What Does an HOA Management Company Do?

What Does an HOA Management Company Do?

Effectively running a community can be a real challenge. Usually, a Homeowner Association (HOA) is in charge of managing the business affairs of the corporations while balancing the wants and needs of the neighborhood community. However, these responsibilities are often more than volunteers can or want to do without professional support.

When tasks become overwhelming for the volunteer board of directors, many HOAs hire an HOA management company to effectively carry out the management of their community. Sometimes, however, the lines can be blurred as to which party does what and where homeowners stand. Here is a closer look at the actual responsibilities of an HOA management company and how they can benefit your community association.

HOA Vs. HOA Management

The role of both parties involves Business Operations and community building. While both the HOA and the HOA management company have the same end-game, both have different roles in the big picture.

HOA

The roles and responsibilities of your homeowner’s association and the owners are dependent on the governing documents, federal, state, and local laws. Your HOA is run by a volunteer board of directors that is elected by the homeowners. Your HOA will usually oversee the maintenance of common areas and any amenities. They may also provide for shared services in a community such as trash collection. Your HOA also has the responsibility to collect dues, enforce their governing documents, cover ongoing expenses, and save for large capital expenditures. The board of Directors is responsible for overseeing these functions, making decisions, adopting policies, and hiring vendors.

HOA Management

Since HOAs are governed by boards that consist of community members that perform their duties on a volunteer basis, many HOAs turn to a professional third-party management firm to help cover their large scope of responsibilities. In a broad sense, an HOA management company should be responsible for:

• Guide and consult with the board of directors to fulfill their duties
• Execute the decisions, directives, and policies approved by the board of directors
• Document transactions accounting and otherwise, activities, and records of the association

The board is in charge of decision making and the HOA managers fulfill the actual dues collection, maintenance, vendor payment, and serve as the primary homeowner point of contact. The specific responsibilities of a community management company can be broken down into four sections:

• Administrative Services
• Accounts Receivable Management
• Site Management
• Accounting Services

Administrative Services

HOAs involved with an HOA management company will have an experienced manager to act as the community’s primary contact. An HOA manager will be an expert in community management and have an idea of how to navigate through any situation that a community may encounter through proper means of communication. A well-developed HOA management team will be able to provide easily accessible support as well as:

• Schedule and attend board meetings
• Provide monthly management reports
• Uniformly enforce the rules and regulations of the community
• Guide the board through preparing an annual budget
• Respond to homeowner inquiries in a timely manner

Accounts Receivable Management

A professional HOA management company will be very well-versed in collecting on delinquent accounts. They’ll be up-to-date on state law regarding collections and ensure that the notices sent to delinquent owners are compliant with those requirements. Debt management with an HOA management company involves:

• Billing
• Reporting delinquent accounts and updates to the board
• Sending Delinquent notices at the board’s direction
• Initiating legal action for collection of funds according to the board’s directives and policies
• Working with the association’s attorney when coordinating legal action

Site Management

Site management is an extremely important piece of the property management puzzle. By neglecting to follow the rules of the association, home values run the chance of decreasing and the community, in general, could be viewed in a negative light. To combat this, the board and management company should be familiar with the rules of the association and enforce them uniformly among members.

To properly enforce your HOA’s rules, the manager should be familiar with the association via regular on-site visits. Tasks during an on-site visit include:

• Check on maintenance issues
• Inspect for rule violations
• Coordination of various Board-approved actions
• Ensure that lawn care, pool cleaning, and other vendor tasks are completed based on the contracted specifications.

Accounting Services

Accuracy with community finances and the HOA budget can be a complicated and involved situation. Your HOA management company will have the experience to handle the complications of community finances. A well-versed HOA management firm will be able to:

• Manage bank accounts for the community
• Accurately estimate maintenance costs
• Review monthly billing for community dues and assessments
• Provide detailed record-keeping on all accounts payable and accounts receivable
• Create monthly financial statements in a timely manner
• Provide guidance for long-term funding for the community and board

Where Do the Homeowners Come into Play?

The responsibilities of the homeowner are quite simple. Aside from paying dues on time, homeowners and tenants really need to focus on the basics:

• Following association rules
• Picking up after your pets
• Keeping the shared areas clean
• Putting trash and recyclables in the proper bins
• Avoiding vandalism and littering

If homeowners, HOA boards, and property managers can get on the same page, recognize their responsibilities and work together, then the community is bound to continue moving on the uptick.

Now that you know what an HOA management company does, here are 5 misconceptions about HOA management companies.

Many condominium, townhome and other common interest communities use third-party management to help the homeowner’s association fulfill its duties. Depending on the manager that is chosen and the contract that is negotiated, the manager could take over almost every duty of the HOA, or could have a very minimal role. In either case, the manager’s power derives from what the HOA itself can do.