What Are the Risks of Self-Managed HOAs?
The ideal scenario is that every single Community Association (HOA) has a management company, but that isn’t always the case. While it’s possible for Board Members to self-manage, many associations eventually transition to some type of management service (accounting, administration, or maintenance services) or full-service management. This is because there are several risks involved in self-management, which include problems with legal compliance, lawsuits, and escalated conflict between homeowners and Board Members. These problems can be prevented with a reliable community association management company because their managers are experts in interpreting and abiding by the association’s legal documents and ensuring that the Board Members are held to the highest ethical standards. It’s also important to remember that having a management company does not revoke the need for a Board of Directors. All community associations need a Board of Directors; having a management company does not mean the Board won’t make decisions, it just means those decisions will be guided by experts.
Why Does an HOA Need a Management Company Instead of Being Self-Managed?
Initiating self-management can be difficult because serving on the Board is a volunteer position, so there’s no compensation. As a result, managing the association along with other personal responsibilities can become overbearing for many people who aren’t dedicated to a career in association management. A benefit of a management company is that Board Members can continue to live a fulfilling and enjoyable life while serving because the time-consuming and complicated matters are handled by a certified manager and various other departments of the management company. In addition, since management companies often serve as mediators between the Board and homeowners, conflict within the community can be minimized, which makes living in the community more enjoyable.
What if a community association can’t afford a management company? Hiring a management company does slightly increase expenses, but the benefit is worthwhile for the peace of mind of each homeowner. If an community association’s finances have been mismanaged for years and there is no room in the budget to receive full-service management, it may be beneficial for the Board to continue to manage maintenance matters and hire a management company to take over the accounting and administrative duties, which can place the community association in a better financial position. This type of assistance can help in multiple ways, like minimizing delinquencies and increasing reserves for future projects. After some time, the community association may be able to transition to full-service management.
Building a Successful HOA Means Hiring the Right Management Company
Finally, every management company isn’t created equally, so it’s important to always seek out services from an Accredited Association Management Company (AAMC). According to the Community Associations Institute (CAI), “An Accredited Association Management Company ensures that their staff have the skills, experience, and integrity to help communities succeed. Its managers have advanced training and demonstrate commitment to the industry—just the type of professionals that community association boards seek to hire”. As a result, if an association needs a great amount of assistance, it’s best to seek out services from an Accredited Association Management Company (AAMC) that provides tailored services to the community association and is willing to assign a dedicated manager to work with the Board. A good rule of thumb when selecting a management company is if the proposal seems too good to be true, it probably is. An extremely low bid insinuates that your community association won’t be the management companies’ priority. It’s best practice for every Community Association to work with a dedicated and reliable management company. Contact us for more information about serving the unique needs of your association.