HOA Management Tips & Community Association Insights

By Michael Kelsen, R.S, Aspen Reserve Specialties 

You have successfully completed the task of reviewing and accepting the Reserve Study prepared by your professional. Most think this well executed plan is a pipe dream made up by the professional. It is not. Many years of knowledge and expertise went into this document to help you better prepare for future projects. The Reserve Study is a budget tool that will map out how to address future capital expenses. So, what do we do with it now? 

First off, use it as a guide to determine where your assessments should be set. Do not determine your Reserve contribution in “reverse order”. All too often, we have seen an association start with what the dues were for the previous year, subtract all your operating expenses (insurance, management fees, utilities, service contracts, etc.), then arrive at the Reserve contribution with what is leftover. This is the wrong approach. Typically, the Reserve contribution makes up a large percentage of the total assessments. To properly establish your budgeted income, go through all the operating expenses, then add the Reserve contribution recommendation to arrive at the total assessment level.  

Use it as a guide for upcoming projects. While we all would like to tout ourselves as being capital project psychics, we are not. Anything can happen at any moment. But, through our experience, we have a great idea of when a project will need to be addressed. However, we are not perfect, so when we are recommending that a project is addressed, the Board of Directors should evaluate the project and if they agree with our opinion, get some bids and recommendations from reputable contractors to perform the work. Also, use the estimated costs your Reserve professional provides as a comparison to the bids being received. The professional has no vested interest in the estimates, so based on their expertise, the number should be within a small percentage of bids being received. 

Analyze major projects coming up in the next 5 – 10 years, but don’t lose sight of projects beyond that either. The major projects within the next 5 – 10 years will require special planning and funding to complete the project in the right manner. By properly funding the Reserves, it will allow you to choose the best contractor for the project, not just the cheapest.    

Keep a history of Reserve project contracts in an electronic file. Often, a Board or community management will change, and by keeping the contracts easily accessible, future management and Boards will have information as to when projects were last completed. Provide those contracts to the Reserve professional when they are preparing the study so they can utilize that information for the report.  This will ensure that actual costs are being used for the current report since we all know every association is different and costs could vary from community to community. 

Review the document frequently. In addition to reviewing the report at least twice a year (early part of the year to go over this years recommended projects and later in the year during budget season), the report should be updated by a professional at least every two years. After a full Reserve Study (Level 1) is completed, we recommend performing a Level 3 (financial review) at least 2 years later to update projects that have been completed and update the estimated replacement costs. Two years later (4 years from the initial full report), a Level 2 (on-site and financial review) should be completed to ensure components are aging as expected, as well as updating the estimated costs. We all know how often costs are changing every year and if too much time is allowed to pass between updates, the further behind in Reserve planning the association may be getting themselves into. In a sense, we recommend the Reserve Study is professionally reviewed at least every two years. 

Share the results of the study.  The entire membership, as well as potential home buyers, should have access to the report. In a world of transparency, the homeowners have the right to have the history of Reserve recommendations, and how the board has followed through with its fiduciary responsibilities, at their fingertips. Homeowners should be able to pull up the report from a secured portal so they can review it at their leisure. In addition, Reserve Studies are becoming a household name, and potential buyers into the community has a right to know the financial health of an association and what they are facing once they become an owner in your community. 

The Reserve Study can be a very valuable tool for the association that will help the community maintain or enhance the property values by utilizing it in the right way. The initial shock factor may seem daunting, but in the long run, you will be better off by living in a community that is well maintained and gives you pride to come home to a beautiful home. 

About the Author: Michael Kelsen, R.S. (#32 in the nation), PRA (Professional Reserve Analyst), has been conducting Reserve Studies since 1991 and has personally completed over 7,500 reports in his career.  In 2001, Mike left the company in which he received his experience to start Aspen Reserve Specialties and is proud to be soon celebrating our 25th year in business. His passion is educating the community about the importance of Reserve Studies and stress that we are not here to raise your dues, we are here to help you protect and enhance your property values. 

By Wes Wollenweber, Jachimiak Peterson Kummer, LLC 

Construction disputes between associations and contractors often illustrate in hindsight what should be in a vendor contract with a construction professional to protect the community. Nasty disputes with contractors over mechanics’ liens against every unit owner, general contractors who stiffed subcontractors – who then lien the community, and a wide array of other issues, there are truly some contract terms associations should consider inserting into a construction-based contract. While it’s not possible to be bullet proof in a dispute with a contractor, there are ways to limit harm and protect a community. These are the critical clauses that can help prevent certain litigation, make it less expensive, and certainly strengthen the association’s rights under the contract.

• For contracts where the vendor is the general contractor who will use subcontractors and/or suppliers of materials, it is recommended to have a clause that states the general contractor will ensure that it pays all subcontractors and material suppliers promptly upon payment by the association and will fully indemnify the association should any subcontractor or supplier attempt to record a mechanics lien against the association’s property and/or unit owners for nonpayment. While subcontractors who get stiffed by an unethical general contractor who the association has paid can sue under Colorado’s constructive trust statute, associations have no statutory standing to do the same. As such, associations need to protect themselves contractually against the unscrupulous contractor who stiffs his subs and/or suppliers. This suggested clause, requiring indemnity, accomplishes that task. 

• A clause that requires the contractor/vendor to identify any agent working on the community’s project who is not an employee; meaning a subcontractor or independent supplier. This lets the association, its community manager and general counsel know who’s out there working on the project and thus have some amount of foresight in identifying issues that may be brewing and help the association in avoiding being blindsided by a disgruntled subcontractor.

