The short answer to this question is, “Homeowners association management companies save boards from many headaches.” But there’s more to it than that (although it’s not a bad start!). The HOA board’s job is a tightrope walk between managing the HOA corporation and meeting the needs and desires of the HOA community. There are numerous responsibilities involved, and very few board members or volunteers have the time or experience to handle it all without a professional’s input.
What Does the HOA Do vs. the HOA Management Company?
This is a good question because it does seem like there would be much overlap between the two. The Homeowners Association is run by a group of volunteers elected by HOA member homeowners. The board members’ function is to oversee day-to-day care of common areas and neighborhood amenities and services. They may also contract for and provide services such as internet access or recycling. The HOA has to enforce HOA rules, collect monthly fees, cover expenses, and save funds for future improvements or emergencies. The Board of Directors supervises all of these activities, creates and enforces policies, and hires any service providers or vendors needed to keep the community running smoothly and all communal properties in good shape.
So Why Use a Homeowners Association Management Company?
The many duties of the HOA are complicated and time-consuming. They are also governed by various federal, state, and local laws. Making a mistake anywhere along the way can be disastrous for the Board, the HOA, and the community. To get some help managing all of this, the HOA might hire a professional company.
The primary functions of a Homeowners Association management company include:
- Advising the Board of directors and providing professional guidance.
- Enforce the Board’s decisions, regulations, and policies.
- Documenting all activities of the Board, including financial transactions, meeting minutes, and all records of the HOA.
The Board of directors makes decisions, and the management company takes care of the details. Including, collecting monthly fees and special assessments, paying all accounts payable, and becoming the point of contact for homeowners. This creates a welcome buffer between the Board and anyone with complaints or questions. To do all this, an HOA management company will take on the administration, site management, and accounting duties.
Paperwork can be the most annoying part of being on an HOA board, but it is essential. Most people don’t want to deal with it. Having an HOA management company take over administrative duties is often met with a collective sigh of relief. Among the administrative tasks handled by HOA management companies are:
- Clearly communicating with homeowners;
- Responding to homeowner questions and complaints;
- Scheduling and attending board meetings;
- Preparing and presenting regular management reports to the Board of directors;
- Enforcing the rules and regulations of the HOA;
- Assisting the Board with preparing a budget;
- Ensuring all necessary federal, state, and local paperwork is prepared correctly and filed.
Site management covers nearly every aspect of keeping the HOA community property in good repair, ensuring home values are enhanced and protecting the reputation of the community. There are many ways to do this, including:
- Consistently enforcing all HOA rules and regulations without favoritism;
- Regularly monitoring the property for violation of laws and the need for repairs or upgrade;
- Ensuring all contracted services (lawn care, maintenance, pool cleaning, cleaning of common areas, pest control) are done correctly and in a timely fashion;
- Seeing potential problems and bringing them to the attention of the Board of directors;
- Addressing emergency site problems quickly;
- Meeting with the Board regularly to discuss any property problems.
Handling the money can be a thankless job with many pitfalls. One of the most difficult jobs for a homeowners association is collecting monthly fees and special assessments from homeowners. This can be hard because it can cause ill will when homeowners are behind on paying. There are also laws in place regarding how an HOA can collect on delinquent accounts. An HOA management company will handle collections issues such as:
- Tracking past-due accounts and reporting them to the Board of directors;
- Sending past-due notices under the direction of the Board;
- Taking legal action as necessary;
- Consulting with the HOA’s lawyer when needed.
Accounting services also cover handling and accurately recording HOA transactions such as:
- Managing HOA checking and savings accounts;
- Keeping records of all accounts payable and accounts receivable;
- Reviewing monthly fees and special assessments for accuracy;
- Offering help with choosing funding and investment options for the community.
The Benefits of Using an HOA Management Company
The benefits of using an HOA management company go beyond taking over tasks. Board members may not want to do it. The right HOA management company gives a homeowners’ association more value than it costs. It provides consistent, dependable support to homeowners and board members by making taking care of all maintenance, and all bills are paid.
HOA management companies ensure that all homeowners are treated fairly. There is no chance of favoritism by board members toward some homeowners if an impartial company is managing the details. Home values tend to be higher in communities with a management company in place. Part of this is because the company’s full-time job is managing the HOA, while board members and volunteers are part-time at best.
The experience and professional skills of a management company also contribute value. The added protection of having a management team with legal experience is a very helpful contributor to an HOA’s success. Both board members and homeowners will appreciate the value of an HOA management company.