Monthly archive for October 2026

Most people join an HOA board to help their neighbors, not to take on legal risk. Then the first tough decision arrives: a fine an owner disputes, a vendor contract that goes sideways, a tree limb that falls on a car in the common area. Sooner or later, almost every volunteer director asks the same question: can I be sued personally for something the board decides?

The short answer in Texas is that directors who act in good faith, with ordinary care and in the association’s best interest are well protected, through state law, the association’s governing documents and its insurance. Those protections have limits, though, and most of the board members who end up exposed got there through a process mistake rather than bad intent. This guide explains how HOA board member liability works in Texas, where the protections come from, where they stop, and the habits that keep a board safely inside them. It is written for volunteer directors of single-family HOAs, townhome communities and master-planned communities across greater Houston, and it supports our broader HOA board resources library for Texas board members.

This article is general information, not legal advice. Your declaration, bylaws, insurance policies and the association’s attorney determine how these rules apply to your community.

Can HOA board members be held personally liable in Texas?

Anyone can be named in a lawsuit, so the practical question is whether a claim against a director personally is likely to succeed. For most routine board work, it is not. Claims usually target the association itself, because the association is the party that signs contracts, owns the common area, collects assessments and enforces the deed restrictions.

Personal exposure tends to arise in a narrow set of situations:

• Self-dealing: a director votes to hire a company they own or profit from without disclosing it.
• Acting outside authority: a single director signs a contract, promises a homeowner something, or directs a vendor without a board vote.
• Intentional or reckless conduct: harassment of an owner, defamatory statements, or knowingly ignoring a safety hazard.
• Ignoring the governing documents or the Property Code: skipping required notices, hearings or open-meeting rules before taking action against an owner.
• Mishandling money: commingling association funds, approving payments without documentation, or failing to oversee the people who handle cash.

Notice the pattern. Each one is a departure from process or loyalty, not an honest judgment call that later turned out to be wrong. That distinction is the foundation of every protection that follows. Our article on how professional management keeps your HOA compliant with changing laws covers the compliance side of the same picture.

What standard does Texas law hold HOA directors to?

Most Texas HOAs are organized as nonprofit corporations, which places their directors under Chapter 22 of the Texas Business Organizations Code. Section 22.221 requires a director to act in good faith, with ordinary care, and in a manner the director reasonably believes to be in the best interest of the corporation. The same section states that a director who acts in compliance with that standard is not liable to the corporation, a member, or another person for an action taken or not taken as a director. Section 22.235 gives officers (president, treasurer, secretary) a parallel protection for actions taken in their capacity as officers.

In plain terms, the law does not ask directors to be perfect. It asks them to be honest, attentive and loyal. A board that reads the reserve study, gets more than one bid, asks questions about the financial statements and votes in an open meeting is doing exactly what the standard requires, even if a decision later proves expensive. A board that rubber-stamps whatever is in front of it, or lets one director run the community, has a much harder time showing ordinary care.

Practical ordinary care looks like this: reading the board packet before the meeting, asking for professional advice on legal, engineering and insurance questions, recording the reasons for major decisions in the minutes, and following the budget and policies the board itself adopted. Our guide on how to prepare an HOA budget in Texas and our overview of how Texas boards use an HOA reserve study show what that diligence looks like for the two financial decisions that draw the most scrutiny.

Are volunteer HOA board members immune from lawsuits in Texas?

Texas adds a second layer of protection for unpaid directors. The Charitable Immunity and Liability Act, Chapter 84 of the Texas Civil Practice and Remedies Code, defines a charitable organization in Section 84.003 to include a homeowners association as defined by Section 528(c) of the Internal Revenue Code. A volunteer under the Act is someone who serves without compensation other than reimbursed expenses, and the definition expressly includes directors and officers.

Under Section 84.004(a), a volunteer of a charitable organization is immune from civil liability for an act or omission that results in damage or injury, as long as the volunteer was acting in the course and scope of their duties. That is a meaningful shield for the board member who approved the pool reopening or voted on a landscaping contract.