• On bigger projects, it is also helpful, if possible, to have a clause that states the association will only pay the contractor’s invoices in tandem with the execution of lien releases. Lien releases create what attorneys call a “condition precedent” in a construction contract and mean that the contractor cannot be paid until it releases any right to a mechanics’ lien for the work on a particular paid invoice. These lien releases can provide powerful protection to a dispute later on where the contractor claims nonpayment and then records a mechanics’ lien. This clause sets up proof of payment and the release of lien rights by that contractor.

• Attorneys’ fee clauses: Fee-shifting clauses (the ol’ familiar “prevailing party shall recover its attorneys’ fees and costs) do not always make sense in construction contracts. However, for associations, it makes sense because if a contractor tries to act on a mechanics’ lien that is not valid, the association can only get attorneys’ fees under the Colorado mechanics’ lien statutes if it proves the lien is overstated. There are other bases by which an association may dispute the contractor’s invoice besides the dollar amount, such as defective work, and having an attorneys’ fee clause helps the association in that instance.

• Delays: For bigger projects, the association truly needs a well written and specific clause that deals with contractor delays. General counsel can help with these clauses and should focus on defining “delay,” the consequences of delay, and consider liquidated damages related to the delay. Delays are specific to the project. Colorado case law supports damages for a contractor’s delays when the damages are hard to predict before the delay that breaches the contract. Setting the liquidated damage clause in the contract creates a real incentive for the contractor to not allow unnecessary and costly delays to occur. 

• Workers compensation: With many contracts, it makes sense to have a clause that specifically states the contractor is required to carry requisite workers compensation insurance for its workers and agents and that the association cannot be liable for any such violation. Many contracts have this but be on the look for those that do not and insist that this type of language is inserted.

Addressing these areas will potentially identify other potentially necessary clauses. At a bare minimum, using the above suggested clauses as a check list of what to have in a construction contract will help protect associations when certain conflicts arise that can be costly and lead to ongoing litigation that could have otherwise been prevented or limited.

Wes Wollenweber is Of Counsel at Jachimiak Peterson Kummer, LLC.  Wes is a lawyer, mediator, and arbitrator with 26 years of litigation experience in federal and state courts in Colorado.  Wes routinely handles HOA disputes, employment civil rights cases, fair housing matters, landlord-tenant cases, construction disputes, among various other areas.

By Chris Stubbs, Clean View HOA Financial

In just the first quarter of 2025, over 68,000 U.S. properties entered foreclosure—a 14% increase from the previous quarter and a troubling signal for communities nationwide. A key driver? Soaring HOA dues, which have been fueled by inflation, rising insurance premiums, and escalating service costs.

However, there's another, often-overlooked culprit: inefficient collections processes. Many homeowner associations still operate without strong AR (accounts receivable) systems or compliant, proactive collection policies. This leads to preventable financial strain—not just for individual homeowners, but for entire communities as well.

• Your Operating Budget Depends on It. Each unpaid assessment weakens the HOA's ability to cover ongoing expenses, such as landscaping, insurance, repairs, utilities, and professional services. In today’s high-cost environment, even modest delinquencies can throw an entire budget into disarray.

• Inflation and Insurance Are Tightening the Squeeze. In many regions, insurance premiums have doubled—or worse—while utility and vendor costs continue to climb. Without a predictable cash flow from dues, communities may be forced to defer maintenance or dip into reserves, thereby risking long-term financial instability.

• Reserve Funding is Becoming More Regulated. Across many states, new legislation is mandating that HOAs conduct reserve studies and fund long-term repair accounts appropriately. Falling behind on collections jeopardizes these goals—and in some jurisdictions, could even put associations out of compliance with local law.

• Transparent delinquency notices that outline potential consequences—including foreclosure and loss of equity.

• Clear disclosures about credit counseling resources or state-specific homeowner advocacy services.

• Mandatory owner contact information policies for phone, text, email, or physical mail communication.

• Legally required ledgers, which must be made available to owners upon request within defined timelines.

• Annual reporting requirements around delinquencies, judgments, payment plans, and foreclosures.

• HOA loans can carry high interest rates, especially for communities without a strong financial track record.

• Special assessments create hardship for owners who are paying on time—and foster resentment within the community.

• Cash flow issues delay critical services, leading to quality-of-life concerns and reduced property values.

• Automate Notices and Follow-Ups. Use software to issue reminders, apply late fees, and trigger escalation steps without relying on manual intervention.

• Set Clear Expectations Early. Ensure that your governing documents and collection policy outline due dates, late fees, interest, and consequences in plain language.

• Offer Flexible Payment Plans. Support struggling homeowners with structured payment plans that keep cash coming in while showing compassion.

• Document Everything. Keep detailed records of contact efforts, payment arrangements, and account balances. These will be critical if legal escalation becomes necessary.

• Monitor and Report Delinquency Trends. Track monthly data on delinquencies, payment plans, and legal actions. These insights can inform budgeting and help meet future state reporting requirements.

• Draft and maintain compliant collection policies

• Automate AR workflows and reduce manual errors

• Manage communication with owners compassionately and efficiently

• Provide financial insights that support better board decision-making

• All owners are treated equitably

• Financial gaps don’t spiral into deeper problems

• Your board can budget with confidence

• Your community remains desirable, safe, and well-kept

Why Staying Current on Collections Is Critical

Even a few delinquent accounts can have a harmful ripple effect on your community. Therefore, staying on top of collections is crucial for the following reasons: 

Collection Requirements Are Evolving Nationwide

States across the U.S. are beginning to tighten requirements for HOA collection practices. Boards should expect (or already be subject to) new standards such as:

Even if your state hasn’t passed similar legislation yet, it’s wise to prepare now and standardize your collections in line with best practices.

The Hidden Cost of Unpaid Dues: Financing the Gap

When owners fall behind, HOAs often need to bridge the gap with loans or special assessments. But borrowing isn’t free:  

Ultimately, the cost of financing unpaid dues is paid by everyone—not just the delinquent owner.

