HOA management companies are third-party organizations hired by residential communities to oversee and handle the day-to-day operations of a Homeowners Association (HOA). But what exactly do these companies do, and how do the best HOA companies manage their communities?
This article covers everything you need to know about HOA management companies, including their importance, the key strategies they use to manage communities, and reasons why your HOA should consider hiring one.
What Is an HOA?
Homeowners Association (HOA) is a private, non-profit organization that governs and enforces rules within a subdivision, condominium building, or planned community.
Residents within an HOA pay monthly, quarterly, or yearly fees to cover the costs of maintaining common areas and upkeeping facilities. These fees are mandatory and automatically included in the contract upon purchasing a property within the governed area.
If a resident misses or refuses to pay their HOA fees, the association may impose penalties such as late fees, interest charges, or suspension of access to community amenities. In more serious cases, the HOA can place a lien on the property or even request foreclosure.
HOAs are among the biggest private organizations in the United States. According to the National Association of Realtors, roughly 30% of American citizens—equivalent to 74 million people—live in communities with HOAs. This number continues to grow as new neighborhoods and properties are being built.
The association is managed by a board of elected homeowners who oversee the community’s operations, budgeting, and rule enforcement.
What Is the Purpose of an HOA?
The HOA exists to preserve property values, maintain order, and enhance the quality of life of its residents. The funds it receives from its members go to the betterment of the community, and include responsibilities and services like:
- Trash collection and removal
- Seasonal landscaping
- Snow removal
- Stormwater management and drainage system upkeep
- Pest control in shared areas or community buildings
- Upkeep of fences, gates, and entryways
- Management of community events or social gatherings
- Trimming trees and mowing common lawns and parks
- Security services
In addition to these responsibilities, the HOA acts as the intermediary between residents. If a resident steps out of line or violates the community’s rules, the HOA addresses the issue via written warnings, fines, or corrective action. The HOA may also mediate disputes between neighbors, such as disagreements over noise, property boundaries, or pet behavior.
The rules and regulations of an HOA are outlined in a legally binding document known as Covenants, Conditions, and Restrictions (CC&Rs).
CC&Rs vary from community to community, but they typically include guidelines related to property appearance, landscaping, architectural changes, noise levels, parking, and the use of common areas. They may also detail restrictions on rentals, business activity inside homes, and the number or type of pets allowed.
CC&Rs maintain the community’s standards and protect everyone’s investment. For example, one of the most common rules in the CC&Rs restricts exterior modifications, such as paint colors, fencing styles, or building additions. These restrictions help maintain a consistent appearance throughout the neighborhood.
What Is HOA Management?
The HOA is governed by a board of directors elected by the homeowners, who themselves are members of the community. These board members are volunteers and don’t receive payment for their contributions. And since they usually have other jobs and personal responsibilities outside the HOA, they often can’t dedicate all their time to managing the HOA’s daily needs.
To remedy this, many HOAs hire professional HOA management companies to handle the day-to-day operations and administrative tasks of the community. The company’s responsibilities include:
- Collecting HOA fees and payments
- Paying bills and managing expenses
- Responding to maintenance requests from homeowners
- Communicating with homeowners about important events, rules, and updates
- Organizing board meetings
- Preparing financial reports
- Issuing violations and managing files
- Following up on residents who have been issued violations
With the basic responsibilities covered, board members can focus on more pressing matters like setting policies and making major decisions for the community.
HOA management companies receive payment through management fees, which can be a flat rate or a percentage of the HOA’s budget.
Why Is Effective HOA Management Important?
Those who live in HOA-run communities pay monthly, quarterly, or yearly fees for the upkeep and management of shared spaces and services.
Naturally, these homeowners expect to receive value for their payments. Imagine paying hundreds of dollars a year and seeing broken gates, overgrown landscaping, or unanswered complaints; it would discourage homeowners from paying the set fees because they’re not getting their money’s worth.
And though HOAs are private organizations, homeowners are well within their rights to file a complaint against an HOA if the organization doesn’t fulfill the end of its bargain.
Effective HOA management not only prevents this from happening but also ensures there’s unity in the community. If homeowners see that what they’re paying for is being put to good use, they’re more likely to feel satisfied, involved, and cooperative. Trust is valuable to the continued success of an HOA-run community.