The immunity is not unlimited. Section 84.007(a) excludes acts that are intentional, wilfully negligent, or done with conscious indifference or reckless disregard for the safety of others. Section 84.004(d) also leaves a volunteer liable for harm caused by operating a motor vehicle or other motor-driven equipment, to the extent of required or available insurance. Two practical points follow. First, whether a particular association meets the 528(c) definition is a tax question the board should confirm with its CPA or attorney. Second, the immunity protects only true volunteers: a director who is paid for board service may fall outside it.

What do our bylaws say about indemnification, and why does it matter?

Statutory immunity keeps a volunteer from losing a lawsuit. It does not pay the lawyer who gets the case dismissed. That is the job of indemnification and insurance.

Chapter 8 of the Business Organizations Code governs indemnification for Texas entities. Section 8.051 requires the organization to indemnify a governing person for reasonable expenses when that person is wholly successful, on the merits or otherwise, in defending a proceeding brought against them because of their position. Beyond that mandatory floor, the chapter allows broader permissive indemnification, and most association bylaws or certificates of formation spell out how far the association will go.

Every director should read three things before their first vote:

• The indemnification article in the bylaws or certificate of formation: who is covered, for what kinds of claims, and whether defense costs are advanced while a case is pending.
• The insurance article in the declaration: which policies the association must carry and at what limits.
• The conflict-of-interest provisions: what a director must disclose and when they must step out of a vote.

If those provisions are missing, vague or out of date, that is a governing document amendment worth putting on the board’s agenda. Our explainer on how deed restrictions and governing documents work in Texas subdivisions walks through how those documents fit together.

What insurance protects HOA board members?

Section 8.151 of the Business Organizations Code allows an organization to purchase and maintain insurance on behalf of its current and former directors, officers and agents. In an HOA, three policies do most of the work, and boards often confuse them:

Coverage terms vary widely between carriers, so the right answers come from the association’s insurance agent, not a blog post. What matters for liability is that the board reviews the policies every year, ideally while building the budget, and records that review in the minutes. Vendor contracts deserve the same attention: requiring current certificates of insurance from landscapers, pool operators and contractors keeps their accidents from becoming the association’s claims, a point our article on how HOA management companies secure better contractor rates touches on as well.

How do open meetings and good minutes reduce board liability?

Process is a director’s best defense, and in Texas the core process rules for property owners’ associations are in Chapter 209 of the Property Code. Section 209.0051 requires regular and special board meetings to be open to owners, with a closed executive session allowed only for specific topics such as personnel, pending or threatened litigation, contract negotiations, enforcement actions, confidential communications with the association’s attorney and matters involving an individual owner’s privacy. Any decision made in executive session must be summarized orally and placed in the minutes.

The same section allows the board to act without a meeting, including by email or phone, for routine matters, as long as every director has a chance to weigh in and the action is summarized at the next meeting. It also lists decisions that cannot be made that way and require an open meeting with prior notice to owners. Those include fines and most enforcement actions, increasing assessments or levying special assessments, approving the annual budget, adopting or amending dedicatory instruments, borrowing money, buying or selling real property, filling a board vacancy, and electing officers.

That list is where many liability problems start. A fine approved by email chain or a budget adopted in a hallway conversation is vulnerable no matter how sensible the decision was. Two related habits round out the picture: confirming a quorum before any vote, which our guide on quorum requirements for HOA meetings covers in detail, and following the statutory notice steps before collecting from an owner, which our board guide to handling delinquent HOA dues in Texas lays out.

Which board habits keep directors protected?

