3 Things You Need To Know About HOA Management Companies



Most people mistake a homeowners’ association, also known as HOA, to be the same as an HOA management company. While HOA is simply an association of volunteer homeowners with the primary purpose of attending to the community’s needs and wants, an HOA management company specializes in offering professional community management. 

To properly define these roles and responsibilities of HOA management companies, this article will address three major things you need to know about such companies.

1.     The Accounting Role

All HOA management companies have an accounting section that works for the homeowners’ association. These financial-related roles are duties that the homeowners may not have the time to perform. They include the following: 

  • Dues Collection: HOA management companies are often saddled with the responsibility of collecting dues from the community members on behalf of the HOA. It should be noted that the management companies don’t hold on to these monies; rather, they place the collected amount into the association’s account. 

Aside from collecting dues, they also perform other financial activities such as conducting business utilities for community members. The HOA performs this duty on behalf of the homeowners’ board of directors, transacted with total transparency at that.

  • Organizing Financial Reports: The HOA management company could also be tasked to prepare financial reports for the board of directors. The release of these financial reports could have a set periodic schedule, like a weekly, monthly, or bi-monthly arrangement, depending on what was agreed upon with the board. These financial reports enable the homeowners’ boards to be well aware of the current financial state of their association. 

The report usually covers all financial engagements of the association, including the monthly income of staff, expenditures, excess, and reserves. Such reports could also be cascaded to the rest of the homeowners as well, for their information.

  • Escrow Duties: Whenever there’s a situation that involves drawing up documents for properties to be sold or leased within the association, it will be the official duty of an HOA management company like AMS Northwest to present this property document to the new homeowners. By acting as escrows, they could assist in ensuring transparency between the new homebuyers and the homeowners’ association.

2. The Administrative Role

The operation system of HOA management companies requires them to perform certain administrative duties to ensure the smooth management and facilitation of the homeowners’ association. For this reason, they employ the services of a manager who’s an expert in discharging administrative duties. The manager is tasked with overseeing the various spheres of work that come with HOA management. 

Furthermore, the manager also becomes the primary contact person between the HOA and the community who could help facilitate smoother communication between the homeowners’ association and the HOA management company, thus minimizing conflicts or misunderstandings. However, it’s impossible for the manager to carry out all the administrative responsibilities alone. That’s why most HOA companies usually build a team of highly skilled people in communication and management. 

To clearly outline what they’re up against, here’s a quick peek into the administrative roles of an HOA management team:

  • Facilitating Board Meetings: Board meetings are an important necessity for most communities. They’re not optional because it helps establish a good working relationship between the HOAs and the HOA management company. The meetings usually involve representatives of the HOAs and the representative of HOA management company. Thus, the company organizes, executes, and carries out these board meetings by delegating a team member to fix the meeting day and have board members confirm their availability.

Organizing these meetings ensure that there’s proper communication among the parties involved within the community. It also prevents misunderstandings and allows for conflict resolution, if needed. It’s at such meetings that board members plan progressive actions and map out blueprints to follow. 

Also, the HOA management oversees proper documentation of what happens at each board meeting with an emphasis on conclusions agreed on by board members for record-keeping and reference purposes. This job is usually done by the secretary of the HOA management company.

  • Management Reports: It’s important to note that, before employing an HOA management company, most homeowners associations have certain expectations from the HOA management company. The standard way to let the HOAs know that they’re getting value for the money is to receive periodic management reports. Thus, one crucial responsibility of an HOA management company is to provide the association with an adequate report of the projects at hand, as well as all the activities of the company.

These progress reports could be drawn up weekly, monthly, or quarterly, depending on the pre-agreed pattern between the company and the association. The report doesn’t have to be given during board meetings, though, as that may prolong the meeting’s duration. Rather, it can be delivered via mail to board members before the scheduled meeting so each member could allot adequate time to browse through the reports and table their feedback during the meeting.

