Transitioning from one set of board members to another can be tricky, but doing the work to ensure it would benefit the community. With a proper HOA board transition, the association’s operation can continue like clockwork, avoiding disruptions and any confusion if done otherwise.
What is an HOA Board Transition?
The board transition is the process when the authority and responsibility of an HOA board, along with all the needed records and documents, are passed on to the next set of directors. This usually happens following an election of HOA board members, but it may also happen when a resignation takes place or when the board is recalled.
This transition goes beyond giving the files the new set of directors would need. It involves the outgoing board members helping new leaders understand the community’s overall situations.
Why HOA Board Turnover can Become Chaotic
There are times when the HOA board turnover becomes difficult. This usuall happesn when an association only sees an election as the end of one board instead of the start of a transition.
Here are a couple of scenarios when a turnover can become chaotic:
Missing Records
One of the biggest and most common issues during board transitions is bad recordkeeping. The outgoing HOA board can either be disorganized or failed to record necessary information.
If there are no reliable records, any board member won’t have the necessary information needed to make proper decisions. In turn, this can delay decisions in many different aspects of HOA operations, including the budget, ARC request, vendor contrats, and rules enforcement.
Authority is Unclear
The new HOA board needs to know who has the authority to act on HOA related maters. If this remains unclear, the new board wouldn’t know who would be resposible for what. It may also accidentally retain the old board’s access to certain functions, if this isn’t cleared immediately.
To avoid any confusion, check who will be designated as the authority to sign bank documents or vendor contracts. The board can also review if they are allowed to approve or reset digital permissions.
Once that’s decided, the access should be given to the new set of board members. Consequently, that access will need to be cut for outgoing directors.
How a New HOA Board Should Start
Like any other transition, your new board should start with a structured plan. Its first few weeks need to prioritize continuity with the outgoing group as they need to understand the ropes, in general.
Here are some tips on how new board members can start:
Hold an Organizational Meeting
Soon after new board members are elected, they will need to hold an organizational meeting where they can define roles. The newly elected directors can choose officers and who gets which role. They can also confirm future meeting schedules and assign tasks related to the board transition.
Review Governing Documents
All incoming directors should get to know the governing documents. As such, they need to review it after becoming elected. This would immediately let them know what their responsibilities are as well as the policies they would need to enforce. It would also let them be well-informed regarding decisions they may want to make once the transition happens.
Confirm Financial Control
One of the biggest factors that need to be handled well in an HOA board transition is financial control. Outgoing HOA board members need to provide all the financial reports and records they may have, as well as information on all of the HOAs accounts.
Following that turnover, the new HOA board needs to review the budget and get to know the financial situation of the HOA. Apart from that, it would also need to update authorized bank signers and online banking access to protect the association’s funds.
Identify Immediate Deadlines
The new HOA board need to set their priorities straight and identify any looming guidelines. They should check which decisions are due in the next 30 to 90 days and prioritize those with closer deadlines.
HOA Board Turnover Checklist
To ensure a smooth transition, it would help both outgoing and incoming board members to have a turnover checklist. Having one prevents any missed document or accounts being given to the new board members.
Here’s what your checklist should include the following:
Governing and Corporate Records
During the transition, the new board should provide the following governing and corporate records:
- Declaration
- HOA Bylaws
- Rules
- Approved Policies
- Board Resolutions
- Meeting Rinutes
- Election Records
- Committee Records
- Corporate Filings
These official records should be stored in a location that is directly overseen by the association. They should not be located or dependent to an officers personal email or private storage.
Financial and Assessment Records
Your HOA’s financial document handoff should cover these items:
- Current Budget
- Recent Financial Statements
- Balance Sheet
- Income and Expense Report
- Reserve Study
- Tax Filings
- Delinquency Reports
- Assessment schedule
If the association has a manager, the board should ask for a financial orientation.
Vendor and Insurance Details
The board should review each active contract one by one. All the contracts should show the service being provided, the scope of the work, its price and terms, and its renewal date. It should also have insurance information and main contact details.
During an HOA board transitions, vendors should also be notified about contract changes.
Access Details
A complete HOA board member transition should also involve a change in both digital and physical access. This means digital access should be changed, which may involve changing passwords and drive permissions. Physical access also needs to be moved, which means gate cards and mailbox keys need to be given to the new board.
Legal and Confidential Files
The new board should receive information about open disputes and ongoing legal correspondence. They should also be provided files related to rules enforcement and volations, architectural applications, collections, and other sensitive owner issues.
In cases of pending legal matters, the incoming board shoud schedule a meeting with the HOA attorney. During that meeting, they should discuss the issue at hand so that the new board members stay well informed.
A Hitch-Free Transition
Your HOA board transition does not have to become chaotic. The key to a smooth change in leadershop lies with the proper preparation well before new directors are elected. This way, the association can continue operations without losing any momentum.
CWD Group offers HOA management services to community associations in Oregon and Washington. Call us today at 503-488-2008 or contact us online!
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