Four key questions that directors can address in exploring the board’s oversight role:

1. Do we have a board framework to execute on decisions impacting the HOA?

2. Does the board’s culture align with the governing documents and present needs of the HOA?

3. Does the information and metrics the board receives suggest that HOA priorities are understood and healthy; or that these need to be addressed?

4. Do our board practices and tone at the top align with the HOA needs, priorities and strategy?

Rethinking Risk:

The nature and scale of risks that boards face today would have been unimaginable just a few years ago. To survive, boards need to understand and manage their increasingly complex risk landscapes. Good risk management does more than just adequately respond to risks: it also examines the risk landscape from a new perspective. And looking at risks from a variety of perspectives opens up new options for managing them.

In 2025, emerging risks such as cybersecurity threats, extreme weather events, AI and fiduciary duty, and evolving governance disputes will present new challenges for HOA boards. Data breaches, misuse of AI, or mismanagement of sensitive homeowner information could lead to claims.

Is the board investing HOA reserve funds for safety, liquidity, and yield (ROI)?

CDs are a common option chosen for the investment of many HOAs’ reserves. There are safety and liquidity issues that come with CDs.

Has the board researched superior options for the bulk of HOA funds?

Boards have a fiduciary duty to manage all HOA assets (including cash and reserves) to their best and highest use. McMills Duffy’s capital markets experts can advise on best investment options in evolving markets.

With automation and utlization of financial software to further reduce costs and human error within HOA operations, come more factors to consider in choosing the right digital solutions.

Automation and AI use will not simplify boards’ fiduciary duties to steward HOA assets and sensitive information - they increase complexity in boards’ liability. McMills Duffy has the technology expertise to guide boards in choosing the right level of automation and software to augment board operations, not complicate them.

Contracts are at the core of all HOAs’ business activities.

Despite this, we often see that contract management processes are not consistently performed using state-of-the-art digital approaches, enabling human error, and some risks go undetected.

Improving contract management directly influences results and thus the success of projects and HOA properties.

A clear design for governance, processes, controls, and policies provides the basis for holistic contract management throughout the entire contract lifecycle. It is also necessary to assess service provider relationships and bias, and contractual risks. McMills Duffy assists boards in managing fiduciary obligations and overcoming challenges that arise in relation to HOA contracts. This enables boards to ensure that business relationships fulfill compliance requirements and that no actions are in violation of contractual - or fiduciary -conditions.

As assets (properties) age, technology introduces new threats, and boards’ responsibilities expand, the number of disputes boards will have to manage will increase.

Many boards will need considerable support in the coming years as homeowner inquiries and contractual disputes threaten to mount.

Disputes will occur; but litigation doesn’t have to. The key to litigation avoidance is being prepared. Whatever the transaction, incentive or claim, having

a file of documents and communications that explain the (compliant) process the board went through in reaching a decision is critical. Being able to produce evidence of clear process, decisioning and governance frameworks will be tantamount to fully understand and validate the boards’ reasoning behind a decision - which can soften financial impacts to the HOA and potentially board members personally.

Alternative dispute resolution or mediation may well be an option and is often seen as a positive alternative to an on-going audit process or litigation. McMills Duffy represents boards and HOAs through alternative dispute resolution services.

Before engaging in large maintenance projects and capital improvements, boards must evaluate their legitimacy.

Avoiding conflicts of interest is part of upholding the board’s fiduciary duty to deal at arm’s length in contractual dealings. Utilizing impartial unincentivized subject matter experts is the first step in evaluating the scope and legitimacy of capital improvement or maintenance projects. Working closely with an engaged reserve study provider can be part of a roadmap for long- and short-term project financial planning. McMills Duffy assists boards with financial modeling, vetting domain /industry subject matter experts, and proposal evaluation to advise the board of optimal solutions.

Outcome-based roadmaps are strategic planning tools that center around goals and results - rather than arbitrary financial projections.

This approach emphasizes tangible value over rigid planning. The logic behind it is simple: by aligning efforts around outcomes, boards can make sure every priority serves a greater purpose — one that is meaningful to both the board and the HOA.

Using a roadmapping framework is paramount to creating a realistic plan. OKR stands for Objectives and Key Results. This goal-setting framework keeps both the board and HOA business partners focused on the board’s priorities, while tracking progress toward documented outcomes.

As with all service providers, community managers should be held to certain performance standards to properly serve the HOA. It is the board’s duty to set and monitor - and act - to preserve the standard of care for the HOA assets through these uniquely-qualified service providers.

McMills Duffy advises boards on what metrics and performance standards to require of community managers in order to fulfill the board’s fiduciary duty of care.

SLIs (Service Level Indicators) measure the health of a service, SLOs (Service Level Objectives) define the target/desired performance of the service, and SLAs (Service Level Agreements) establish the promises made to the HOA by the service provider - in this case - the community manager. By using SLIs, SLOs, and SLAs, HOAs can improve service reliability, meet Board / HOA / Homeowner expectations, and ensure that services are performing as expected - ensuring value for spend.

The board sets the tone for the environment of the HOA. Are the board’s (and the community manager’s) communications eliciting the desired environment for the community?

Increasing homeowner engagement and alignment is important to maintaining a good quality of life on the property - as well as facilitating successful homeowner voting when required.

McMills Duffy creates and executes purpose-driven communications and branding campaigns for internal and external HOA and board communications. Maintaining intentional market-facing HOA branding and communications can positively impact property values, sales, and lending.

For many HOAs, resources are scarce – often too scarce to react correctly when compliance or governance breaches are suspected, unforeseen legal matters arise, or critical maintenance or structural failures on the property suddenly occur. Protecting the HOA an board in these situations is accomplished by identifying and presenting the raw data in a manner that minimizes risks to the board and HOA. These investigative audits are often complex and time-consuming. A special investigation must be launched – and this demands case management or even crisis management.

McMills Duffy has direct experience in conducting successful audits representing past clients against the IRS, homeowners, and insurance companies. In 2025, McMills Duffy successfully deflected a $900,000 litigation cost to an HOA as a result of a forensic investigative audit.

Does the board utilize a framework based on prescribed KPIs (key performance indicators), ensuring board members evaluate and finalize vendor contracts consistently and impartially?

The larger an HOA, the more organization becomes critical to its daily operations. Without proper vetting of service providers, fiscal waste can happen quickly and create great damage to the HOAs finances, reputation, and property values.

McMills Duffy has extensive experience in identifying, interviewing, and analyzing bids and proposals from all types of HOA vendors and service providers - including consultants and engineers. McMills Duffy vendor vetting services ensures boards and HOAs get “value for spend”. In 2025, McMills Duffy performed a “vendor overhaul” for an HOA, resulting in savings and cost avoidance of over $1,000,000.

The legislative and regulatory environment is the most challenging in HOA history.

McMills Duffy is a team of specialists working across all aspects of HOA- and board-related disputes from the identification of problem areas, prevention, ongoing management and ultimate resolution of claims and disputes. Using cutting edge technology including generative and agentic AI, alongside more traditional methods, we can support boards and HOAs in the prevention, management and resolution of disputes.

in 2025, McMills Duffy successfully deflected a $900,000 claim through forensic auditing and adept negotiation in private mediation for an HOA.