If you’re a resident in a planned community, you may be aware that board members and HOA managers both help run the homeowners’ association. But what do HOA management companies do, and how is it different from the board’s responsibilities?
What are HOA Management Companies?
These companies provide homeowners’ associations with a professional support system that helps run the community more smoothly. Managers from these companies are usually hired to do the day-to-day work needed to ensure the community stays organized, and the board’s decisions are carried out.
While they’re there to help, HOA management companies don’t directly control the community. Instead, their role is mainly operational. They work for the association under a management agreement.
What Do HOA Management Companies Do?
What are the responsibilities of an HOA management company? When an association hires a management company, it does so to take care of the practical needs of the community.
The exact scope would depend on the agreement between the HOA and the management company. However, here are some common responsibilities of HOA management companies:
1. Providing Administrative Support
The most common duty an HOA management company would have is overseeing the association’s administrative work. This includes maintaining and preparing records as well as organizing board meetings.
As part of this responsibility, the management company may also oversee the communications sent out to residents, including announcements and notices. Consequently, they may also help organize documents received by the HOA, such as requests.
Good administrative support helps ensure the HOA runs smoothly. Properly preparing and managing records can prevent misunderstandings and delays down the line.
2. Helping Manage Finances
Another common task done by management companies is helping with the association’s finances. Managers can collect HOA dues and process invoices. They may also help prepare financial reports and assist the HOA board in planning the annual budget.
Of course, their role is limited to execution. The management company doesn’t have the authority to make decisions for the HOA budget, as that remains with the board.
However, HOA managers can still provide useful financial insights to help the board make decisions. They can support by showing the directors where their funds are being used and which financial issues need to be addressed.
3. Coordinating with Vendors
HOA managers can coordinate with contractors and vendors on behalf of the HOA board. They can help obtain proposals and handle schedules. Managers can also check whether the contracted work is completed.
However, HOA management companies don’t have absolute authority when hiring a contractor. The board still needs to meet and approve contracts and large expenses.
4. Board Decisions
Homeowners’ associations also rely on HOA management companies for rule enforcement. In this regard, managers can track resident compliance and issue violation notices. They can also help with documenting any homeowner responses the HOA may receive.
The board still has the responsibilities of adopting or amending rules. HOA managers must follow those enforcement processes as approved by the association itself.
Knowing these differences matters since some HOAs believe management companies can create the rules. However, the policies are based on board decisions, with governing documents and state laws regulating how they’re done.
5. Helping Maintain Compliance
Your HOA still needs to follow both state laws and your governing documents. Board members may happen to overlook some matters. With that, HOA management companies can help the board stay compliant by monitoring deadlines and requirements.
Of course, these managers don’t replace legal counsel. If a certain issue or matter needs legal advice, the board should consult an HOA attorney.
Nevertheless, having professional managers will help to raise possible compliance concerns.
What Does the HOA Board Do?
The HOA board is a group of volunteers elected by the membership to run the association. They are responsible for governing community matters and have a fiduciary duty to act in the best interest of the association.
But what’s the difference between their roles and those of HOA management companies? Here are some of the duties the HOA board takes on:
Making Community Decisions
The board has the authority to decide how the association should run, consistent with its governing documents. This includes deciding which policies to adopt and which projects to approve. They also have the responsibility of addressing resident concerns.
Meanwhile, an HOA management company may only provide recommendations, which the board will still need to accept, reject, or amend.
Having this division of duties helps protect the community by retaining the authority to decide with elected homeowners.
Setting the Budget and Priorities
The association’s board of directors has the authority to approve the community’s annual budget and decide how assessments are used. It also determines which projects the HOA should focus on based on the community’s needs.
The management company supports the board by helping prepare and organize financial information. Managers can also help explain trends and data from past records.
However, the final approval of the HOA budget, along with decisions regarding dues and reserves, still remains with the association’s board of directors.
Overseeing the Management Company
Monitoring the management company your HOA hired is another one of the board’s responsibilities. Overseeing these companies is similar to handling any other vendors. The board needs to ensure managers are performing as expected and in accordance with the contract.
In scenarios where the management company is unresponsive or disorganized, the board has the power to address the issue. In such cases, they usually start the process of changing HOA management companies.
Does an HOA Need a Management Company?
Having an HOA management company is not a requirement for all homeowner associations. Usually, smaller communities can do well through self-management, especially if their board members have enough time and experience.
However, this setup can be difficult if the community is bigger. With more members come more finances to manage and administrative tasks to run. Responsibilities in associations with more members are on a larger scale, and ensuring all duties are done can become difficult without external help.
Working Together
HOA management companies handle the day-to-day support that keeps an association functioning, while the HOA board makes the final decisions for the community. When both roles are clearly understood, the association can operate more efficiently, and homeowners know who is responsible for what.
Creative Management Company offers professional community management for HOAs and condo communities in the Greater Houston area. Call us today at 713-772-4420 or contact us online to learn more!
Related Articles:
- What Do HOA Fees Cover for Community Associations?
- HOA Reserve Funds: A Guide for Board Members and Homeowners
- What Is A Resort Community And How To Manage One?