The protections above all assume a board that behaves like a careful fiduciary. These habits make that easy to show if anyone ever questions a decision:

1. Disclose conflicts in writing and abstain. If a director, relative or employer has a stake in a vendor, say so before the discussion and step out of the vote. Record it in the minutes.
2. Act only as a board. Individual directors have no authority to bind the association. Route requests through the full board or the manager under an approved policy.
3. Write down the reasons. Minutes do not need to be transcripts, but major votes should note the information the board relied on: bids, the reserve study, attorney advice.
4. Get professional advice on professional questions. Engineering, legal and insurance questions belong with engineers, attorneys and agents. Relying in good faith on qualified advice is strong evidence of ordinary care.
5. Use two signatures and monthly reconciliation. No single person should be able to move association money alone. Our article on how management companies protect HOA assets and prevent fraud explains the controls.
6. Enforce rules consistently. Selective enforcement is one of the most common sources of owner claims. A written enforcement policy applied the same way to every lot protects the board as much as the owners.
7. Treat safety reports as urgent. A broken gate, a pool chemical issue or an eroding pond bank is exactly the kind of known hazard where “conscious indifference” arguments arise. Our guide on who maintains retention and detention ponds in Texas communities is a good example of an asset boards should inspect on a schedule.
8. Keep owner communications professional. Board members should not argue with owners on social media or in neighborhood group chats. Factual, written responses from the manager or the board as a whole are safer.

Condominium boards follow a different chapter of the Property Code for many of these rules, so condo directors should also read our guide on how condo association management differs from an HOA in Texas.

Does hiring an HOA management company reduce board liability?

A management company does not take over the board’s legal duties. Directors remain the decision makers and the fiduciaries. What a good manager does is make careful process the default: meeting notices go out on time, agendas reflect what the Property Code requires, minutes are drafted consistently, invoices come with documentation, insurance renewals land on the board’s calendar, and enforcement letters follow the same steps every time. That is the practical meaning of how management companies keep boards on the right side of the law.

Professional management also takes the most emotionally charged work off volunteers’ plates, which is one reason it helps with board member burnout and volunteer fatigue. Sterling ASI supports boards with compliance guidance and board training, finance and accounting, and communications handled by a real person, along with 24-hour emergency assistance for the urgent issues that create the most risk. You can see the full scope on our HOA and community association management services page, or find your area: HOA management in Houston, Katy, Kingwood, Sugar Land, The Woodlands and Cypress.

If your community is still under developer control, the rules shift again once owners take over the board; our guide to what a declarant is and how control passes in Texas HOAs explains the handoff. And if your current manager is not giving the board this kind of support, our Texas checklist for switching HOA management companies shows how to change without a gap in records or insurance.

HOA board member liability: frequently asked questions

Every association has a few owners who fall behind. A job loss, a medical bill, a missed autopay after a bank change: most late accounts start with something ordinary, and most of them can be brought current with a reminder and a reasonable plan. The trouble starts when a board has no written process, so each late account gets handled differently depending on who is on the board that year and how they feel about the owner. That is how communities end up with budget shortfalls on one side and angry neighbors, or worse, a legal challenge, on the other.

This guide walks a Texas HOA board through a fair, consistent and legally sound way to handle delinquent HOA dues: what the Texas Property Code requires before collection costs can be charged, how payment plans work, the order payments must be applied in, and where foreclosure fits (and where it does not). It is written for volunteer directors of single-family HOAs, townhome communities and master-planned communities in greater Houston. Condo boards should also read our guide on how condo association management differs from an HOA in Texas, because condominiums operate under a different chapter of the code.

This article is general information, not legal advice. Your declaration, bylaws and the association’s attorney set the exact rules for your community.

Why do delinquent HOA dues matter so much to the whole community?

Assessments are the association’s only real source of income. When a handful of owners stop paying, the shortfall does not disappear: it is covered by everyone else, either through a higher assessment next year, a thinner reserve contribution, or projects that get pushed back. A board that adopts its budget in the fall, as our guide on how to prepare an HOA budget in Texas explains, usually builds in a bad-debt allowance. A slow or inconsistent collection process is what turns that allowance into a real hole.