Best Practices for a Healthy Collections Strategy

To protect your community’s financial health, it’s crucial to implement a collections strategy built for transparency, fairness, and sustainability. Here are some key steps to take:

Partnering with Financial Experts Makes a Difference

Effective collections require consistency, empathy, and legal awareness, which is why many boards choose to work with a dedicated HOA financial partner. A dedicated HOA financial partner can help communities:

Final Thought: Collections Are About More Than Cash

Collecting dues is crucial for funding your community—but it also plays a key role in building trust, maintaining fairness, and staying ahead of legal and economic change. A well-run collections process ensures that:

Now is the time to audit your collections process, prepare for future regulatory changes, and reinforce your financial foundation.

About the Author:

Chris Stubbs is the CEO of Clear View HOA Financial, which provides comprehensive financial management services for HOAs. With over 20 years of experience, he leads a team known for expert support and exceptional service, delivering precise financial oversight for community associations.

By Carly Spengler, Haven by Neighborhood Management Inc. 

As managers, we view our relationship with clients as a true partnership—one built on transparency, communication, and mutual understanding. A key component of this partnership is ensuring clarity around cost structures, particularly those outlined in what is commonly referred to as “Schedule A” or “Addendum A” of a management contract. This document should be clearly communicated and fully understood by all parties and never buried in the fine print or treated as an afterthought.

Whether you are a board member evaluating a new management proposal or a homeowner reviewing your community’s invoices, it is essential to understand the purpose of Addendum A and how to extrapolate its contents. 

What Is “Addendum A” and How Does It Relate to the Management Contract?

Addendum A is a legally binding supplement to a management agreement. It details specific costs and services that fall outside the scope of the base contract, providing additional context or clarification on items that may incur extra fees. Common inclusions are:

• Postage and mailing services

• Photocopying and document reproduction

• Special oversight or project management fees

• Administrative or ancillary services

• The association. It means it is not pre-paying for services it does not use.

• The management company. It ensures fair compensation for services that require additional time or resources.

• “Notwithstanding Section X of the HOA Agreement...”

• “This addendum shall supersede any conflicting terms...”

• Ask the HOA board or property manager to explain anything that is unclear

• Consult an HOA attorney, especially if the addendum includes financial or legal obligations

• Request written confirmation if verbal clarifications are made

Carly Spengler is the Director of Association Management at Haven by Neighborhood Management Inc. Haven is a boutique management firm located in Broomfield. With three years of industry experience and certifications including CMCA and AMS, Carly focuses on building authentic relationships with clients and team members while promoting ongoing education within the industry.

These costs are not typically included in the base monthly management fee but rather billed as they are incurred. As such, Addendum A plays a crucial role in ensuring the association only pays for what it uses, benefiting both the client and the management company.

Why Is an Addendum A Important?

Many management companies choose to separate ancillary fees from their base contract. This model provides flexibility for:

Additionally, Addendum A can often be updated separately, without needing to renegotiate the full contract. This offers adaptability as the community’s needs evolve.

Watch for Superseding Clauses

Some terms in Addendum A may override provisions in the original agreement. Language to watch for includes:

These phrases indicate that Addendum A takes precedence over the original contract where conflicts exist. Some contracts may allow Addendum A to be updated unilaterally, so it's important to review how changes are governed and approved.

Ask Questions Before You Sign

Before agreeing to the terms of Addendum A:

Understanding the addendum is vital. It is a legally binding part of your agreement and can have lasting financial and operational implications.

Final Thoughts

Reading the Addendum A carefully can help you avoid unpleasant surprises down the road. While it may appear to be just another piece of legal documentation, its impact on your community and your relationship with the management company can be substantial. Treat it with the same seriousness as the main contract and never hesitate to ask for help when in doubt. As stated, transparency is paramount when entering into a new management agreement. It is not just a best practice, it’s a responsibility.  When both the board and the management company are aligned on expectations and costs, it strengthens the relationship and lays the foundation for long-term success and continuous partnership.

About the Author

Carly Spengler is the Director of Association Management at Haven by Neighborhood Management Inc. Haven is a boutique management firm located in Broomfield. With three years of industry experience and certifications including CMCA and AMS, Carly focuses on building authentic relationships with clients and team members while promoting ongoing education within the industry.

By David Ford-Coates, Alliance Association Bank 

Many community associations contemplating large-scale capital improvements first look to fund their needs with cash reserves. While fully funded reserves are ideal, many associations aren’t fully funded. For day-to-day operations, a good rule of thumb is that maintaining at least 70% reserve funding is adequate for meeting the National Reserve Study standard of reserve adequacy, according to Association Reserves, a leading reserve study provider.

For one-time or unexpected projects, an alternative to depleting your reserves is to obtain a loan with a bank that specializes in association lending. The following overview provides a basic game plan for financing your association’s capital improvement with loan funds.

Step 1: Gain borrowing approval

The first step is to contact your association’s management company and attorney to assess the steps to obtain approval to enter into a loan. Your loan will be secured by an assignment of the association’s assessments or other collateral.  Governing documents differ as to the authority to pledge assessments and the approvals – whether Board or Owner approval – to do so.

Step 2: Determine a repayment plan

Next, the association needs to determine what means you will use to repay the loan. For smaller loans, an increase to regular monthly assessments may be a feasible way to make loan payments. Another option could be implementing a special assessment wherein each unit owner would pay upfront or participate in the loan program. 

In either case, you’ll need to consider the board or homeowner approval(s) necessary to implement the desired repayment structure. You won’t need to have the structure in place before you apply for the loan, but in most cases, the structure will have to be approved before closing the loan. However, putting an increased regular assessment or special assessment in place before you apply for a loan can demonstrate to your bank that your association has both community support and the ability to repay the loan.

