Hiring an HOA management company can be one of the best decisions board members can make. A management company is especially important for larger communities. While small HOAs can get away with self-management, larger ones typically have more amenities and residents as well as more complex operations.
The Benefits of Hiring an HOA Management Company
Homeowners associations are governed by a board of directors. These directors are volunteer homeowners who are elected by their peers. Because board members are volunteers, they don’t usually have the luxury of dedicating all their time to HOA management. For this reason, many communities hire professional help.
Here are the benefits of a HOA management company.
1. Professional Expertise and Experience
HOA management companies bring extensive knowledge of community oversight, financial management, and legal compliance. Their expertise ensures that the association operates within state laws, local regulations, and its own governing documents.
Additionally, HOA management companies have years of experience. They know what to do when faced with certain problems because they’ve encountered them before. Board members can rely on experts to manage their community.
2. Knowledge of Accounting and Financial Management
Managing an HOA’s finances can be challenging. A professional management company can help create and maintain budgets, collect dues, oversee expenses, and handle financial reporting. They also ensure timely and accurate record-keeping and tax preparation.
Many board members lack the necessary expertise in accounting and financial management. Fortunately, an HOA management company does.
3. Efficient Maintenance and Vendor Management
HOA management companies coordinate landscaping, maintenance, security, and other services with vendors. They negotiate contracts, oversee vendor performance, and ensure that common areas remain well-maintained. As a result, having an HOA management company can improve property values and enhance resident satisfaction.
Moreover, HOA management companies also usually have a network of vetted contractors. These are vendors that they have worked with in the past and can vouch for their services. An HOA that hires the management company gains access to this pool of vendors.
4. Rule Enforcement and Compliance
Another benefit of hiring an HOA management company is consistent rule enforcement.
A management company can help ensure compliance with the governing documents, handle violations, resolve disputes, and enforce the rules in a professional and fair manner.
5. Effective Communication and Conflict Resolution
HOA management companies serve as a bridge between the board and homeowners. They send notices, post updates, and distribute all important documents. They also handle homeowner inquiries, complaints, and disputes. This way, board members won’t have to field calls from homeowners at all times of the day.
6. Administrative Support
An HOA management company can handle all administrative tasks, from scheduling board meetings and recording minutes to maintaining legal documents and processing insurance claims.
Most management companies have a dedicated team of administrative staff members. The HOA manager then works with this team to manage day-to-day operations.
7. Emergency and Crisis Management
An HOA management company can be a great partner during natural disasters, accidents, or emergencies. Management companies already have protocols in place to respond to these events efficiently and effectively. They can coordinate emergency repairs, communicate with homeowners, and work with insurance providers to get the community back on track.
8. Legal Guidance and Risk Mitigation
HOA management companies help associations stay compliant with ever-changing laws and regulations.
They work with legal professionals to minimize liability risks. Moreover, management companies can help the board ensure policies align with the law.
9. Increased Board Efficiency
Another benefit of hiring an HOA management company is increased board efficiency. Board members are typically volunteers with limited time and expertise.
A management company can alleviate the board’s workload by handling daily operations. This allows the board to focus on long-term planning and decision-making.
10. Improved Homeowner Satisfaction
With professional management, residents receive better service, quicker responses to concerns, and well-maintained amenities. This fosters a sense of community, enhances property values, and improves overall homeowner satisfaction.
How to Hire a HOA Management Company
Clearly, an HOA management company brings many key benefits. However, board members may not be familiar with the hiring process, making it difficult to partner with the right one.
Here are the steps to follow when hiring an HOA management company.
1. Determine Needs
The first step in hiring an HOA management company is to determine the association’s needs. What types of services does the HOA board require? Is the board looking for full-service management or remote management? Some companies offer their services on a carte basis, allowing boards to pick and choose.
2. Start Search
The second step in hiring an HOA management company is to start the search process. Boards that go into this process blind probably won’t have any leads. The best way to get them is to search online or ask other communities for referrals. It’s always good to read reviews and hear references.
3. Distribute and Review RFPs
Next, the HOA board should create and distribute requests for proposals (RFPs). An RFP standardizes the search process and details what the HOA wants to know about the candidates. It should include the project background and context, a detailed scope of work, specific requirements, and budget criteria.
With an RFP, potential candidates can send in the information the HOA seeks. The HOA board can then evaluate all the proposals side by side, using the same criteria.
It is important to remember that cheaper is not always better. Some companies may offer low rates because their services are subpar. When evaluating candidates, board members should weigh everything against each other.
4. Interview Candidates
The HOA board can choose to interview all candidates, but it’s best to narrow down the pool first before proceeding with this step. An interview will allow the board to get a better understanding of the company’s core values, work ethic, and personality. These are important, as the HOA’s values should align with the company’s.
Here are some sample questions to ask an HOA management company:
- How long has your company been managing HOAs?
- How many communities do you currently manage, and what is their average size?
- Do you specialize in communities similar to ours in terms of size, budget, and amenities?
- Can you provide references from other HOAs you manage?
- Are you licensed and insured in our state?
