A Common Misunderstanding: HOA vs. Property Management Company
As a condominium owner, it is natural to feel frustrated when it takes too long for a maintenance vendor to arrive, or when you head to work and the parking lot isn’t plowed. You may not deem fair one of the community’s rules. It is a common misunderstanding that your property management company is the party at the root of these issues. In this article, we explain the difference between the homeowners’ association and the management company.
The role of an HOA
The role of a homeowners’ association for single family and town home communities is similar. Homeowners are responsible for what is clearly their own property. But, for shared property, someone needs to represent the interests of the homeowners who share. This includes shared walls (and any pipes within in them), and shared outdoor property such as neighborhood signs or clubhouses.
Condo associations have additional responsibilities, since members share more walls, as well as hallways, roofs, and parking lots.
An HOA board is elected to represent the interests homeowners within the HOA, manage the budget, and take care of administrative tasks. An example is choosing and hiring a landscaping company. HOAs have governing legal documents that state the rules and regulations for the community, guiding how it is to operate. These documents were created at HOA inception, and can be revised and amended as needed over time.
HOA board members are volunteers who care about the community enough to dedicate their time. They must be homeowners within the community, and are not paid. They pay assessments just like everyone else in the association.
The role of a Property Management Company
Property management companies exist to help HOAs manage their administrative tasks, and to be advisors on expertise that board members may not have.
Running an HOA is a lot of work
Depending on the size and type of community, running an HOA can be quite a lot of work. The board is there to enforce the rules and deal with homeowners who don’t like the rules. HOAs have to manage the association’s budget. If the association runs out of funds for the things it needs to pay for, the homeowners will suffer the consequences. That is why it is crucial that the HOA effectively collect assessments. The board members have a fiduciary responsibility not to mismanage the community’s money. Also, an association is responsible for managing vendors for repair and maintenance of all common areas. In a condo community with many units, this is a very large task.
Property management companies work for HOAs
The amount of work and expertise required to run an HOA is the reason HOAs hire property management companies. Property management companies have tools for HOAs and their members to use to help with administrative tasks. For example, property management companies can offer a means for online payments and a community website. These companies send out letters for fines and overdue assessments based on the fine schedule that the HOA creates. This is merely on behalf of the HOA. Homeowners mistakenly think that the property management company created the fine schedule, or the rules. But, in fact, the company is simply there to enforce the rules that the HOA themselves set up.
Property management companies also act as advisors to HOAs. One area this can be really helpful is in the accounting and financial statements. Often, an accountant homeowner will volunteer to be a board member, but this is not always feasible year over year. A management company can do the budgeting and financial statements on behalf of the board.
Additionally, such companies typically assist the HOA in managing maintenance. However, they do not conduct maintenance and repairs themselves. The property management company’s role is to ensure all maintenance vendors the HOA recommends are bonded and insured. Then it is up to the vendor to schedule the work with the homeowner, and complete it.
HOA maintenance responsibilities
HOA maintenance responsibilities include:
- common lawns, trees, trails, ponds, and dog waste stations
- clubhouse, party rooms, fitness room, and pools
- shingles and roof for condominiums
- shared walls and pipes within them
- hallways, stairs, elevators
- mail room
- balconies and patios for condominiums
- parking lots and sidewalks
- usually some utilities
For these shared items, the HOA board is to work with necessary vendors to take care of repair and upkeep.
Let’s look at snow plowing as an example. One plow trip alone can cost hundreds of dollars out of the HOA’s budget. Like with all of the above responsibilities, the property management company is not the vendor who takes care of the upkeep. They simply do their best to schedule the plow, and it is up the snow plow company who of their customers they plow first. The snow plow company may service 100 customers, so not all communities will feel like they are first in line. This comes with the territory when living in shared-property communities.
Understanding who is responsible for what can be very empowering. It can relieve feeling that you are not in control. Plus it enables you to go to the correct entity to address your concerns. HOAs are required to have board meetings with open forum for homeowners to express their concerns.