Choose the Right HOA Management Company
Few people outside the property management industry understand the difference between HOA management and property management. The difference for industry pros is pretty clear, but for newbies the distinction is sometimes difficult to make.
Regardless of who owns the properties in a community(s), a homeowner’s association must be set up to allow maintenance of utilities, trash removal, security, and building/facilities, etc.
Homeowners associations after they’re formed must hire an HOA management company.
Confusingly, property management companies and HOA management companies may have shared areas of responsibility. Let’s sort through a few of them so you’ll identify the best HOA software for you.
The Focus is on Shared Community Areas
Most times, HOA managers manage outdoor/shared areas of a community and are focused on managing residents’ behavior with respect to how the property is used. However, you will find community association management companies performing typical property management services such as rent collection, tenant screening, accounting and more.
“A homeowner’s association (HOA) is an organization in a subdivision, planned community, or condominium building that makes and enforces rules for the properties and its residents. — definition from Investopedia.com.
An HOA company is hired by an elected board that governs the association. They hold meetings, set the rules, and hire a service firm that uses an HOA management system. The system allows them to manage their HOA budget, expenses, arrange repairs and maintenance and allows board members to communicate with homeowners.
The HOA services company is not the HOA board and does not set association rules, dues, and policies.
HOA Management Companies
HOA property management responsibilities usually involve:
- managing operating budget for HOA business
- vetting and hiring vendors/contractors to perform maintenance and repairs
- operation of the common areas of a community or housing complex (properties to be managed typically include housing subdivisions, condominium complexes or townhome complexes, or even mixed-use buildings)
- maintenance, snow removal, community recreational facilities operation and repair (pools, tennis courts, community centers, parking lots
HOA for Builders and Developers
New construction builders of various sizes often set up HOA associations to help the community support itself. Some builders/developers continue to own the units and rent them out and thus set up an HOA to help the community carry out needed services.
Homeowners themselves also create an HOA and vote to elect board members who create rules for their association. They will hire an HOA services company too.
HOA Bylaw Enforcement
The HOA rules pertain to homeowners rights, restrictions, dues. That will include home appearance, snow removal, lawn care, number of parked vehicles allowed, noise bylaws, and more. The HOA board then hires an HOA property management company to carry out management of the shared areas.
HOA company managers must communicate with board members to collect dues from homeowners and enforce HOA bylaws. The HOA management company is directed by the HOA board and carries out policies.
The HOA management software they use provides an interface between the board and their company so they’re able to communicate their performance and ensure compliance to HOA rules.
More uncommonly, they prevent gun usage, exotic pets, automobile repairs in homeowner driveways or parking lots.
Property Management Companies
Property management is a much wider scope of work. Residential property management companies may also manage outdoor or shared community assets. They cut lawns, do snow removal, remove trash, perform landscaping and gardening, and more.
However, they typically manage tenants, buildings, collect rent, and so on. They work for a landlord and often manage the landlords tasks.
Property Managers also conduct financial management tasks such as collecting rent and deposits, bank reconciliation, paying bills, charging fees, managing a budget, communicate with tenants or homeowners, hire and manage service contractors for indoor repairs and maintenance including HVAC, plumbing, electrical, structural and roofing repairs to name a few.
Because there aren’t any hard and fast rules about what a property management firm can do, it can be confusing.
Where do HOA Management Firms Work
However, if you remember that the HOA management company works for a community or homeowner association, it might be a little clearer. Property managers are hired by specific rental housing landlords or condo owners. HOA’s charge monthly or yearly management fees for shared property management and bylaw enforcement.
Newer low rise and single house developments may have HOA’s who take care of the outdoor common areas, often in gated communities.
A large variety of specialized communities exist in the US, UK and Australia which HOA companies serve. You’ll want to know the company’s expertise with that type of community:
- Condo Communities
- Mixed-Use Residential/Retail Developments
- Townhouse Communities
- Adult or Seniors Communities
- Luxury High-Rise Communities
- Golf Club Communities
- Single Family Communities
These associations take shape in many forms from huge master planned communities to a small neighborhood associations.
List of HOA Management Company Responsibilities
- manage common areas such as roads, sidewalks, sports facilities, swimming pools, playgrounds, and parks
- collect HOA dues from homeowners, charges late fees and pursue homeowners who haven’t paid
- enforce HOA bylaws and issue fines
- manage an HOA community management budget
- hire vendors/contractors for landscaping, construction, and road maintenance work
- perform HOA accounting and bookkeeping along with financial reporting for the HOA’s activities
- arrange for and manages insurance policies for common areas
- arrange for trash and snow removal
- ensure eco-friendly practices and polices any pollution or contamination breaches on property
Hiring an HOA Management Company
After identifying the responsibilities and service capabilities needed, you’re ready to begin researching different HOA services providers. Visit the website of the Community Associations Institute which offers insight into HOA manager training and certification, community association law, and perhaps find a consultant to help you.
If you check out our post on how to hire a property management company, you’ll get a better feel for the full gamut of checkpoints, training, certifications, etc. needed. Many HOA’s will not be performing mechanical and indoor structural repairs. They’ll just need good judgment in hiring contractors who might do that work.
Tips for Hiring an HOA Management Company
- understand your communities specific needs
- check for the licensing, skills, reputation, and accreditation
- review their HOA law knowledge
- ensure service deliverability rather than just cheapest price
- review their site maintenance process, equipment, security system usage, and digital property management system
- review and check their inspection, emergency and maintenance responsiveness, board communications, and 24×7 availability
- review their insurance coverage
- ask them how they vett and hire contractors
- ask them how they would deal with enforcement situations where tenants persistently don’t obey the rules
- review the HOA managers and staff’s individual technical and people skills, training and experience
- review their fee structure and start with a one year contract to give them a trial
- have your lawyer review the contract
Of course, if you’d like to know more about what property managers do, you can visit our other posts which explain their role. Please see posts on hiring a property management company.
Software Systems Key to Efficiency
HOA managers may use a specialized HOA management software solution or simply adopt a general property management system to perform work. Both are very affordable. Property management solutions such as ManageCasa offer modules dedicated to the requirements of HOA and community association managers.
Most professional-grade property management software has document management modules that can help with legal and bylaw compliance. You’ll want to have a solution that allows online payments and has a website and app for homeowner and board member communications.
As you can see an HOA management company has duties that require flexibility, systems, skill and experience. A good one will likely make a big difference in your association’s success. Good luck with your search and have a great year in 2021.
Check out ManageCasa’s software solution for HOA’s now.
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