Originall Published By Cedar Management Group | cedarmanagementgroup.com
HOA board members work hand-in-hand with their HOA management company to run an association. Much like a machine, the HOA board and the management company make up different parts that, together, keep the community in continuous operation.
However, unlike a machine, the lines of responsibility between the HOA board vs HOA management company can start to blur. Before long, HOA managers are performing functions meant for the HOA board.
Discerning which responsibilities fall under the board’s control and which ones belong to the management company is the first step to preventing such a mishap. While an HOA board can benefit from the help of a management company, some duties should remain for the board alone.
After all, HOA managers are not supposed to act as board members in an association. Therefore, the functions they perform should reflect that.
HOA Board Responsibilities
While homeowners should generally take care of their own properties, maintaining shared properties or common areas is the responsibility of the HOA board. Shared properties pertain to pools, clubhouses, community parks, lobbies, neighborhood signs, and even shared walls and pipes.
This applies to community associations for single-family homes and townhomes. In condo associations, HOA board duties also extend to other shared properties, such as roofs, hallways, and parking lots.
Although these duties seem simple on the outside, there is a lot of administrative work that goes into maintaining these properties. An HOA board should create and manage an annual budget, hire vendors, enforce covenants, oversee maintenance, and more.
An association’s governing documents, formed at the inception of the HOA, dictate what the board must do. HOA boards must also uphold certain fiduciary duties and make decisions in the community’s best interests.
All this work ultimately serves an overarching purpose — to maintain property values.
Despite the seemingly glamorous nature of their job, HOA board members do not get preferential treatment or perks. They follow the rules of the association and must pay assessments just like regular homeowners. Furthermore, because board members are volunteers elected into their positions, they also do not receive a salary.
HOA Management Company Responsibilities
Running a community association is, in many ways, similar to running a business — it takes a great deal of work. Though some smaller communities can operate smoothly with the board alone, larger ones require external help.
Most HOA boards bring in an HOA manager or management company to assist with day-to-day operations. While the role of a management company is to offer a helping hand, the board should still retain all decision-making tasks.
HOA management company duties include assisting with administrative work, executive board decisions, and communicating with residents. When it comes to creating policies and fine schedules, the board handles all of that.
Homeowners association management companies essentially act as advisors, not leaders. For instance, while a homeowner with accounting experience can manage the association’s finances and create reports, it is not always practical to perpetually have the same person on the board. HOA management companies employ accounting and financial managers who can help with this area.
Another aspect management companies can help with is maintenance. These companies do not perform repairs and maintenance work themselves, though. Rather, they make sure maintenance vendors have proper insurance and coordinate with them on behalf of the board.
HOA Board vs HOA Management Company: Defining Specific Duties
It is difficult to determine the duties of the HOA board vs HOA management company without concrete examples. Here are some instances used to define the board and the management company’s roles. In most cases, the HOA management company’s involvement is limited to a communicative capacity.
1. Fines and Late Fees In terms of fines and late fees, the HOA management company has no power to make decisions or create policies. The HOA board retains that authority.
The management company, on the other hand, processes the fines and implements the late fee policy. Sending notices to homeowners about their fines and late fees also fall under the HOA management company’s duties. The management company has no right to waive late fees or fines.
2. Rules and Regulations Every association has rules and regulations that govern the community. This can be in the form of operating rules or covenants found in the CC&Rs. Homeowners, board members included, must obey these rules and covenants. They can also submit reporting violations to the board.
Meanwhile, the HOA board must enforce these rules, upholding the CC&Rs. The management company’s role is limited to sending letters and correspondence about the rules per the board’s direction. The company cannot bend the rules for homeowners or excuse certain violations.
3. Maintenance Requests Associations receive maintenance requests on the regular. Homeowners send in these requests, typically using a fixed format, which the board will then review.
The management company will take care of the maintenance request coordination, reserving the decision-making process for the board. Once the board approves or rejects the request, the management company can communicate the result to the homeowner.
4. ARC Requests If a homeowner wants to make architectural changes on their home, they must submit an ARC request. In many associations, an Architectural Review Committee exists to oversee and review these requests.
The committee works with the HOA board to approve or deny requests, making sure they align with the governing documents. The management company will then send correspondence based on the board’s direction.
5. HOA Finances and Audits Some associations allow their HOA managers to sign checks on behalf of the board. However, as a precaution, the board should impose an amount limit for managers or management companies to spend. Any check beyond that set amount should go to a board member (the treasurer in most cases) for signing.
Moreover, the HOA board must also hire a third-party or independent CPA to perform financial audits. Some state laws, like California , require HOAs to conduct financial reviews every so often. Others, like North Carolina , have no such provisions.
Regardless, it is a good idea for any association to have a comprehensive review or audit of their finances. The board should arrange and oversee this audit instead of the management company so as to discourage fraud.
Avoid Common Misunderstandings It is important for HOA boards not to operate under a misapprehension regarding HOA management companies. These companies have limited power and are simply performing their contractual duties.
Learning the difference in responsibilities between the HOA board vs HOA management company is paramount to preventing misunderstandings.
HOA board members may be tempted to delegate decision-making tasks to the management company to lighten their own load. However, HOA boards have a duty to the community and must, therefore, refrain from giving the management company too much control.
Community associations looking to partner with an excellent HOA management company should consider Cedar Management Group. Feel free to contact us for a free quote, email us at firstname.lastname@example.org , or call us at (877) 252-3327.