Step 3: Choose the type of association loan

When applying for a loan, your bank will want to know what type of loan and loan term you’re seeking. For large, lengthy projects, your bank will likely offer the option of entering into a non-revolving line of credit for the construction period. These lines of credit typically last six to 24 months. During that time, you’ll make interest-only payments on the amount drawn. 

When construction ends, the line will convert to a fully amortizing term loan. A typical term loan is for five to 15 years. It is important that the loan length not exceed the useful life of the financed improvements — you don’t want to be paying for improvements that have outlived their lifespan. If the project is smaller or short-term, it may make sense to forego the draw period and immediately enter into a term loan. The sooner you begin paying the principal, the sooner your association pays off the loan.

Step 4: Prepare for the application process

When your bank evaluates a loan request, it may use several key metrics to gauge your association’s credit risk and ability to repay the loan. Some factors the bank may consider during the underwriting process include:

Delinquency

Banks consider the number of accounts and the total amount of delinquencies. Many banks allow no more than 10% of accounts to be delinquent for 60+ days. Strong credit means your association’s delinquency rate is less than 5%.

Liquidity

This measure considers your association’s cash amount as a percentage of annual assessments and annual debt service. Many banks have a minimum liquidity requirement of 20% of the association’s annual assessments. With strong credit, your liquidity levels are greater than 50% with at least one year of debt service.

Size

More units or homes provide a diversified cash flow stream.

Assessment increases

Large increases may cause delinquencies to rise. Strong credit involves increases of less than 25%. If a significant increase is necessary, implementing it before applying for the loan can mitigate your risk.

Annual assessments related to market value

Annual assessments should not be greater than 10% of the unit value. Strong credit comes with yearly assessments that are less than 2% of market value.

Owner occupancy and concentration

A high percentage of investors not living in their respective units poses more borrowing risk. Banks consider an association to have strong credit when more than 80% of units are owner-occupied, and multiple-unit owners control less than 10% of the units. Banks may consider an association to have weak credit when less than 60% of units are owner-occupied, and multiple-unit owners control more than 20% of the units.

Management and capital planning

Ideally, your association will have an external professional management company with experience managing similar capital improvements. Having a professional reserve study that is at least partially funded indicates prudent financial planning.

If your association has ratings of fair to strong in most of the factors above, you will have higher chances of being approved for a loan. 

About the Author: David Ford-Coates is the Vice President of HOA & Special District Banking for Alliance Association Bank, a Division of Western Alliance Bank. Member FDIC.

By Pat Wilderotter, CIRMS, CCIG

If you are new to condominium/townhome living, or have been a long time resident but never understood what insurance you needed, this article is for you.

Under your monthly assessments, you probably see “insurance” as one of the items you are paying for but that can be misleading. The insurance being provided, especially on the interior of the units, depends on the association’s declarations. 

Typically, interior coverage falls into one of three categories with variations. There is “all in” coverage where we will rebuild back to where the unit was at the time of the loss. So, all upgrades that have been made, the association’s insurance will cover. Next, you have original construction, also known as “single entity” coverage, where we will rebuild according to what was original to the unit when sold by the developer. In this case, owners are responsible for any upgrades made since the units were first built. This can become tricky to determine when you are the third or fourth owner. Finally, there is what is referred to as “bare walls” coverage. In this case, after a loss, the insurance company for the association only provides coverage to the drywall of the unfinished floors, ceilings, walls and the subfloors. Items like floor coverings, cabinets, countertops etc. are the responsibility of the unit owner to insure. There can be variations on these three options like coverage on appliances and other interior items. Make sure to check your responsibility to obtain coverage on the interior items that the association does not cover according to the association’s declarations.  When an association submits a claim, the insurance adjustor will ask to see a copy of the association’s declarations to know what the association is responsible to repair or replace and what falls onto the owner.

 

Once you know what you are responsible to insure on the interior of the unit, you need to consult your personal insurance agent. You will need to purchase an HO6 policy (sometimes known as a condominium owners policy). These policies should provide at least coverage for (1) dwelling/unit coverge for items you are responsible for, (2) personal property coverage, (3) general liability for anything that happens inside the unit, (4) loss assessment coverage and (5) loss of use. If you are renting your unit out, you will also need loss of rents coverage since you are a landlord. 

The HO6 policy also offers coverage for the association’s deductibles that the owners will have to cover. Typically, if the association were to have a $25,000 property deductible for example, and you had a kitchen fire where the association insures original construction and the kitchen has not been updated, you would be responsible for the first $25,000 of damage. This could  be covered under your personal HO6 policy if you had bought the right coverage. Also, being in Colorado, we know the importance of having loss assessment coverage after a hailstorm. The hailstorm deductible is typically a percentage of the building limit, often 5%, which is then shared by the number of unit owners. We are also seeing percentage wildfire deductibles in some areas so that would need to be covered under the loss assessment section of the personal HO6 policy. Loss assessment only applies when everyone in the community is assessed to pay the deductible after an insurance event. Special assessments, where owners are assessed for maintenance issues, are not covered since the work is not triggered by a covered insurance event. Confirm with your personal agent that there are no sub-limits that would apply if the loss assessment was to go to pay for the association’s deductible. 

It is essential to know your responsibilities for the insurance that you will need to obtain to cover items that are your obligation as well as what association deductibles you will need to cover under your personal HO6 policy. This will eliminate the potential gaps between the association’s master policy and your personal HO6 policy. 

Pat Wilderotter is past-president of the Rocky Mountain Chapter of CAI. She is one of 150 agents in the US to hold the designation of CIRMS (Community Insurance and Risk Management Specialist). Pat heads the HOA team at CCIG where she is an executive VP and Partner. 

