Tips for Making a Smooth Transition from One HOA Board to Another

Passing on the titles and responsibilities of one HOA board to another requires that everyone work together to make the process as seamless as possible to ensure continued success of the community and to avoid any unnecessary mistakes.

When experienced board members are leaving to be replaced by less experienced ones, there should be very clearly defined expectations for the new, incoming board contributors. Creating a precise transition plan is imperative. If your governing documents already contain a well-defined transition plan, review it carefully and make any changes that may be relevant. If you don’t already have a transition plan in place, current board members should create one before the changeover occurs.

To help make your transition plan as comprehensive as possible so the HOA association can continue to operate, we’ve compiled a list of tips from the experts. Below are a four things that must be included by the HOA board in an effective and detailed transition plan:

Budget and Financial Statements:

The current budget should be contained within the transition plan for new HOA board members to familiarize themselves with. Any major variances between the budget that is provided and actual expenses should be outlined so the new board can make the necessary adjustments that may be required for the next year’s budget.

A balance sheet should also be included to show income statements, bank statements, account balances, and the general ledger. Each of the accounts contained within the budget should be included in the financial portion of your transition plan.

Financial Responsibilities:

Individuals elected to the HOA board are most often volunteers, which means not all board members may have experience or knowledge of their own fiduciary responsibilities as it pertains to the community association. New members should be instructed as to their personal financial accountability and liability. Information about the directors of the association and updated insurance policy information should be included. The new board will rely on this information to take necessary action for their decisions over the course of their tenure.

Reserve Study:

The reserve study is a financial analysis which includes detailed information regarding reserve funds that have accrued, in addition to capital expenditures that may be anticipated in the near and distant future.

Outlining the needs within the community, the reserve study will identify how funds are to be allocated to necessary expenses. This portion of the transition plan should be no more than three years old, as adjustments need to be made periodically – specifically addressing the needs within the association.

Bylaws and Covenants:

Last, but certainly not least, board members must be familiar with the association’s rules and regulations. These documents being included in the transition plan will provide new board members with the information they need to make decisions in the best interest of their community. Many mistakes can be avoided by being familiar with the covenants and bylaws that govern the operation of an HOA community board.

Another component to consider is to include information regarding local management company resources and educational tools for the new board members to refer to during their transition. In addition, it is helpful to provide contact information for previous board members; this will enable new members to learn their roles and have access to individuals that may be willing to answer questions or provide feedback for concerns they may encounter.

We always recommend board training, as it is most important to get new board members up to speed quickly. Just remember, you’re not alone! We at Boardline Academy are here to help answer any questions that you may have and help you make the transition ideal.   

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