Is Your Homeowners Association (HOA) Management Company Doing Their job?
When you begin to bring in experts, a sequence of trust begins in the client/management company relationship. Homeowners and rental owners trust their elected HOA’s Board of Directors in making good decisions. Furthermore, the board trusts a professional HOA Management Company to carry out various functions of the organization. Each individual community is unique and requires different services.
The board is typically made up of volunteers who are voted in, usually respected members of the community. The majority of these volunteers have little formal training, to no training at all in HOA management. Many of them soon realize how stressful becoming a Board Member can be after they have already committed. Situations arise and they can not determine a ‘Clear Cut’ answer to the problem. It can become very time consuming trying to come up with answers to these situations. A common dilemma is a dispute between two neighbors about a section of the bylaws that may have been violated. The section violated tends to be a grey area, which is why it becomes a problem. Vigourous emails are sent back and forth, correspondence is made between multiple individuals regarding the problem, and many times having attorneys involved to make variations to the bylaws once a solution has been reached can be a nightmare! Then there are the complaints that arise from other neighbors that are irate about the new changes. This typical scenario is a never ending saga and very quickly becomes overwhelming to most of the board members and as a result, no common ground is met. This is what leads most HOA’s to hire a HOA management company to maintain the integrity and value of a community.
A common problem for many HOA’s is all the bookkeeping, especially maintaining a balanced budget. This can be a major headache for larger complexes or subdivisions. The importance of crafting a well maintained annual budget is crucial. For instance, if the community has private roads, where will the money come from if they need to be repaved? For condo communities, you have common areas that need to be upgraded from time to time, or roofs that need to be replaced, and let’s not forget about exterior siding, which is usually another big assessment. If the reserve funds are not managed properly, this could result in large, unnecessary assessments for the home owners of the community. Common disputes from large assessments can quickly give HOAs a bad reputation, and many times results in the entire board abandoning their positions. This happens more often than you think and can become an even bigger nightmare for homeowners and rental owners of the community.
In most cases you will find out that a board seems to be operating well. This is a result of a larger contribution of the board members time, in addition to their full time job or business. These members typically get burned out fast and resign. When they leave, a new ‘Can of Worms’ emerges, usually in the form of chaos.
Another problem that seems to exist is that many board members don’t feel comfortable in having to issue fines to friends or neighbors for not paying HOA dues on time or not being compliant with the community bylaws. If any favoritism is shown to any of the homeowners, it quickly stirs up trouble with the rest of the community. The best way to achieve a productive and well balanced HOA is to hire a professional HOA Management Company.
A Professional HOA Management Company can take the weight off the shoulders of the board members. The management company should never make any decisions without the board’s consent.
When establishing a HOA, a management firm can help organize and properly set things up the right way from the very start. Professional companies will handle tasks such as setting up and launching a website, as well as keeping detailed logs. Other services should include, good bookkeeping, and establishing and maintaining a balanced budget. This will help the community form necessary bylaws and codes of conduct for members of the community. Making sure these systems are in place from the beginning are vital to the longevity of the community.
A good HOA managment company will be great at any handling disputes or complaints that have been received from any of the homeowners. It will also offer a sense of security for the board in keeping up to date with state laws and insurance policies. They will handle managing the reserve funds and assessing any outside contractors or projects. The HOA Management company will aid in organizing any of the monthly meetings that may need to take place for creating bylaws and codes of conduct. They will also be the group maintaining order at these events. They will create and maintain a balanced budget for the general upkeep of the amenities, such as swimming pools, fitness centers, the clubhouse, tennis courts and walking trails, etc., etc. They will also handle all the administrative work, such as sending appropriate letters out for violations or late dues and keeping up with reporting of all fiduciary responsibilities. If, for any reason, issues arise that require going to court for any disputes, they will handle this as well.
If you already have an existing HOA, shifting the responsibility of management duties over to a professional management firm is usually an easy process. A Management Company can give a much needed overhaul to the services listed above. With some professional restructuring, the systems that are currently in place will become more efficient, saving the board members unnecessary man hours and a great deal money. HOA management companies begin by acquiring all the legal documents for review then asses and make any necessary changes. It is also a wise idea to open new bank accounts as well.
A solid HOA management company will also know the laws governing HOAs for their specific state. These laws tend to vary from state to state, so it’s important to make sure the management firm is familiar with local and state laws. Typically management companies have a system that can be modified for each association. These systems are engineered to make communities a great success. Once everything has made the full transition, the management company will send out letters to all homeowners introducing the company and and let owners know they are available for any questions or concerns regarding the HOA or the community.
Of course some services may vary from company to company, however, make sure to ask questions pertaining to the services mentioned above. Once you have found and hired a good company, you will have more free time to focus on the more important picture, such as reviewing weekly action lists or possibly attending quarterly meetings to make decisions that impact the overall direction of the association. This will free you from being bogged down by day-to-day headaches and adminstrative operations.