- Will we have a dedicated community manager?
- How many HOAs does each manager oversee?
- What services are included in your standard contract?
- Are there any additional fees for specific services?
- How do you handle transitions from a previous management company?
- What is your process for collecting assessments and handling delinquent accounts?
- What internal controls do you have in place to prevent financial mismanagement or fraud?
- What is your process for addressing homeowner complaints and disputes?
- Do you provide legal support or work with an attorney for compliance and dispute resolution?
- Do you have a network of preferred vendors for maintenance, landscaping, and repairs?
- Do you handle emergency maintenance, and what is your response time?
- What technology or software do you use to manage HOA operations?
- Do you provide an online portal for homeowners to make payments, access documents, and submit requests?
5. Negotiate the Contract
Even though a company may have a standard service contract, board members shouldn’t be afraid to negotiate. Negotiations can help the HOA secure a better deal, such as lower pricing or additional services at no extra cost.
It’s also a good idea to enter a one-year contract with a new HOA management company. This gives the HOA more flexibility and control over termination. It acts as a sort of trial period before renewing for a longer term. Shorter terms typically come with higher pricing.
If an HOA wants to enter a long-term contract for a significant discount, board members should make sure the contract comes with a termination clause. This clause should clearly state any fees that come with early termination. It should also indicate what causes an HOA can use to terminate the contract.
6. Monitor Performance
The work doesn’t stop after signing the management agreement. Board members must continuously monitor and evaluate the performance of the HOA management company
This ensures that the company makes good on all deliverables in a timely and quality manner. Should the HOA board have complaints, it’s important to bring them up and address them as soon as possible.
What to Look for in a HOA Management Company
When hiring HOA management companies, several factors must be considered to ensure the company aligns with the community’s needs.
Here are the things to look for when hiring an HOA management company.
1. Experience and Reputation
Look for a company with a proven track record in HOA management. Research their experience in handling communities of similar size and complexity. Check online reviews, ask for client references, and verify their credentials.
2. Knowledge of State and Local HOA Laws
HOA management companies should be well-versed in federal, state, and local laws. They should also understand fair housing regulations, dues collection laws, and compliance requirements to minimize legal risks.
In Chicago, two of the major state laws include the Illinois Common Interest Community Act and the Illinois Condominium Property Act.
3. Comprehensive Financial Management
Board members should ensure the company offers comprehensive financial services, including budgeting, reserve fund management, dues collection, financial reporting, and tax preparation.
The company should also uphold transparency and accountability.
4. Effective Communication and Responsiveness
A reliable management company should provide timely responses to homeowners and board members. Look for companies that offer multiple communication channels, such as email, phone support, and online portals.
5. Strong Vendor and Maintenance Oversight
This is another thing to look for when hiring an HOA management company. The company should have established relationships with reputable vendors. They should also oversee contracts, negotiate pricing, and ensure vendors perform their jobs well.
6. Rule Enforcement and Conflict Resolution
An HOA management company should consistently enforce community rules. At the same time, they should handle disputes fairly and professionally. It is important to ask about their process for dealing with violations and conflict within the community.
7. Technology and Online Services
Modern HOA management companies offer digital tools, such as homeowner portals, online payments, automated violation tracking, and mobile-friendly platforms. Boards don’t want a company stuck in the past, but they also want a company that caters to all demographics.
8. Availability and Emergency Support
Another thing to look for when hiring an HOA management company is emergency support. A good management company should offer 24/7 emergency response services to handle urgent issues. The board should look elsewhere if a company doesn’t have a dedicated point of contact for emergencies.
9. Customization and Flexibility
Every HOA has unique needs. The management company should be able to tailor its services to fit each community, whether they need full-service management or assistance with specific tasks like financial management.
10. Transparent Pricing and Contract Terms
Board members should review their contracts carefully before hiring an HOA management company.
This helps ensure transparency in pricing and no hidden fees. They should also look for flexibility in service terms and a clear termination policy.
What Does HOA Management Company Do?
An HOA management company helps homeowners associations with day-to-day operations. The exact responsibilities of a management company depend on the scope of work defined in the management agreement.
What are the responsibilities of an HOA management company? In general, an HOA management company does the following:
- Enforces community rules, CC&Rs, and bylaws
- Handles homeowner communications and complaints
- Collects dues, assessments, and fines
- Manages the HOA’s budget and financial reports
- Oversees reserve fund management and planning
- Processes invoices and payments to vendors
- Oversees maintenance and repairs for common areas
- Hires and supervises vendors
- Conducts property inspections for compliance and upkeep
- Manages violations and rule enforcement
- Mediates conflicts between homeowners and the board
- Ensures compliance with state and local laws
- Communicates with homeowners
- Organizes social events and community activities
- Schedules and manages emergency repairs
The Bottom Line
Hiring an HOA management company isn’t always an easy process, but it is worth the time and effort. When board members invest in good management, they can ease the burden of their workload and ensure successful community operations.
Hillcrest offers HOA management services to communities in Chicago. Call us today at 630-627-3303 or contact us online to request a proposal!
