It takes a lot to operate a homeowners association. The board must enforce the rules, update policies, conduct meetings, collect fees, and work with various contractors. If the responsibilities are too much for the board members, they often consult an HOA management company for help.
What is an HOA Management Company?
An HOA management company is a professional business that can take over a planned community’s operations. HOA management staff work full-time, allowing them to fully focus on community matters. This helps relieve the board members of their burden as most directors work on a volunteer basis.
Apart from dedicated manpower, management companies are helpful because they have years of experience running planned communities. They are familiar with everything related to HOAs including financial management, legal requirements, and even taxation. Moreover, they have well-established relationships with relevant vendors. HOA management companies can connect communities with reliable contractors to help with maintenance, repairs, and even construction.
When Should You Consult an HOA Management Company?
HOA management consultation is a big step for many planned communities. After all, management companies usually charge high prices for their services. When is the time to bring in an HOA management company? Here are some signs a community needs it.
1. Lack of Board Experience and Expertise
HOA consulting might be a good idea if the board members need help figuring out where to begin when it comes to managing communities. Hiring an HOA management company might be a better alternative to self-management in these cases.
Otherwise, the board might have trouble with upkeep, financial management, and legal compliance with California HOA laws. The latter two can be costly and even lead to liability.
2. Difficulty Enforcing Rules
An HOA’s governing documents dictate what community residents can and cannot do with their property. They also outline the homeowners’ maintenance and assessment obligations. However, just because the rules are written does not mean the homeowners will follow them.
In fact, many communities struggle with enforcing the rules. The board might not have enough time to inspect the entire community for architectural violations. Alternatively, the board may struggle to create fee schedules and policies that ensure consistent and fair enforcement.
If this is the case, it’s best to hire a management company to help. HOA management companies are well-versed in rule enforcement and even know about local laws. They can not only issue violation notices but also advise the board when there are tricky circumstances to navigate.
3. Fee Collection Problems
HOA management companies are experts at collecting fees, tracking down unpaid charges, and doubling down on delinquent accounts. If the HOA board is struggling to keep up with collections, professional help may be warranted. It’s especially important if the collection issues lead to budget shortfalls, fee increases, and constant special assessments.
4. Poor Quality Vendors
Homeowners associations must hire reliable vendors to keep the community in good shape. Otherwise, the members might complain that the HOA board is not doing its job. It could lead to claims of a breach of fiduciary duty and even legal disputes.
One way to get around this is by hiring an HOA management company. Management companies often have a large pool of vendors to contact within the area. They know who is reliable and who is not. Furthermore, since their relationships are well-established, the management company won’t have problems working with the vendor.
5. Board Burnout
Regardless of how skilled the board members are, managing a planned community with just a few people can be taxing. Board member burnout is quite common and can lead to mass resignations.
To avoid this, HOAs should consult an HOA management company to help them with minor tasks. Doing so allows the board to devote more time to major community projects and pressing issues.
6. Member Dissatisfaction
Self-management is not always in the community’s best interest. While it can save money, it can lead to dissatisfaction if the board does not know what it is doing. For example, the board may hire good vendors but have poor processes for work orders and maintenance requests.
In addition, members can sometimes be dissatisfied if they suspect the board is not making the best decisions for the neighborhood. Hiring in a management company brings fresh eyes to the community’s concerns and facilitates better accountability.
7. Disorganized Record Keeping
Homeowners associations must keep many records to keep the community running. Required records include financial statements, receipts of expenditures, homeowner invoices, payments, membership lists, vendor contracts, and meeting minutes. The HOA board must also keep a record of the governing documents and all their amendments.
When record keeping becomes disorganized, it can lead to tons of issues. The board may need to remember the promises it has made to the homeowners. They may also need help abiding by the terms of vendor contracts or keeping track of insurance policies. In the worst-case scenario, they may lose records and even lose a lot of money.
A management company can help by organizing all of the community’s paper trail and documents. It can also use specialized software and provide an online portal for easy access.
8. Lack of Volunteers
Self-managed communities rely on volunteers to handle the bulk of their operations. Volunteer committees handle architectural reviews, budget planning, and even maintenance.
However, when a community lacks volunteers, it may be time to consider professional management. HOA management companies have several teams of community managers who can dedicate their time and resources to the community. The community can thrive even with a few volunteer members.
How an HOA Management Company Helps Communities
Consulting with an HOA management company is usually a good call for communities that can afford it. This is because professional companies can help take over most of the HOA board’s responsibilities. These include the following:
- Agenda creation and meeting minutes recording
- Meeting scheduling, notification, and facilitation
- HOA budgeting, accounting, and financial statement preparation
- Fee collection, account tracking, and delinquency management
- Common area maintenance and vendor management
- Receiving, processing, and managing maintenance requests and work orders
- Board guidance on insurance, legal, and financial matters
- Rule enforcement
- Facilitating member communication
- Dispute resolution
How Much is Professional Management?
HOA management companies have different pricing structures that determine how much a community pays. Generally, though, they often charge a flat fee based on the number of units in the community. On average, the residents should expect to pay $10-$60 per month.
In other cases, HOA management companies charge fees based on a percentage of HOA assessments. For instance, if the fees cost $300 monthly, the management company may take ten percent ($30) from the fees.
Finally, homeowners associations should expect to pay more if they have more amenities. Management contracts also cost more when there are more units in the HOA.
What are the Drawbacks of Professional Management?
HOA management companies offer tremendous benefits to communities. However, they are not always fit for everyone. Professional management has its downsides, too. These include the following:
- Cost. HOA management contracts can cost a lot. Homeowners will have to pay higher HOA fees to cover the cost.
- Less Control. HOA board members may have less control over the community’s operations. The HOA management company becomes more involved in daily operations and may make choices without approval from the board.
- Homeowner Issues. HOA management companies may not be as empathetic toward the homeowners as the board members. The company’s decisions may not consider the residents’ feelings or wants as much, leading to disputes.
- Overzealous Enforcement. HOA management companies often implement rule enforcement processes to make things more efficient. However, this efficiency can sometimes lead to overzealous enforcement that drives potential residents away.
Can Self-Management Work?
Many communities choose professional management to boost quality of life and make processes more efficient. But, are there cases wherein self-management can work? Can board members truly do everything themselves?
To put it simply, yes, self-management can work for some communities. However, whether it will work for a community depends on several factors, including:
- Size. Smaller communities can get by with self-management as there are fewer units to inspect and few amenities to manage.
- Budget. Self-management may be better for communities with little room in the budget to hire an HOA management company or HOA manager.
- Desire for Control. HOA board members who want full control over community matters may choose self-management. The board can better implement its vision for the community without third-party involvement.
- Number of Volunteers. HOAs with plenty of willing volunteers can make self-management work. The HOA can create committees that handle different aspects of community life like vendor management, landscaping, and architectural review.
- Access to Tools. Communities may be able to get by using just HOA software. Good software will help the board manage meetings, enforce rules, collect fees, and even manage work orders.
Find a Reliable HOA Management Company Today
Homeowners associations should recognize when it’s time to consult an HOA management company. Make sure to watch out for the tell-tale signs that the board is not enough to sustain the community’s operations. Otherwise, the HOA may face financial issues and struggle to survive.
Personalized Property Management provides top-tier HOA management services to Southern California communities. Call us at 760-325-9500 or leave us a message!
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