Delinquencies also touch the reserve fund. If collections run behind for a year or two, boards are tempted to skip reserve transfers to keep the lights on, and the community falls behind the funding plan in its HOA reserve study. That is how a manageable delinquency problem becomes a special assessment later.

Finally, unpaid balances surface when a home sells. The resale certificate and payoff figures that title companies request will show the open balance, which is why our guide to HOA estoppel letters and the Texas resale certificate stresses accurate, current ledgers.

What should a Texas HOA collection policy include?

The single best protection a board has is a written collection policy, adopted at an open board meeting and applied the same way to every owner. A good policy answers these questions in plain language:

• Due dates and grace period: when assessments are due and when an account is considered late, as set by the declaration.
• Late charges and interest: only what the governing documents authorize, stated as a fixed amount or rate.
• The reminder sequence: how many courtesy notices go out, by what method, and at what intervals.
• Payment plan guidelines: the terms an owner can request and who approves them.
• The turnover point: when an account goes to a collection agent or the association’s attorney, and the notice that must come first.
• Board involvement: which steps the manager handles under the policy and which require a board vote.
• Hardship requests: how an owner asks for a plan or a waiver of late fees, and who reviews it.

Writing the policy down protects directors as much as owners. When the process is written, approved and followed, no one can credibly claim the board singled out a neighbor, and new directors inherit a system instead of a pile of judgment calls. Our article on how management companies keep boards on the right side of the law covers why consistent, documented decisions are the foundation of compliance.

What does the Texas Property Code require before an HOA uses a collection agent?

Texas sets clear guardrails in Chapter 209 of the Property Code. The most important one for collections is Section 209.0064. Before an association can hold an owner responsible for the fees of a third-party collection agent, it must send a written notice by certified mail that:

1. Lists each delinquent amount and the total needed to bring the account current;
2. Describes the owner’s options for avoiding turnover to a collection agent, including whether a payment plan is available; and
3. Gives the owner at least 45 days to cure the delinquency before further collection action is taken.

The same section adds protections boards should know. An agreement with a collection agent cannot stop the owner from talking to the board or the managing agent about the balance. If the association’s payment to the agent depends on what is recovered, or the agreement does not require the association to pay all of the agent’s fees, the owner is not liable for those fees. And the association cannot sell or transfer its accounts receivable, except as collateral for a loan.

In practice, this means the certified 45-day letter is the hinge of the whole process. Courtesy reminders come before it; agent or attorney involvement comes after it. Skipping or rushing that letter is one of the most common ways an association ends up unable to recover its collection costs.

Does a Texas HOA have to offer a payment plan?

For most associations, yes. Section 209.0062 requires an association with more than 14 lots to adopt reasonable guidelines for an alternative payment schedule, so an owner can pay a delinquent balance in installments without accruing additional monetary penalties during the plan. The association may still charge reasonable costs of administering the plan and interest.

The key terms the statute sets:

• Minimum term: a plan must be at least three months long.
• Maximum term: the association is not required to allow a plan that runs more than 18 months from the owner’s request.
• When a plan can be refused: the association does not have to offer a plan to an owner who defaulted on a previous plan within the last two years, after the 209.0064 cure period has expired, or more than once in any 12-month period.
• Recording: the guidelines must be filed in the real property records of each county where the community is located. Failing to file does not take away an owner’s right to request a plan.

Boards sometimes see payment plans as a concession. In practice they are usually the fastest route to a current account. An owner who can see a realistic monthly number tends to engage; an owner who receives only a lump-sum demand tends to stop opening the mail.

In what order must an HOA apply a homeowner’s payments?

This is the rule that catches the most boards off guard. Section 209.0063 sets a priority order for applying payments received from an owner:

There is one exception: if the owner is in default under a payment plan when the payment arrives, the association does not have to follow this order, although it still cannot give a fine priority over any other amount owed. The practical takeaway is that accounting software and ledgers must be set up to apply payments in the statutory order automatically. Applying a payment to late fees first, as many generic billing systems do, can put an association out of compliance without anyone noticing.