By Anthony Smith, Smith Jadin Johnson, PLLC 

Introduction

Homeowners Associations (HOAs) hold a vital role in safeguarding the value and integrity of residential communities. Securing the appropriate property insurance coverage is crucial for HOAs as they oversee shared spaces and amenities. However, choosing the right property insurance policy can be a complex task. In this article, we will discuss three essential considerations that every HOA manager and board member should be aware of when purchasing insurance.

Consideration #1: Understand and Plan for Your Deductibles

Deductibles for property insurance policies have evolved over time, becoming more intricate. Nowadays, most property insurance policies for HOAs feature different deductibles for different types of losses. While some losses still involve a single flat rate deductible, others employ a percentage-based deductible. In states like Colorado, where wind and hail storms are common, percentage-based deductibles place a significant financial burden on HOAs and their members.

Fortunately, HOAs subject to the Colorado Common Interest Ownership Act (“CCIOA”) can shift the deductible expense downstream to their owners through pro rata assessments. This means owners' HO-6 insurance policies can cover the deductible assessment. However, HOAs not subject to CCIOA must either have an explicit right in their governing documents to assess the deductible back to the owners or rely on special assessments, which can cause delays or barriers to necessary repairs.

Older HOAs not subject to CCIOA should consider amending their governing documents to grant them the right to assess their property insurance deductible back to the owners.

Consideration #2: Pay Attention to Exclusions

While insurance policies may appear similar at first glance, they often vary significantly in terms and conditions. HOAs must be attentive to potential exclusions in their policies. Here are three common exclusions that HOAs should strive to avoid:

a) Functional Damage, Cosmetic Damage, and Marring Exclusions: These exclusions pertain to damage that doesn't impact the structural integrity of the property but can still detract from its aesthetic appeal. These exclusions hinder an HOA's ability to address issues that may affect the property's overall value and appeal.

b) Ordinance or Law Exclusions: These exclusions limit coverage for costs associated with complying with building codes or laws that may have changed since the property's original construction. For older communities, this exclusion can be particularly significant as repairs may require updates to meet current building codes, leaving the HOA responsible for the additional costs.

c) Matching Exclusions: Matching exclusions restrict coverage for the replacement of undamaged portions of a property to achieve visual consistency with the repaired or replaced sections. This limitation makes it challenging for HOAs to restore or replace damaged portions of a property to match the undamaged areas.

HOAs should negotiate with insurers to eliminate these exclusions, ensuring they have comprehensive coverage that adequately protects their assets, maintains aesthetic appeal, and positively contributes to property values.

Consideration #3: Be Mindful of Your Duties and Responsibilities

Finally, HOAs have important duties to fulfill to their insurance companies in the event of a loss. The most significant duties include:

a) Prompt Notice of Loss: HOAs must promptly notify their insurance companies of any loss or damage to the insured property. Timely notification is critical and generally outlined as a requirement in the insurance policy.

b) Cooperation with the Insurance Adjuster: HOAs are obligated to cooperate with the insurance carrier's adjuster during the claims investigation. This involves providing access to the damaged property, facilitating inspections, and offering necessary documentation to support the claim.

c) Proof of Loss: Insurance companies may require HOAs to submit a formal proof of loss document. This document details the loss, including the items damaged, estimated repair or replacement costs, and other pertinent information. Timely submission of a proof of loss is often crucial, as failure to provide one may result in the claim being denied.

Conclusion

As HOA managers and board members, understanding the nuances of property insurance policies is essential for protecting the interests of residential communities. By keeping three key considerations in mind, HOAs can make informed decisions when purchasing insurance:

First, comprehending and planning for deductibles is crucial. Whether dealing with percentage-based or flat rate deductibles, HOAs should explore their options to shift the deductible expense downstream to owners, either through CCIOA provisions or by amending governing documents.

Second, paying attention to exclusions is vital for comprehensive coverage. Negotiating with insurers to eliminate exclusions related to functional damage, cosmetic damage, marring, ordinance or law compliance, and matching can help maintain aesthetic appeal, address repairs, and protect property values.

Last, understanding and fulfilling duties and responsibilities to insurance companies is essential in the event of a loss. Promptly notifying insurers, cooperating with adjusters, and providing necessary documentation such as proof of loss facilitate efficient claims processes and ensure that HOAs receive the coverage they need.

By being well-informed and proactive in insurance matters, HOA managers and board members can effectively safeguard the assets, integrity, and overall value of their residential communities. Making thoughtful choices and fostering constructive relationships with insurance providers lead to greater protection and peace of mind for everyone involved.

Anthony (“Tony”) T. Smith has been representing property owners for most of his career. His practice focuses on the diverse legal needs of homeowners associations (HOAs) in all aspects of their operations. Tony is a skilled communicator, problem solver, and negotiator. He regularly presents educational seminars for CAI’s Colorado and Minnesota chapters and other professional organizations and was the 2022 President of CAI’s Minnesota chapter.

By Brian TerHark, AMS®, PCAM®, Westward Management Group

Has anyone had any challenges with funding insurance premiums over the past few years? If so, you are not alone. According to a CBS news report, as an example, one Castle Rock community experienced a 600% annual premium increase in 2024 from $197,000 to $1,360,000. While a 600% increase was not the standard for all communities, we saw communities experience significant increases in recent years. Fortunately, we are not consistently seeing huge increases in premiums in more recent renewals. Although the insurance market is still adjusting to loss trends and stabilizing, one insurance broker has indicated they have seen some recent renewals where they were able to renew at a lower cost. Regardless of insurance premium trends, one thing remains constant…communities must adequately plan for funding their insurance needs!    

