The Essential Obligations of Self-Managed Small HOAs
Running a small, self-managed HOA offers flexibility, cost savings, and a strong sense of community. But with that freedom comes real responsibility.
Here are some of the core responsibilities for small HOAs.
HOAs must maintain a reliable budget, collect dues, pay bills, and track all spending. Annual reports, tax filings, and 1099s are also required. You’ll need a reserve fund for major repairs, not just enough for daily expenses.
Boards must file annual reports, and follow housing, tax, and meeting laws. Even basic actions, like hosting elections or notifying homeowners, have legal requirements. Ignoring these can invalidate decisions or lead to personal liability.
At a minimum, your HOA should carry:
- General liability (for common areas)
- Directors and Officers (D&O) coverage
See the chart below
Directors and officers liability insurance for HOA boards is projected to grow at a rate of 8-11% each year. Boards are becoming more aware of the need for coverage.
Even simple spaces like signage, lighting, or a small lawn require regular care. Deferred maintenance can lead to safety issues or insurance claims. Create a checklist, do seasonal walkthroughs, and fix problems as soon as they come up.
Another core obligation is vendor management.
Most small HOAs rely on vendors. The board is responsible for hiring, checking insurance, reviewing contracts, and tracking payments. Keep all vendor info, contacts, rates, terms, organized and accessible.
In addition, keep copies of everything in an organized digital folder like google drive.
- Meeting notes
- Tax returns
- Insurance policies
- Signed agreements
How about board elections?
Even with low participation, formal elections are required. Notify owners, collect nominations, hold a vote, and document results. Skipping this step can create legal problems down the road.
Probably the most important duty is to collect dues.
This occurs monthly and gives the HOA the ability to do what’s needed. Make sure to reconcile your accounts using quickbooks or any other accounting software.
If you're a board member, we're here to help.
Self-managed operations can be complicated, but if you’re equipped with a good understanding, it doesn’t have to be all that stressful.
Key Definitions that might help:
Self-Managed HOA: An HOA run by the board and volunteers, without hiring a management company.
Budget: A financial plan showing how much money will be collected and spent.
Dues: Monthly or annual fees paid by homeowners to fund the HOA’s operations.
Reserve Fund: Savings set aside for large, future repairs (e.g., roofs, pavement).
Annual Report: A required filing that updates the state on the HOA’s legal and operational status.
1099: A tax form sent to vendors or contractors paid over a certain amount during the year.
General Liability Insurance: Coverage that protects the HOA from accidents or property damage in common areas.
D&O Insurance: Protects board members from personal liability related to their decisions or actions.
Deferred Maintenance: Repairs or upkeep that have been delayed, which can lead to bigger issues.
Vendor: A service provider hired to do work for the HOA (e.g., landscapers, electricians).
Contract: A written agreement outlining the work a vendor will perform and how they’ll be paid.
Meeting Minutes: Notes that document what was discussed and decided at board meetings.
Board Elections: The formal process of selecting who will serve on the HOA board.
Reconciliation: Matching the HOA’s financial records with bank statements to ensure accuracy.
