board is responsible for running the entire community. Specific duties can vary depending on state laws and the governing documents. However, they generally include the following:

• Ensuring the maintenance of common areas
• Preparing and monitoring the annual budget
• Collecting dues
• Preparing financial statements
• Maintaining and monitoring reserves
• Enforcing the rules
• Enacting policies
• Hiring and coordinating with vendors
• Securing proper insurance coverage
• Communicating with homeowners
• Ensuring compliance with federal and state laws as well as the HOA’s governing documents
• Assessing risks

What happens to an HOA with no board? Without an HOA board, these tasks would fall by the wayside.

What Happens to an HOA With No Board?

An HOA without board members is like a country without leaders. Without a HOA board, the association would cease to operate as designed. No one would make decisions, enter contracts, or transact business, and all of the duties listed above would be neglected.

It is a domino effect, too. Without board members to transact business, vendors would go unpaid, and services would halt. No one will collect dues from homeowners, leaving the association financially dry. Common areas would go into disrepair, rules would go unenforced, and homeowners would be left with no direction.

In the end, the entire community will suffer. Curb appeal will plummet, taking property values with it.

Can You Dissolve an HOA With No Board?

An HOA without a board will not automatically disband or dissolve. It remains a legal entity with very real obligations. The irony is that an HOA can only file for dissolution if it has an HOA board leading the charge.

The requirements for dissolving an HOA can vary from state to state. However, the HOA board generally must coordinate the disposal of the association’s assets. Furthermore, a vote of approval from the membership would be necessary.

A Nightmare for Homeowners

What happens when a homeowners association has no board? The result would not only be detrimental for the association itself but also for the homeowners living in it.

Homeowners will find themselves trapped in a community they can’t control. It is also difficult to leave the association because homeowners need a functioning HOA before selling their homes. The sale process usually requires the HOA to provide specific disclosure documents to mortgage lenders and potential buyers.

Homeowners will become stuck until the board positions get filled or the court appoints a receiver.

Can the HOA Management Company Step In?

An HOA without a board likely won’t retain its management company’s services for much longer. For an HOA management company to continue its services, the association will require payment. Without an HOA board, there would be no one to approve invoices, sign checks, and coordinate payments.

An HOA management company can help prevent the board from emptying without replacements. For instance, if no one is interested in running for vacant positions, current board members may be able to stay on. The HOA manager can check the association’s state laws and bylaws to see if that is possible.

Additionally, an HOA management company can help attract interest in board membership. The HOA manager can set up initiatives and programs to entice owners into joining the board. They can also plan training sessions and educational seminars to help equip new board members.

Understanding HOA Receivership

What happens if no one runs for the HOA board? The association will likely go into receivership. Any homeowner or creditor can take legal action against the HOA. Once it is clear that no one on the board will serve as the association’s representative, the court will appoint a receiver.

A receiver acts as the association’s representative and conducts business on its behalf. They essentially function as the HOA board in one. While receivership may seem like a good idea initially, especially to an HOA with no interested homeowners, it has many downsides.

Costly

Receivers don’t come free. They charge for their services, and their fees are often expensive. Some receivers even charge upwards of $200 per hour. Homeowners will have to shoulder this cost through a dues increase or a sizable special assessment. In contrast, board members do the same work without compensation.

Unappealing to Buyers and Lenders

When an HOA has a receiver, it is less attractive to potential buyers and lenders. Receivership indicates that an HOA has uninterested homeowners or wasn’t managed very well. Buyers don’t want to join a poorly managed association, while lenders don’t want to approve home loans in a struggling community. If the HOA tries to take out a loan, lenders will likely deny the application or impose a high interest rate.

Bare Minimum

Receivers may manage the association’s affairs but are not always good for the community. This is because receivers tend to do the bare minimum to keep the association afloat. They don’t have the HOA’s best interests at heart, so they might change the rules and make decisions on a whim.

In comparison, board members are volunteer homeowners. They are stakeholders who have a vested interest in the association’s success, which drives them to make decisions that prioritize the association.

How to Avoid an HOA Without BOD Members

Since the alternative (receivership) is not ideal, an HOA should do its best to fill vacant board seats. To avoid the worst possible outcome, an HOA can follow a few tips.

Educate Residents

Educating residents on what it means to be a board member is important. Homeowners should know the board’s responsibilities and what the job entails specifically. They should also know what could happen if no one runs for the board.

Encourage Participation

Sometimes, it takes a little face-to-face time with residents to get them interested. Current board members should speak to residents and gauge their interest in joining the board. An excellent way to do this is to organize more social events so that residents become more involved in community affairs.

Form Committees

Forming committees can greatly help recruit more new board members. Residents who feel apprehensive about joining the board can start in low-commitment roles such as committees. This will give them a taste of what it’s like to serve the community before going all-in. Furthermore, committees can help the board manage the workload, making board membership more appealing.

Disseminate Election Information

Sometimes, residents don’t know that there is an upcoming election. The HOA should notify residents and seek candidates in advance to resolve this. Recruitment should start early, especially for communities struggling to drum up interest. Advanced preparation increases the chances of securing candidates and heightens voter turnout.

Hire an HOA Management Company

Finally, an HOA can hire a professional management company. A management company can significantly lighten the burden and workload of the HOA board. Many homeowners don’t want to join the board because they lack time or experience. An HOA management company addresses both issues at once.

What Happens If an HOA Has No Board? Answered!

An HOA without a board will stop functioning properly, leaving homeowners in the dust. Eventually, the association will have a receiver appointed to it, which is less than ideal. Now that it is clear what happens to an HOA with no board, HOAs should work toward consistently refilling its pool of potential candidates.

An HOA management company can make board positions more attractive to homeowners. Start looking for the best one in your area using our online directory!

RELATED ARTICLES:

• What Is A HOA Board Member Holdover?
• Is It Legal To Reinstate An HOA That Has Been Dormant For A While?
• How To Write An HOA Board Member Recruitment Letter And Recruiting Tips