How do you plan for insurance premiums? It is not a once-a-year activity that only occurs when drafting next year’s budget. Communities should consider the following throughout the year:

• Check in with your professional insurance agent or broker, 2-3 times throughout the year, to keep up with the current trends they are seeing with similar communities. This helps you understand what your community may expect to experience at renewal. If nothing else, it helps reduce the shock and awe experience. It should also help facilitate proactive discussions with the Board and community professionals on what actions the community can take to help anticipate and respond to premium increases. Keeping homeowners informed throughout the year on anticipated significant changes can help significantly when needing to increase the assessment.

 

• Identify what actions the community can take to mitigate risk for the carrier which may result in a lower premium renewal. Your insurance professional should be able to assist the community with this. This may include property enhancements, accepting higher deductibles, etc.    

• As wind/hail deductibles continue to increase, consistently educate the homeowners regarding the need for loss assessment coverage through their own insurance policy.    

• Evaluate when the community files a claim against its current policy.  If there is a property loss and the total loss would be $20,000 but the deductible is $10,000, the community may determine not to file a claim. Be sure to seek the advice of your professionals (insurance, legal, management, etc.) when determining if it would be better not to file a claim to help ensure the Board understands the risks by not doing so. Bottom line: Your claim / loss history matters!   

• Consider adjusting the policy period so that it better aligns with your budgeting timeframe and mitigates the financial impact on the current year. If your renewal happens in March for example, and the community is on a calendar year budget, unanticipated significant increases will be especially painful for the remainder of that calendar year.   

A balanced budget…here are a few suggestions to help balance the budget:

• Create a “next year’s budget” file and make note of impactful items throughout the year. This is where you can make note of current insurance trends, deferred or desired projects / services not currently funded, legislative changes that may impact costs, etc.

• Clearly define the expense line items within the budget that the Association must fund versus discretionary expense items. It is the discretionary expense items that may have to be reduced in more difficult financial times. Proactive communication and/or homeowner engagement through surveys are very important when reducing discretionary items that some homeowners may very much value and appreciate.  

• Establish a contingency expense line item and/or fund. While this may be difficult to establish, it can be extremely important during challenging and unstable times. Extreme weather events (such as snow), unexpected maintenance items, and significant increases in insurance premiums are just a few examples of why contingency funds are necessary. CAI recommends 1-3 months’ worth of expenses be maintained as a contingency fund. Bottom line: Start planning for the unexpected today.  

• Understand revenue funding options for your community. This is most often through regular assessments to homeowners. Be sure to understand how the assessments are calculated and limitations on how much they can be increased without a membership vote.  There may be other ways to generate revenue to help cover the expenses.  Interest income from interest bearing accounts or investments, amenity use fees, etc. Some communities receive revenue from leasing mineral rights.  Be sure to check with your professionals on some of the more complex revenue options.  Local municipalities may even offer grants.     

• Consider potential impacts on revenue or cash flow from delinquencies and/or legislative changes. We have seen recent legislation that amended the Colorado Common Interest Ownership Act. C.R.S. 38-33.3-316.3 (2) requires homeowners to have the opportunity for an 18-month payment plan and in part defines a failure to comply with the payment plan by “failure to remit payment of three or more agreed-upon installments”. C.R.S. 38-33.3-123 (1) limits the Association’s ability to recover attorney fees from homeowners who fail to pay their assessments. HB25-1043 provides for the opportunity for a homeowner to obtain a 9-month stay from the Association to be able to foreclose its lien against a property.             

We all appreciate the complexity of, and challenges faced in, meeting a community’s funding needs. It is critically important to not only seek feedback and involvement from homeowners to get more buy-in, but to also touch base with those professional advisors who are here to serve the needs of the community. This includes your management professionals, legal advisors, financial advisors, reserve analysts and insurance professionals. Hopefully, this information is useful as you work through balancing your budget and funding insurance premiums into the future!  Westwind Management Group has been providing excellence in management, administrative and accounting services to Colorado communities since 1986!  

By Steve Walz, CMCA, AMS, Westward360-Denver

Manager Perspective By: Steve Walz, CMCA, AMS Twelve years in the trenches of community association management has taught me one undeniable truth: insurance claims are not a matter of "if," but "when." From hailstorms to plumbing failures, the unpredictable nature of shared living necessitates a robust and efficient claims management strategy. For board members and fellow managers, understanding the intricacies of this process is paramount to protecting the association's assets and maintaining community harmony. Here are some important things to consider both before and during a claim. Proactive Planning: Laying the Groundwork The cornerstone of effective claims management is proactive planning. This begins long before any incident occurs. Policy Comprehension is Non-Negotiable: Thoroughly review all insurance policies with the board, ensuring a clear understanding of coverage limits, deductibles, and exclusions. Document key policy details in a readily accessible format, including contact information for the insurer and agent. Regularly schedule policy reviews with your insurance professional to address any changes in legislation or association needs. Establish a Robust Documentation System: Maintain meticulous records of all property maintenance, inspections, and repairs. Implement a standardized incident reporting form, ensuring consistent and detailed documentation of any damage. Utilize digital platforms for secure storage and easy retrieval of documents. Develop an Emergency Response Plan: Outline clear procedures for responding to various emergencies, including water damage, fire, and natural disasters. Establish a communication protocol for notifying residents, board members, and relevant contractors. Identify preferred vendors for emergency repairs and mitigation services. The Anatomy of a Claim: From Incident to Resolution When an incident occurs, swift and decisive action is crucial. Immediate Action and Mitigation: Prioritize the safety of residents and secure the affected area. Take immediate steps to mitigate further damage, such as water extraction or temporary roof repairs. Document all mitigation efforts with photographs and detailed notes. Prompt Notification and Reporting: Notify the insurance company as soon as possible, adhering to policy timelines. Provide accurate and comprehensive information regarding the incident, including dates, times, and a description of the damage. Utilize the association's established incident reporting form. Working with Adjusters and Contractors: Maintain open and consistent communication with the insurance adjuster. Identify the vendor that you want to work with the help build the scope based on the adjuster’s analysis of the damage or repair needed. Document all communication with adjusters and vendors in writing. Navigating Deductibles and Assessments: Clearly communicate deductible responsibilities to affected homeowners, referencing governing documents. If necessary, work with the board to determine appropriate assessment strategies for shared expenses. Be aware of the governing documents regarding insurance and assessments as there are anomalies in those documents. Don’t assume! Claims Documentation and Settlement: Maintain organized records of all expenses related to the claim, including invoices, receipts, and contractor estimates. Review the insurance settlement offer carefully, ensuring it adequately covers the cost of repairs. Work closely with legal counsel if disputes arise. Key Considerations and Best Practices: Transparency and Communication:Maintain open and honest communication with residents throughout the claims process. Vendor Relationships: Build strong relationships with reputable contractors and mitigation specialists. Legal Counsel: Engage legal counsel when necessary, particularly for complex claims or disputes. Education and Training: Provide ongoing training to board members and staff on insurance claims procedures. Regular reviews of the reserve study:Make sure that the association's reserve study is up to date and accurately reflects the current replacement costs of the buildings and common elements. Understand your state laws: Make sure you understand the laws that apply to your association and what the governing documents may also require. Managing insurance claims for community associations is a complex and demanding task. However, by implementing proactive planning, meticulous documentation, and clear communication, managers can navigate the process effectively, protecting the association's assets and fostering a sense of security within the community. In the end, it is about more than just repairing property; it is about restoring peace of mind.