Can a Texas HOA foreclose for unpaid dues?

Foreclosure is the step owners fear most, and Texas limits it carefully. Under Section 209.009, an association may not foreclose its assessment lien if the debt consists only of fines, attorney’s fees tied solely to those fines, or certain amounts added to an account under the records and audit sections of the chapter. In other words, a fine for an unapproved fence can never be the basis for a foreclosure on its own.

Where unpaid assessments are involved, Section 209.0091 adds another step before the association can file for an expedited court order or a judicial foreclosure: it must notify any other lienholder of record whose deed of trust is subordinate to the association’s lien, by certified mail, and give that lienholder until the 61st day after the notice is mailed to cure the delinquency. In practice, the owner’s mortgage company often pays the balance at this stage to protect its own position.

Most boards never get this far, and they should not want to. Foreclosure is slow, expensive, emotionally hard on a community and a poor fit for small balances. A consistent policy, early contact and a real payment plan resolve the large majority of accounts long before an attorney is needed. When an account does reach that point, the decision belongs to the board, made with the association’s attorney.

What does a fair HOA collection timeline look like?

Every community’s documents differ, so treat the schedule below as an illustration, not a template. Your declaration sets the due date and charges, and the statutory steps cannot be shortened.

The tone of each notice matters as much as its timing. Owners respond better to a clear, respectful letter that leads with options than to legal language that leads with threats. Our article on how management companies defuse homeowner disputes explains why early, human contact prevents most escalations.

How can a board keep collections consistent without making it personal?

Collections are one of the hardest jobs a volunteer director can take on, because the late owner is often a neighbor. A few habits keep the process fair and keep relationships intact:

• Let the policy decide. Directors approve exceptions in an executive session where appropriate and record the outcome, but routine notices follow the written schedule automatically.
• Review an aging report monthly. A simple 30, 60, 90 and 90-plus day report shows whether the problem is growing, without anyone discussing a neighbor’s finances at the pool.
• Keep the ledger owner-friendly. Owners who can see their balance, payment history and plan status online dispute far less. Our guide on what to look for in modern HOA management software covers the features that help.
• Protect the money. Separate operating and reserve accounts, dual controls on disbursements and regular reconciliation matter as much on the income side as on payables. See how management companies protect HOA assets and prevent fraud.
• Know the tax angle owners ask about. Owners on a plan sometimes ask whether their dues are deductible; our guide on whether HOA fees are tax deductible in Texas answers that question so the board does not have to.

When does it make sense to hand collections to a management company?

If your board is tracking late accounts in a spreadsheet, drafting letters from scratch, or debating each account at every meeting, it is probably time. A professional manager runs the reminder schedule, sends the statutory notices on time, applies payments in the correct order, administers payment plans and reports the aging to the board every month, so directors make policy decisions instead of chasing neighbors.

Sterling ASI’s finance and accounting team handles assessment collections and payables for associations across greater Houston, and calls are answered by a real person, not voicemail, which matters when an owner is ready to set up a plan. Collections are one part of our full HOA and community association management services, and our overview of what a full-service HOA management contract should include shows how collections fit with budgeting, compliance and communications.

We serve boards in Houston, Katy, Kingwood, Sugar Land, The Woodlands and Cypress. If your current arrangement is not keeping delinquencies under control, our Texas checklist for switching HOA management companies shows how to make the change cleanly, including the handoff of owner ledgers and open payment plans.

Delinquent HOA dues: frequently asked questions

For most Houston-area associations, fall is budget season. Boards whose fiscal year follows the calendar year spend October and November turning this year’s numbers into next year’s plan, so the budget can be adopted and owners can be told about their assessment before January statements go out. The HOA budget is the single document homeowners read most closely, and it sets almost everything else the board does: what dues will be, how much goes into reserves, which vendors get renewed and how much cushion the community has when a storm or a pipe break hits.

