Curious about how well your homeowner association (HOA) is being managed? Would a third-party independent evaluation of your HOA be beneficial to you? Did you know that many HOAs are not following legal compliance requirements? Homeowners associations are like mini governmental bodies run by volunteers with insufficient experience and with few checks and balances. What’s needed is a measure of how healthy an HOA is. So how healthy is an individual HOA and what does that even mean? Reserve studies can shed light on the health of an HOA and while that information is necessary in determining the health, it’s not sufficient in giving a well-rounded picture as to all aspects of the management and operation of an HOA. With over 30 years of experience managing HOAs, the team at Rating Index (RII) has devised a comprehensive scoring system that synthesizes several HOA metrics into one, easy to understand rating which gives an accurate picture of the health of an HOA.

The RII scoring system gathers metrics across five distinct categories that measure various aspects of the HOA. These categories include administrative, operational, visual, physical characteristics and reserve. Each category consists of several metrics, each of which measures a certain aspect of the operation of the HOA. A proprietary, patent pending process is used to score the HOA based on the value of each of the metrics. The scoring ranges from 0-1000 with 1000 being a perfect score. Basically, the RII scoring system is analogous to a personal credit score with the difference being that the metrics are not simply strictly financial in nature.

In the RII scoring system, a perfect score of 1000 is absolutely achievable by many HOAs. However, even those HOAs where a perfect score is unattainable, a score of 900 or above represents an excellently run and healthy HOA. The scoring breakdown in the RII system is as follows:

So why is a rating system for HOAs needed? Basically, a rating can give interested parties an at-a-glance idea of how well an HOA is doing without the need to pour through disclosures, CC&Rs, reserve studies, financial documents and the like. Of course, a more in-depth analysis is desirable when evaluating an HOA and the above documents are necessary for that analysis. That said, in addition to a singular score, RII provides a more detailed report as to the health of the HOA. These reports can (should) be included in any disclosure documents a potential homeowner would receive when considering purchasing a home in an HOA.

Now is the time to score HOAs to shed light on how well the Boards of Directors and their agents are managing the properties and also to inform the homeowners and other interested parties as to their HOA’s health. Lives and livelihood can literally depend on it!