  • Enforcement Of Communal Rules And Regulation: Perhaps it’s in the intrinsic nature of humans to occasionally want to break the rules. This is actually the reason why communities form homeowners’ associations; when they come together as a body, every homeowner who’s an association member would be mandated to follow certain rules. These regulations are often drawn up in agreement by the association members for the progress and protection of their community. 

However, despite the association’s efforts, it’s not uncommon to find some members unrepentantly breaking such bylaws. This is where HOA management companies enter the picture—they could help enforce these communal rules of the association. To do this peacefully, they need to make sure that they develop good relations with every community member. In addition, they should also employ managerial strategies that would encourage association members to comply with the stated rules and obligations. 

  • Preparation Of Budgets: Preparing a budget has never been an easy task to undertake. There are too many variables to consider in the process, especially if a homeowners’ association has to deal with various activities and juxtapose these with differing personalities of board members and association members. For this reason, this task becomes one of the most crucial roles that they could delegate to their hired HOA management company. 

In addition, most HOAs prefer to have an annual budget done to give them a definite estimated figure of what they’re expected to contribute within a specific timeframe. Since the association assigns the responsibility of preparing an articulate budget to an HOA management company, the company should always have a financial management expert as part of their team. This person will be in charge of preparing the necessary budgets to ensure that nothing will be overlooked or under appraised.

3. The Site Management Role 

The end goal of any good site management leader is to increase the overall value of the properties they’re managing. In other words, excellent site management practice is necessary to ensure that a community’s value over time is on the increase and not on the decrease. For this reason, homeowners’ associations employ the services of an HOA management company to implement practices that will continually increase the overall market value of their homes. The aim is to make your home environment a place that will always interest homebuyers.  

Due to this objective, site management became a very important aspect to focus on, and any respectable HOA management company will offer well-trained site managers that work around the clock to optimize the values of the homes within their jurisdiction. 

Generally, some of the practices of an experienced site manager include but aren’t limited to the following: 

  • Maintenance Duties: Site managers move around the homes to see what needs to be repaired or improved within specific common areas and the overall vicinity. Their duties also include facilitating the routine servicing and cleaning of their community’s environment. 

This step is undeniably crucial for site management as home buildings break down over time, especially when there could be accumulated construction problems such as leaking roofs and blocked sewage systems if left unchecked and unrepaired. It’s the HOA management company’s responsibility to watch out for and correct these errors before they become reasons that will reduce the overall market value of the homes owned by the association.

  • Coordinates Ethical Environmental Practices: One major way that HOA management companies enact their site management role is through planning and coordinating basic upkeep practices within the community. This move ensures that the homes of the association’s members remain safe, marketable, and inviting, which enables the homes to retain their market value.

These environmental practices that an HOA management company oversees are always in cooperation with the homeowners themselves. For example, the company makes sure that the homeowners maintain their lawns and areas around their respective property or follow the HOA specifications regarding building maintenance and construction guidelines. Other practices that the company enacts include overseeing pool services and waste disposal monitoring, to name a few.

Conclusion

By outlining some of the essential things you need to know about what an HOA management company is all about, like the varied roles they play and tasks they could do for a community, it’s undeniable that these types of management companies could provide and infuse professionalism to an HOA’s managerial and facilitation procedures. 
With this knowledge firmly in place, you should encourage your HOA to consider hiring a good and reputable HOA management company to ensure your community’s optimum growth and seamless operation.  

Comments

  1. All duties and responsibilities of property management companies mentioned are why HOAs hire them. However, most major cases of misappropriation of funds, fraud, charging excessive-duplicative-and unjustified home sales transfer fees, non-competitive bidding practices, etc. are also at the heart of HOA homeowner complaints. Licensing of the profession and regulatory oversight that includes a dispute resolution process are needed. Property management companies are needed and they, not Boards, manage HOAs and there is no shortage in any state concerning homeowner complaints about living in HOAs. Oversight is needed and the number one opponent is property management companies.