This guide walks a Texas HOA board through the process step by step, from pulling actuals to the open-meeting vote, with a worked example and the Texas Property Code rules that apply along the way. It is written for volunteer directors in single-family HOAs, townhome communities and master-planned communities. Condo boards should also read our guide on how condo association management differs from an HOA in Texas, because condominiums run on a different chapter of the code.

What does an HOA budget actually include?

A sound association budget has two halves that work together: an operating budget for the costs of running the community this year, and a reserve contribution for the large, predictable repairs that come due over the next 20 to 30 years.

Typical operating line items for a Houston-area community include:

• Grounds and landscaping: mowing, seasonal color, irrigation repair, tree trimming and entry monument upkeep.
• Common-area utilities: water for irrigation and amenities, electricity for street lights, gates and the pool.
• Amenities: pool management and chemicals, clubhouse cleaning, playground inspection.
• Drainage: mowing, aeration and erosion repair for detention ponds. Our guide to who maintains retention and detention ponds in Texas communities explains why this line often grows over time.
• Insurance premiums: general liability, directors and officers (D&O), property coverage on common elements and fidelity or crime coverage.
• Professional services: the management fee, legal, accounting, the annual audit or financial review, and tax preparation.
• Administration: postage and printing, bank fees, the website and owner communications.
• Contingency and bad debt: a realistic allowance for unpaid assessments and a modest cushion for the unexpected.

On the income side, most of the revenue comes from regular assessments. Smaller sources include late fees and collection recoveries, interest on reserve accounts, amenity rentals and transfer or resale-related fees where the governing documents allow them.

When should a Texas board start the budget process?

Earlier than most boards think. For a calendar fiscal year, a workable schedule looks like this:

If your fiscal year starts on another date, shift the whole calendar. The key is leaving enough time between adoption and the first due date for owners to absorb any change.

How do you build next year’s HOA budget, step by step?

1. Start with actuals, not last year’s budget

Copying last year’s budget and adding a percentage is the most common shortcut, and it carries every old mistake forward. Instead, annualize nine or ten months of actual spending, then compare each line with what was budgeted. A line that ran 20 percent over this year will not fix itself next year.

2. Check every vendor contract

List each contract’s term, renewal date and price escalator. Landscaping, pool, janitorial and patrol contracts are usually the largest operating lines, so they deserve competitive bids when they come up. Experienced managers also know what comparable communities pay, which is part of how HOA management companies secure better contractor rates.

3. Get insurance numbers early

On the Gulf Coast, property premiums and named-storm deductibles can move more than any other line. Ask for renewal indications well before the workshop so the board is not guessing, and confirm that D&O coverage still fits the community’s size and activities.

4. Update utilities and recurring services

Check current water and electricity rates for common areas, plus any planned changes to irrigation or lighting. Small per-unit increases add up across a full year.

5. Set the reserve contribution from a reserve study

The reserve line should come from a current study of the community’s major components, their remaining useful life and their replacement cost, not from whatever is left over. Our guide to how Texas boards use an HOA reserve study explains how to read a funding plan and update it between full studies.

6. Budget realistically for delinquencies

If 2 percent of assessments went uncollected this year, assume something similar next year. A bad-debt allowance keeps the operating account from coming up short in the fourth quarter.

7. Read the governing documents before setting the number

Your declaration and bylaws may cap how much the board can raise assessments in a year without an owner vote, set the fiscal year, or require a specific method for allocating assessments among lots. Those rules control, so confirm them before the workshop.

How is the annual assessment calculated? A worked example

Here is the basic math, using a hypothetical 400-home community. The figures are illustrative only, not a quote or a typical cost:

• Operating expenses: $520,000
• Reserve contribution: $80,000
• Total spending plan: $600,000
• Minus non-assessment income (interest, rentals, fees): $12,000
• Needed from assessments: $588,000
• Adjusted for a 2 percent bad-debt allowance: $588,000 divided by 0.98 = $600,000
• Annual assessment per home: $600,000 divided by 400 = $1,500 per year, or $125 per month

The same math shows a board exactly what a decision costs each household. In this example, every $4,000 added to the budget adds $10 per home per year. That kind of translation makes the workshop conversation far more productive than debating totals.

