What you need to know before hiring an HOA management company

Date Published : Feb-10-2020

Written By : Phillip Livingston

Most young associations are managed solely by a homeowner’s association, which in turn, is led by an elected board of directors. This small group of individuals is made up of volunteers from the community, and most HOA board members don’t have any specific expertise that qualifies or prepare them for the task.

That’s why it becomes essential for HOA communities to hire an HOA management company that can take care of daily management while helping the community to realize its long-term vision.

At what point should a community hire an HOA management company? Should you wait until the board members are so overwhelmed with the demands of running the association that they’re unable to follow through on most of their responsibilities? Truth is, you probably shouldn’t wait that long.

If you’re not sure if your HOA has crossed that threshold, read on for a helpful guide on how to know when “it’s time” to hire a management company.

 

Benefits of an HOA Management Company

With the help of a management company, an HOA board can achieve so much more than it could on its own.  The best part is there’s no need to delegate all responsibility to a manager, only a few demanding everyday tasks that would free the board to focus on more important, long-term goals.

In essence, it’s much easier for an HOA board to fulfill its duties with the assistance of a qualified HOA management company. Here are some of the services that an HOA management company can assist your association with:

–           Hiring vendors

HOA board members don’t usually have the resources or network connections required to find cost-effective and quality vendors. However, when you delegate this task to a management company, you can have rest assured that the firm will draw on a vast array of resources to find the best vendors in your location at cost-effective prices.

That’s because most management companies have long standing relationships with experienced and qualified vendors that they’ve been working with for years. These relationships are often built on a positive reputation underpinned by years of reliability, paying on time and getting access to more clients. As such, vendors are willing to negotiate lower rates with management companies that they know, as opposed to HOA board members they’re not familiar with.

           Open communication

The great thing about an experienced HOA management company is that they’re not just there to enforce rules and regulations. They also make a concerted effort, through systematic action, to listen to community members and understand their needs so they can cater to them better.

A qualified community management company will ensure that residents feel comfortable to express their thoughts and ideas in order to foster a happier community.

–           Consistency

Sometimes, familiarity with neighbors can affect the decision-making of HOA board members, and even lead to unintended preferential treatment. After all, we’re all human.

A management company is different because it has no personal relationships with any of the residents. As such, the manager is able to enforce the association rules and regulations without any underlying bias.

–           Dealing with legal issues

Another responsibility of the HOA management company is to ensure that the association operates according to its own rules and regulations, as well as state legislation.

An experienced HOA manager will bring a wealth of litigation experience and relationships with legal professionals that can benefit the HOA.

–           Managing expectations

When most people move into a planned community development, they’ll receive association governing documents as part of their welcome pack. But, most people are so busy that they don’t bother to read these drawn-out and difficult to understand documents.

However, it’s important for the board at least to study and understand the HOA’s founding documents, including its policies, bylaws, and CC&R’s.

An experienced HOA management company can work with the board of directors to interpret and clarify the governing documents so that the board is empowered to enforce them fairly and appropriately.

It can be quite difficult to operate a homeowner’s association. It’s a balancing act between keeping homeowners happy while securing the long-term fiscal future of the community. This is more than most HOA board members can handle, and it’s the reason why it might be a good idea to hire an HOA management company.

 

Roles and Responsibilities of an HOA management company

documents

An HOA management company acts on behalf of the board of directors to perform daily management tasks. But, it’s important to make sure that the management company knows what is expected of it and can carry out its responsibilities without crossing the line.

As such, the HOA must be clear on the tasks it wants to delegate to the management company.   There must be a clear boundary between the duties and responsibilities of the HOA and those of the management company. Generally, these are the duties of the HOA:

  • To oversee the maintenance of common areas and the community as a whole;
  • Provide shared community amenities such as trash collection and recycling;
  • Enforce governing documents;
  • Collect dues;
  • Maintain a reserve fund and take out insurance for a rainy day; and,
  • Cover ongoing expenses.
  • Adopt policies;
  • Organize community events
  • Hire vendors

These and other duties can be overwhelming for a small group of volunteer with little to no experience in this field. That’s why a vast majority of HOA boards choose to hire a management company to manage some or most of these responsibilities.

