Effectively running a community can be a real challenge for most board members. In most cases, a Homeowner Association (HOA) is in charge of managing the business affairs’ of the corporations while balancing the wants and needs of the homeowners within the community. However, these responsibilities are usually more than volunteers can handle without a professional management company.
When tasks become overwhelming for the board of directors, many Homeowners Associations hire a HOA management company to effectively carry out the management of their community. Sometimes, however, there is some confusion as to what each party does and where homeowners stand. We would love to give you a closer look at the actual responsibilities of a HOA management company and how they can increase your community’s value.
Duties of Homeowners Association (HOA) vs. HOA Management Company
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.
The roles and responsibilities of your homeowner’s association are dependent on the governing documents, federal, state, and local laws. Your HOA is ran by a volunteer board of directors that is elected by the homeowners. Your HOA will be responsible for operating the Administrative, Financial and Physical management of the Community. They may also provide for shared services in a community such as trash collection. Your HOA also has the responsibility to collect dues/assessments, enforce their governing documents, cover ongoing expenses, and save for large capital expenditures such as (repaving roads, amenity repairs and equipment replacement, retile roofing, etc.) . The Board of Directors is responsible for overseeing these functions, making decisions, adopting new policies, hiring vendors and much more.
Since HOAs are governed by the board of directors, which 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 community responsibilities. A HOA management company should be responsible for:
- Guiding and consulting the board of directors to fulfill their duties.
- Executing the decisions, directives, and policies approved by the board of directors.
- Documenting 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
HOAs involved with a HOA management company will have an experienced manager to act as the community’s primary contact. The HOA manager will be an expert in community management and have strong problem solving skills to get through any situation that a community may encounter. A well-experienced 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
Site management is extremely important. By not following the rules of the association, home values could potentially decrease and the community, in general, could be viewed in a negative light. To help resolve this, the board and management company should be familiar with the rules & regulations of the association and enforce them fairly
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.
Community finances and creating a HOA budget can be a complicated task for HOA Management companies that lack experience. Your HOA management company will have to have the experience to handle the complications of community finances. An experienced 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.
Accounts receivable management
A professional HOA management company will have experience collecting on delinquent accounts. They’ll be up-to-date on state laws regarding collections and ensure that the notices are sent to delinquent owners. Debt management with an HOA management company involves:
- 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.
Where do the homeowners come into play?
The responsibilities of a homeowner are quite simple. Aside from paying dues/assessments on time, homeowners and tenants really need to focus on the basics:
- Following association rules
- Picking up after your pets
- Keeping the common areas clean
- Putting trash and recyclables in the proper bins
- Avoiding vandalism and littering
If homeowners, board of directors, and property managers can get on the same page, recognize their responsibilities and work together, then the community is on the right path.
Now that you know what an HOA management company does, here are 5 misconceptions about HOA management companies.
Many condominiums, townhomes 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 comes from what the HOA itself can do.