What does Texas law require when the board adopts the budget?

For HOAs governed by Chapter 209 of the Texas Property Code, a few rules shape the adoption process:

• The vote happens in an open meeting. Section 209.0051(h) says the board may not approve an annual budget or an amendment to an annual budget, increase assessments or levy a special assessment except in an open meeting for which prior notice was given to owners.
• Notice timing. Under Section 209.0051(e), notice can be mailed to each owner at least 10 and no more than 60 days before the meeting, or posted in a place members can see (or on the association or management company website) and emailed to owners who have registered an address, at least 144 hours before a regular meeting or 72 hours before a special meeting.
• A quorum must be present. Check your bylaws for the board quorum, and see our explanation of quorum requirements for HOA meetings.
• Records stay available. Section 209.005 requires associations with more than 14 lots to keep financial books and records for seven years, and an owner’s records request must generally be answered by the 10th business day after it is received.
• Payment plans affect cash flow. Section 209.0062 requires associations with more than 14 lots to adopt guidelines for alternative payment schedules, with a minimum term of three months. Factor that into the delinquency assumptions. Our guide to handling delinquent HOA dues in Texas covers the payment plan rules and the collection steps the budget should assume.

Rules vary by community, so read these alongside your own documents and your association attorney’s advice. A manager who tracks these requirements is part of how management companies keep boards on the right side of the law.

How should the board explain an assessment increase to homeowners?

Owners accept increases they understand. A short cover letter with the adopted budget should say what changed, why, and what the board did to hold costs down. Show the three or four lines that drove the change, such as insurance, landscaping or the reserve contribution, and connect the reserve line to specific future projects like pool resurfacing or fence replacement.

Give owners a chance to ask questions at the meeting or a town hall before the vote, and keep the answers consistent afterward. When homeowners ask whether their dues can be written off, point them to our guide on whether HOA fees are tax deductible in Texas. Buyers and title companies will also ask for current assessment figures at closing, which is covered in our guide to HOA estoppel letters and the Texas resale certificate.

What are the most common HOA budget mistakes?

• Holding dues flat by starving reserves. It feels responsible in the moment and usually ends in a special assessment later.
• Choosing the lowest bid without checking scope. The cheapest contract is not always the lowest cost, as our post on the hidden costs of bargain HOA management explains.
• Ignoring renewal timing. An insurance or landscaping renewal in March can break a budget adopted in November if no one looked ahead.
• No bad-debt or contingency line. A budget with no cushion turns every surprise into an emergency meeting.
• Adopting it and forgetting it. Monthly variance reports, reviewed by the treasurer, catch problems while there is still time to adjust. Our guide on how to read HOA financial statements walks through that monthly review one report at a time. Good controls are also central to how management companies protect HOA assets and prevent fraud.

How does a management company help with the HOA budget?

A volunteer treasurer should not have to build a budget from scratch every fall. A full-service manager brings the actuals, the contract calendar, the insurance renewal, the reserve study and the delinquency history to the table in one package, then turns the board’s decisions into owner notices and assessment statements. After adoption, the same team handles assessment collections and payables so the plan the board approved is the plan that actually runs. You can see what a full-service HOA management contract should include, or review our HOA management and community association services.

Sterling ASI is the largest locally owned community association management company in Houston, working with more than 200 communities from four offices. Our teams support boards in Houston, Katy, Kingwood, Sugar Land, The Woodlands and Cypress. If budget season keeps showing your board that the current arrangement is not working, our Texas checklist for switching HOA management companies shows how to plan the change around your fiscal year.

HOA budget: frequently asked questions