HOA management companies are usually tasked with the following:

  • To assist the board of directors in accomplishing their responsibilities
  • To implement any decisions or policies that are permitted by the board of directors
  • To maintain accurate and up to date records of financial and other transactions that are carried out on behalf of the association

The HOA board should retain its decision-making power and only delegate tasks like vendor payment, maintenance and due collection to the HOA manager.

To determine what its own immutable duties and responsibilities are, the HOA should start with the association’s governing documents, as well as local, state and federal laws.

 

Services of an HOA Management Company

The services rendered by most HOA management companies can be divided into four separate parts, namely:

  1. Administrative Services

When an HOA appoints an HOA management company, the first thing they’ll get is a primary contact person. This is usually an experienced community manager within the company, who will work exclusively with the HOA to provide customized solutions.

Thanks to their years of experience managing similar developments, this professional will provide valuable advice and recommendations that’ll help the HOA to navigate any situation they come across. Some of the primary administrative responsibilities of the HOA manager is to:

  • Organize and attend board meetings
  • Reply to homeowner requests
  • Offer guidance to the HOA board through the annual budget preparation process
  • Carry out HOA rules and regulations
  • Report back to the HOA board on a monthly basis
  1. Managing Accounts Receivable

One of the benefits of hiring a management company is that they have experience with the successful collection of delinquent accounts. They know which state laws they need to follow in order to lawfully apply pressure on delinquent owners or they should have an HOA lawyer handy when dealing with other legal matters. The management company will also provide debt management services in the form of:

  • Billing
  • Distribute delinquent notices on behalf of the board of directors
  • Update the board on delinquent accounts
  • Take legal action to recover HOA funds based on board approval and association governing documents
  • Liaise with the association attorney to manage legal proceedings
  1. Site Management

This is probably the most important aspect of property management because it’s concerned with maintaining property values and a good standard of living. To ensure that the community maintains a positive reputation, the management company must work closely with the board of directors to ensure equal enforcement of association rules and regulations.

The prerequisite for this, of course, would be for the manager to acquaint him/herself with the goings-on of the association. This can only be achieved through consistent on-site visits where the manager would conduct the following tasks:

  • Check for possible rule violations
  • Ensure the completion of vendor tasks according to contractual agreements. This includes pool cleaning, roof cleaning, lawn care, trash collection, etc.
  • Inspect the premises for maintenance issues
  1. Accounting Services

Community finances can be complex and sometimes overwhelming. An experienced HOA management company comes with the expertise needed to manage community finances with ease. This includes tasks such as:

  • Managing community bank account/s
  • Developing up-to-date monthly financial statements
  • Offering guidance on long-term funding advice for the board and the community at large
  • Maintaining and providing up to date records of accounts payable and receivable
  • Conduct monthly review of community assessments and dues
  • Provide a correct estimate of maintenance costs

It’s important to note that an HOA management company isn’t there to replace the homeowner’s association. Even when an HOA hires a management company, it still has a responsibility to govern the community CC&R’s, oversee disputes and non-compliance penalties, and determine maintenance and aesthetic tasks.

 

What to look for in an HOA Management Company?

When hiring an HOA management company, it’s important to prioritize environmental safety and responsibility as well. Eco-friendly thinking is no longer a choice but a must, considering the state of the environment today.

Some HOAs are starting to make more of an effort in this direction by installing solar panels, implementing xeriscape or eco-friendly landscaping, planting trees, etc.

The HOA management company must be transparent and maintain an open-door policy with the board and homeowners as well. They must create an environment that makes it easy for homeowners to ask questions regarding:

  • The community’s governing documents
  • Contact list
  • Meeting minutes
  • Maps
  • Newsletter
  • Welcome packages and manuals
  • Future planning documents

 

Conclusion

When done right, the act of hiring an HOA management company can be of great benefit to all involved. After all, the key to a successful HOA community is a collaboration between the HOA board, property manager and homeowners. Each party must acknowledge their responsibilities in order to become a beneficial member of a thriving community.

We hope this guide has given you food for thought and brings you closer to making a decision about hiring an HOA management company.

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