Insurance Perspective By: Devon Schad, Schad Agency Simplicity is the ultimate sophistication in a world of complex insurance. It is always best to discuss claims with your agent, but below is a look into a general wind/hail claim: Pre-Season Preparedness Encourage associations to send out information about loss assessment coverage before hail season (April–October) and at insurance renewal. Ensure associations understand their policy details, including wind/hail deductibles and any potential gaps in coverage Immediate Steps After a Storm Before filing a claim, have a reputable roofing contractor assess the damage and provide an estimated repair cost. If damage is found the association should plan how they will fund the roof repair, including owner assessments and payment plans for those without sufficient coverage. Filing the Claim and Managing Costs Submit the claim to the agent.  If the damage is below the deductible use roofer estimates to help validate the claim. The goal is to have the carrier agree the property is damaged. Detailed Scope of Work: If the cost is below the deductible, ensure a comprehensive scope of work is prepared upfront to prevent additional assessments later. The association may consider hiring a third party to develop the scope and estimate ensuring all contractor bids are based on the same criteria.  Obtain Multiple Bids: For damage below the deductible, the association can obtain multiple bids to ensure cost-efficiency and transparency or use third party to help. If the cost exceeds the deductible, multiple bids will not affect the claim payout and therefore multiple bids will not be necessary. Contractor Selection & Project Management Select a contractor who agrees to perform the work as approved by the insurance carrier and has a track record of performance Consider requiring a performance and payment bond to protect against the contractor failing to complete the job or from unpaid subcontractors, suppliers or laborers involved. Community Communication & Assessment Process Hold a meeting with community members, the roofer, the insurance agent, and the association attorney to explain the claim process, expected timelines, and financial implications including potential assessments. Follow Association CC&Rs for Assessments: If an assessment is necessary, conduct a formal meeting and vote based on the association’s governing documents. Monitor the Repair Process Assign a point person to oversee the roofing project and address any issues that arise. Conduct a final inspection before making full payment to ensure work is completed to standard.

Contractor Perspective By: Joshua Flanagan, Blue Frog Roofing  From my experience and the experience of Blue Frog as a company working with communities through countless large loss claims, we’ve found a very smooth process to help make insurance claims successful. Here is a basic process with key points to follow, also outlining major pitfalls we see communities fall into if the correct order and steps aren’t followed.  Immediately following a storm: Choose 2 or 3 reputable contractors to assess the community for damage The BOD should meet with the contractors and choose their contractor to work with through the process. It is important to select the contractor before filing a claim. Claims Process: Pursue the claim option right for the community. Consider deductible, rough cost of repairs, policy limits and exclusions, etc. in determining if filing a claim is right for the community or not.  If so, file the claim  Contractor should prepare for the adjuster appointment and it's crucial that the contractor is on site during the adjuster/engineer appointment(s). This allows them to get on the same page quickly, speeds up the process and makes it much smoother from the beginning.  Insurance Scope and price If necessary, the contractor submits a supplemental estimate. Sometimes the adjuster misses essential items needed for the project like permits and telehandlers or documented damages.  If a claim is filed, but the claim amount is lower than the deductible, the contractor can still request the scope and estimate from the carrier. This is typically written by the adjusting firm hired by the carrier.  In this below deductible situation, all supplementing needs to be completed before any special assessment because loss assessments will be funding the entire project and cannot be filed on more than once for a specific event. It’s important to have your contractor work directly with the insurance carrier and adjuster to make sure all necessary damages related to the loss event are included. The insurance approved estimate and proper documentation written by the insurance adjuster must be used when everyone files claims on their H0-6 loss assessment policies Again, it is important that the insurance company or the adjusting firm on the claim writes the estimate and sets scope of work, not the roofing/construction company. Community Meetings: After the insurance information is finalized with the insurance company/adjuster, it's important to have a full community meeting to explain the next steps, answer questions and educate to ensure a smooth process. Special assessment vote and letter: unless the board can pass an assessment, the vote will go to the community to have it officially passed Special assessment letters with correct documentation is sent to homeowners to submit to their loss assessment carriers to file claims with. Pre-project planning meeting: contractor should meet with management and the BOD to get on the same page before the project.  If the claim is going to end up lower than the deductible: With 5% and higher deductibles being the norm, this situation occurs quite often.  It is still a good idea to choose a contractor and work with them before getting further in the process. The contractor of choice should work with you and a third party and/or your insurance provider through the process and make sure everything that needs to be repaired is included.  Make sure that a third party is writing the scope and estimate.  Production: Once the claim is finalized, funds are coming in, and the project is planned, the hard part is over, and the work can be done! Make sure you are on the same page with your contractor regarding the project plan, quality control, project updates, materials and warranties. Perform a final walkthrough with the contractor making sure everything is completed properly.

