There is a lot of confusion surrounding HOA vs. property management. Many use these two terms interchangeably, but they are not the same thing. While both terms relate to real estate management, they have different goals and responsibilities.
HOA vs Property Management: What’s the Difference?
Homeowners associations manage communities, with responsibilities ranging from collecting dues to enforcing rules. They are pretty common in the United States, with an estimated 365,000 community associations in 2023. They can take many forms, including, but not limited to, single-family communities, condo associations, and townhome communities.
While many of these associations are self-managed, many more turn to professional management companies. When it comes to management, two terms are often used interchangeably: HOA management and property management.
What is HOA Management?
HOA management refers to the management of homeowners associations. This usually involves collecting dues, enforcing rules, resolving disputes, and maintaining common areas. A company that offers this type of service is called an HOA management company.
What is Property Management?
Property management refers to the management of rental properties. This usually involves collecting rent, enforcing lease agreements, screening tenants, and handling evictions. A company that offers this type of service is called a property management company.
Responsibilities of an HOA Management Company
An HOA management company handles many aspects of community management, but specific responsibilities can vary depending on the management contract. Some associations require full-service management, while others only need select services. That said, some responsibilities are more common than others.
What Does a Management Company Do for an HOA?
An HOA management company’s services for a homeowners association typically include the following:
- Collecting fees and assessments from homeowners
- Managing delinquent accounts and ensuring unpaid balances are settled
- Managing and planning reserves
- Maintaining common areas, including amenities, streets, and landscaping
- Scheduling inspections and maintenance work
- Overseeing repairs
- Hiring and coordinating with vendors
- Inspecting the community for potential violations
- Enforcing the rules and regulations
- Collecting fines for violations
- Managing the community’s insurance policies
- Responding to homeowner complaints
- Resolving disputes
- Communicating with homeowners
- Attending and organizing board meetings
- Preparing financial statements and reports
- Accounting and bookkeeping
- Preparing tax returns
- Guiding board members and providing insights
- Ensuring compliance with state laws and the governing documents
What Does a Management Company Do for a Condo Association?
While the needs of a condo association mirror those of an HOA for the most part, there are some key differences brought on by structural differences. Condominiums have more shared elements, requiring a special understanding of maintenance and policies.
An HOA management company’s services for a condo association typically include the following:
- Collecting fees and assessments from unit owners
- Managing delinquent accounts and ensuring unpaid balances are settled
- Managing and planning reserves
- Maintaining common elements, including the building exterior, roofs, hallways, common walls, plumbing, elevators, and HVAC systems
- Scheduling inspections and maintenance work
- Overseeing repairs
- Hiring and coordinating with vendors
- Inspecting the condominium for potential violations
- Enforcing the rules and regulations
- Collecting fines for violations
- Managing the condo’s insurance policies
- Responding to unit owner complaints
- Resolving disputes
- Communicating with unit owners
- Attending and organizing board meetings
- Preparing financial statements and reports
- Accounting and bookkeeping
- Preparing tax returns
- Guiding board members and providing insights
- Ensuring compliance with state laws and the governing documents
Responsibilities of a Property Management Company
As with an HOA management company, the specific responsibilities of an association property management company will depend on the management agreement. It is essential to review the agreement before signing to ensure all of the property’s needs are met.
What Does a Property Management Company do for HOA?
A property management company typically deals with rental properties. Homeowners associations don’t always have rental properties, which is why many HOAs don’t need property management. Most of the time, an HOA will only require the services of an HOA management company.
Even with rental properties, an HOA’s agreement with an HOA management company will usually cover rental management. That said, an HOA property management company can still be helpful if an HOA only requires rental management services.
An HOA property management company can help with rent collection, tenant screening and management, rule enforcement, tax preparation, accounting and bookkeeping, maintenance, and communication. If an HOA rents out its amenities, the property manager can handle reservations and bookings.
What Does a Property Management Company Do for a Condo Association?
Condo property management can benefit a condo association that rents out its amenities or units or is part of a larger mixed-use development. Services include, but are not limited to, rent collection, tenant screening and management, rule enforcement, tax preparation, accounting and bookkeeping, maintenance, and communication.
Many condo associations also have amenities such as swimming pools, fitness centers, clubhouses, and tennis courts. Property management for condo associations can handle amenity reservations and oversight if a condo makes these amenities open for rent.
Problems With HOA Management Companies
Managing an HOA is a difficult endeavor, which is why many self-managed HOA boards turn to professional management for assistance. Unfortunately, not all companies are equal. Some offer subpar services and don’t meet communities’ expectations.
Here are signs that an HOA needs to switch management.
1. Poor Communication
Communication is the foundation of good management. If an HOA management company fails to keep open lines of communication with the HOA board and the homeowners, it’s time to make a change.
2. Lack of Transparency
Transparency is necessary in any relationship, including the one between an HOA and its management company. If the management company hides information from the board or displays a lack of financial integrity, the board should consider non-renewal of the contract.
3. Maintenance Issues
A community is bound to have maintenance problems, but a good management team will always stay on top of everything. A surefire way things aren’t going well is when maintenance issues are left unresolved and begin to pile up.
4. Inconsistent Enforcement
Rule enforcement must always be fair, consistent, and uniform. When a management company starts to enforce the rules selectively, it’s not only a sign of unprofessional behavior but also a gateway to liability.
5. High Turnover Rate
Not all problems are external. One thing that HOAs should look out for is a high turnover rate within the management team.
If board members find that their manager constantly changes or staff members consistently leave the company, something may be wrong internally.
Do What’s Best: HOA vs Property Management
Understanding the difference between HOA vs property management is only the first step to better management. Board members should strive to pursue continuing education and familiarize themselves with best practices. The alternative is to hire a competent HOA management company to share the burden.
Hillcrest helps both homeowners associations and condo associations in Chicagoland. Call us today at 630-627-3303 or contact us online to request a proposal!
