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  • Wise Property Solution

Be Aware of Potential Pitfalls in Small HOAs

Homeowners find running small associations challenging for good reasons. Financial resources are stretched to the max. The few volunteers are spread too thin. There are few, if any, price breaks from vendors. Small communities (forty or fewer units) are common in Knoxville and the Tri-Cities, Tennessee. These communities are particularly vulnerable to changes in economic circumstances. One delinquent homeowner or wrong decision can send the community in a downward spiral. Being aware of potential pitfalls can help you keep your community in good standing.

Governing documents that are out of step with reality are a major concern for many of these associations. For example, their governing documents specify an annual “audit”, which could easily consume 50-60% of their total annual budget. Owners need to review and amend their governing documents to fit their small community instead of trying to follow a template created for a larger community.

In small associations, it’s not unusual for one individual to manage most or all of the business. One individual should never assume all roles, even if he or she is dedicated to doing a great job. One person in charge can increase the potential for fraud. Sickness or a move could leave no one to manage the association. When it comes to roles for managing your small association, involving more owners is your best option. Divide and conquer.

Small associations need the same processes as larger communities—it’s just a different scale. It may seem easier to manage association business on the fly, but a more formal process can help you stay on the right track. Establish a regular meeting time and record minutes. Develop a budget, a reserve fund, a maintenance schedule, and a list of approved vendors. You’ll find that following solid business practices can save you time and prevent issues from falling through the cracks.

One advantage of a small community is neighbors become friends. This plus can become a disadvantage when it comes to enforcing rules, collecting assessments and handling disputes. When you start overlooking an owner’s rules violations or delinquent assessments, you set your community up for failure. Yet, enforcing association rules can create rifts in small communities. You may want to explore how a professional community association management company handling some limited services can keep peace between neighbors and boost your results.

Being aware of the pitfalls in a small HOA can help you navigate them. The very road that once seemed so secure can often take unexpected turns. These detours take a big toll on small communities. Just a few tweaks in how you run a small association can make a significant difference in your long-term success.


Wise Property Solutions is a property management company serving East Tennessee with offices in Knoxville, TN and the Tri-Cities, TN-VA. Specializing in Condominium Association Management, Home Owners Association Management, HOA Management and Gated Community Association Management.

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