Steve Walz, CMCA, AMS is the General Manager for Westward360-Denver. Steve is a 12-year veteran of the industry and values personal relationships, open, clear communication and a slice of humor to navigate the Community Association industry.  

Devon Schad, currently serves as the President Elect of the Board of Directors for the CAI Rocky Mountain Chapter and is a CAI Educated Business Partner. Beyond his board position, Devon is the visionary owner of the Schad Agency, a family-owned business that has been at the forefront of the insurance industry since its establishment in 1976. As an expert in his field, Devon is instrumental in crafting insurance language for CC&R's, contributing insightful articles to the industry, and imparting knowledge through teaching certified CMCA classes. His exemplary efforts have not gone unnoticed, as he and the Schad Agency have been acknowledged as a top agency in the United States.

Joshua Flanagan is the business development specialist for Blue Frog Roofing in the multi-family, HOA, and commercial roofing verticals. In the last 3 years, Blue Frog has become a perfect fit for him as a fast-growing company with great, like-minded people, culture, values and vision. Blue Frog is a premium roofing company serving the state of Colorado and select markets nationally, specializing in roofing and gutters –repairs, maintenance and replacements. In addition to the multi-family and commercial focus, Blue Frog has a federal government/military roofing vertical and a single-family division. 

By George Skrbin, The Management Trust

I began my career in community association management in 1980 after taking the leap from retail thinking I would do this until I found something better.  Fast forward to 2025, wow what a journey.  I quickly learned that to have longevity and represent myself as a professional, I needed to set expectations with limits and boundaries.  This business is incredibly rewarding— bringing order, harmony, and increased curb appeal to communities, making a difference in people’s lives and working with incredible teams. But the absence of clear limits and boundaries can quickly become a fast track to burnout. While the goal is to provide excellent service and meet the needs of homeowners and Board members, there's a fine line between being responsive and being overextended.

What challenges and consequences arise when boundaries aren’t clearly defined and how do we work through them?

The Challenge: when “going above and beyond” goes too far.  It's not uncommon for Board members to call at all hours, expect immediate responses, or rely on you for responsibilities that fall outside your contractual scope. You want to be helpful, so you say "yes" too often—whether it's answering emails on weekends or taking on tasks that belong to the Board or vendors.  This may seem like good service, but in the long term, it is unsustainable. The workload snowballs, professional relationships blur, and you become overburdened and reactive rather than strategic. The risk? Stress, resentment, reduced performance, and eventually, burnout.

Being “always on" will build emotional stress, exhaustion, resentment cascading into burnout.   When you feel like you are never off the clock, you lose the ability to recover between tasks and meetings. This doesn’t just impact your well-being— it affects your professionalism, decision-making, and ability to manage conflict.   Setting boundaries isn’t just about self-care—it’s about sustaining a productive career, relationships, respect and integrity.

How do you know when better boundaries are needed?  Watch for these signals within yourself:

• You feel guilty when you're not working.  Who hasn’t experienced this? What about vacation?  Is letting go a challenge. Trust your team to cover you.

• You frequently answer emails or calls during evenings or weekends.  Ok, guilty.  Consider using the “delay send” function if you insist on answering emails in the evening and on weekends.  This minimizes the perception that you are always available.

• You’re included in every issue—big or small—even when it's not the scope of service in the contract.

• You are accepting to do things from the vocal minority that pressures the Board to ask you to do those things while knowing that nothing will result from the request.

• You feel reactive and your hair is on fire, rather than being strategic and proactive.

• “That request falls outside our current agreement, but I can refer you to the right resource.”

• “Let’s add that to the agenda for our next meeting so we can address it thoroughly.”

• “I want to give this the attention it deserves; can we set up a time during office hours to discuss it?” Good to use when a Board meeting is running long into the night and rabbit trails off the agenda.

Boundaries can feel uncomfortable at first, especially if your style has been “always available.”  Here are ways to get started:

Help the Board understand what’s in the scope of the contract.  The contract outlines your duties, and hours of availability.  When Boards understand what's in scope, they’re less likely to overreach.

Be clear about communication hours.  Let Boards know your working hours and preferred communication methods. Set expectations about response times for emails and calls. For example: "Emails received after 5 PM will be addressed the next business day."  If emergencies are the exception, define what qualifies as one.

Have regular check-ins or written updates.  Schedule consistent (but time-bound) meetings with Boards to go over outstanding issues or send a written update on a consistent schedule, such as weekly, twice per month and so on. This proactive approach reduces the number of emails and phone calls and keeps everyone focused on the big picture.

Learn how to say “no” professionally and at times saying no without saying no.  Saying no doesn’t mean being uncooperative—it means protecting your time so you can deliver your best work. Try phrases like:

The payoff is respect and reduces the stress that contributes to burnout.  When you set limits, you teach others how to treat you. Most Boards appreciate clear expectations, even if they push back initially. Clear expectations improve efficiency, reduce conflict, and allow you to provide consistent, high-quality service without sacrificing personal well-being.  Then you will look back and say to yourself, “wow, that was an incredible 35 years” where I now serve The Management Trust team in Colorado.

About the Author: George has 35 years’ experience in community association management.  George now partners with The Management Trust team in Colorado.  His experience includes multiple markets from Florida to California and shares his insights with those he serves.