Effective HOA management also helps prevent small problems from escalating into larger, more expensive issues. Proper management can save time, money, and stress for everyone involved, all the while protecting the residents’ investment.
Key Strategies The Best HOA Companies Use to Manage Their Communities
Here are some of the top strategies reputable HOA companies use to manage their communities:
Transparent and Proactive HOA Communication
HOA companies have dozens of responsibilities, but none is more important than transparent and proactive communication.
Homeowners need to be aware of how their fees are being used, what projects are underway, and how decisions are made so they feel valued, respected, and involved.
Similarly, the HOA board must stay informed about residents’ thoughts, concerns, and expectations to effectively represent the community.
HOA Board Communication
A good management company maintains regular contact with members of the HOA board. They update the board about finances, maintenance schedules, vendor performance, and community issues. They also offer solutions to maximize the community’s resources.
HOA Community Communications
An HOA management company acts as the primary point of contact between the board and the residents. When the board has an announcement to make, whether it relates to upcoming votes, meetings, policy changes, or community events, the management company makes sure all residents are informed.
HOA companies keep homeowners informed about important updates through various channels, including email communication, texts, newsletters, and meetings.
Some companies also maintain a user-friendly website where residents can check event calendars, access important documents, and find important contact information of the management company and the HOA board.
HOA Financial Management and HOA Budgeting
Unless they have experience with handling fees, board members typically have limited knowledge on how to handle HOA finances and budgets. Management companies take that responsibility off their hands.
The person responsible for HOA finances is called a financial manager. Their responsibilities include:
- Maintaining financial records
- Creating a budget
- Tracking income and expenses
- Managing accounts payments
- Planning and managing reserve funds for future repairs and replacements
- Implementing and managing an assessment collection policy
- Ensuring the timely collection of homeowner dues and assessment
- Answering questions and concerns about dues and assessments
HOA Maintenance & Vendor Management
HOA management companies have contacts across dozens of industries, allowing them to select trusted third-party service providers that fit the budget and the work the community needs.
They contact, schedule, and coordinate with these vendors, and once hired, regularly check in to ensure they fulfill the responsibilities outlined in their contracts.
If a homeowner requires the personal service of vendors, the management company can also connect them with reliable contractors from their network, often at a reduced price.
HOA Legal and Regulatory Compliance
Just because an HOA is private doesn’t mean it’s exempt from local and state rules and regulations.
HOA management companies make sure the organization stays compliant with these rules and keep board members up to date on legal changes.
And if they’re faced with a legal issue that’s outside their scope, they can refer board members to the association’s attorney.
HOA Management Software
Reputable HOA management companies utilize various HOA management software to save time and money.
HOA software takes care of accounting, billing and invoicing, document management, website management, and fee collection.
Many HOA management software also provide detailed reports and analytics so HOA managers can make informed decisions about finances, maintenance planning, and vendor performance.
Focus on HOA Resident Satisfaction and Community Building
The primary goal of an HOA management company is to ensure the satisfaction of all residents and boost community engagement.
With the approval of the board, HOA companies can create organized events, social gatherings, and volunteer opportunities to bring neighbors together and encourage good community relations.
HOA management companies can also add value to the neighborhood. When a buyer learns about how proactive and involved the HOA is, they’re more likely to purchase a property within that community.
Why Hire a Professional HOA Management?
Hiring a professional HOA management company is one of the smartest investments an HOA can make for the community.
Remember that the board members running the HOA are volunteers and often don’t have the experience or expertise to manage an organization with dozens of paying members.
HOA management companies take care of everything the community needs behind the scenes while providing legal, professional advice to those responsible for running the community.
Knowing that professionals handle the residents’ fees and regulations puts people more at ease and increases their trust in the organization.
HOA management companies:
- Provide reliable and sound guidance based on years of experience managing communities of all sizes
- Save board members’ time and stress by handling day-to-day tasks like maintenance coordination and fee collection.
- Offer access to trusted vendors who deliver quality work at competitive rates.
- Ensure legal and regulatory compliance to protect the HOA from liability and costly mistakes.
- Help resolve conflicts fairly by acting as neutral third parties in resident disputes.
- Use technology and software tools to streamline operations and provide real-time insights.
- Manage the HOA’s finances responsibly through budgeting, reporting, and timely collection of dues
Lifetime HOA Management is one of the most reputable management companies in the United States.
We’ve managed over 100 communities, boast a 95% client retention, and have over 9 years of experience in the field.
Our contracts are among the most flexible in the market, allowing HOAs to cancel anytime with a 60-day notice. We also run a 24-hour hotline for emergencies so we can address issues as soon as they arise.
Problems With HOA Management Companies
Making an informed decision also means understanding the problems that may arise when hiring an HOA management company. Here:
- Lack of Transparency: Less reputable HOA management companies practice unfair tactics like hidden fees, unclear billing, and vague financial reporting, which do more harm than good to the community.
- Poor Communication: Some companies fail to keep residents and boards informed regularly, leading to confusion and frustration. This usually happens when the HOA company is new or has limited employees.
- Extra costs: Hiring a management company adds ongoing costs to the HOA budget. Residents with limited budgets may not be happy with the extra fees, especially if they don’t see the benefits of these costs.
- Loss of control: When an HOA management company takes over, homeowners may feel like they have less control over community decisions. They may consider the HOA management company as ‘outsiders’ and don’t have their best interests in mind.
- Overreliance on HOA Management: HOA management companies save board members a lot of time and energy by covering basic responsibilities like fee collection, maintenance, and the like. But when the HOA decides to let go of the management company, they may struggle to keep up with operations, deadlines, and homeowner expectations, especially if the board hasn’t been actively involved in the HOA’s operations for a while.
The majority of these issues can be solved by hiring a reputable HOA management company like Lifetime HOA Management. A trusted company has financial transparency, fast service and response time, and excellent customer service to alleviate the worries of residents.
In cases where budget is a concern, some management companies take a percentage of collected fees rather than a flat monthly rate. This ensures their payment is proportional to the association’s budget.
Many also take the time to educate board members about the processes they handle, so the HOA isn’t left in the dark if they ever decide to self-manage in the future.
What to Look For In an HOA Management Company
When searching for an HOA management company, keep these factors in mind:
- Credibility: Look for a company with positive reviews or testimonials. Make sure they’re licensed, insured, and affiliated with professional organizations.
- Experience: A company with years of experience will be better equipped to handle unexpected or difficult situations, address legal complications, and provide reliable vendors.
- Flexibility: You don’t want to be locked in a long-term contract without the ability to adjust or exit if the company isn’t meeting expectations. Search for a company that offers clear cancellation policies and flexible terms.
- Ease of communication: What channels of communication do they offer? Do they have a dedicated customer service team, or do they handle all complaints through one manager? HOA management companies should provide multiple ways to get in touch and have the ability to respond promptly to both residents and board members.
Frequently Asked Questions (FAQs)
Can homeowners contact the management company directly?
Absolutely. In fact, HOA management companies actively encourage homeowners to contact them about any HOA-related concern, whether that be payments, violations, or general clarifications.
If the question is outside the management’s scope, they’ll relay the information to the board of directors and contact the homeowners as soon as they respond.
What happens if the HOA management company makes a mistake?
With years of experience, reputable HOA management companies are meticulous in their work. However, mistakes can happen. It’s for this reason that HOA management companies carry liability insurance so they can be held accountable for serious errors.
Can HOA management services be customized?
Yes. Some HOAs choose to delegate almost all operational responsibilities to the management company, handling only policy decisions themselves. Others prefer to select specific services they require, such as financial management. The more the responsibility an HOA management has, the higher its rate.
Can a management company enforce HOA rules?
No, HOA management companies aren’t legally allowed to enforce HOA rules without the go-ahead of board members.
Management companies can issue notices and process violations on behalf of the HOA, but they can’t create or change rules. That responsibility lies solely on the HOA’s board of directors.
Do homeowners vote on hiring a management company?
HOAs may consult with homeowners about hiring a management company if the decision will greatly affect how much they’re paying every month. However, the final decision typically rests on the HOA board of directors. They have all the inside knowledge of how things work, allowing them to decide whether hiring a management company is the best solution for the organization.
