Understanding HOA Board roles vs. HOA Management Company roles

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 constant operation.

The lines of accountability between the HOA board and the HOA management business, unlike a machine, might begin to blur. HOA managers will soon be undertaking tasks that the HOA board should perform. The first step in avoiding a mistake is determining which obligations belong to the board of directors and the management business. While a management business can assist an HOA board, some responsibilities should be left alone to the board. 

After all, HOA managers aren’t supposed to serve on an association’s board of directors. As a result, the tasks they undertake should reflect this.

What are the responsibilities of the HOA Board?

It is a known fact that homeowners should typically take care of their properties. The HOA board is responsible for maintaining shared properties or communal areas. Clubhouses, lobbies, neighborhood signs, community parks, not to mention shared walls and pipes are examples of shared properties. HOA boards must also uphold specific fiduciary duties and make decisions in the community’s best interests. You’d think they get advantages in their job, but board members do not get preferential treatment or perks.

What are the responsibilities of the HOA Management Company?

Operating a community association is similar to running a business in that it requires a significant amount of effort. Most HOA boards hire an HOA manager or management agency to assist with day-to-day operations. While the goal of a management company is to help, all decision-making should stay in the hands of the board.

HOA management companies advocate hiring accounting and financial managers to help with this. A homeowner with accounting skills can manage the association’s finances and create reports. Another area where management services might assist is maintenance. On the other hand, these businesses do not conduct their own repairs and maintenance.

Breaking down specific duties: What does the HOA Board do vs. HOA Management Company

It is difficult to determine the duties of the HOA board vs. the 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.

  • Fines and Late Fees

The HOA management business has no authority to make decisions or establish regulations. The management business is in charge of processing fines and enforcing the late fee policy. There is no right for the management business to waive late fees or penalties. The HOA board has the final say in fines and late fees.

  • Rules and Regulations

Every community is governed by its own set of laws and regulations. The management firm’s responsibilities are limited to sending letters and communications related to the rules as ordered by the board. The organization is unable to make exceptions or dismiss specific offenses for homeowners. The operating restrictions or covenants in the CC&Rs contain this information. Similarly, the HOA administration must respect the CC&Rs by implementing these limits.

  • Maintenance Requests

Regularly, associations get maintenance requests. Homeowners submit their proposals in a pre-determined format, which the board reviews. The management business will handle the repair request coordination, leaving the decision-making to the board. The management business can inform the homeowner whether the board approves or rejects the request.

  • ARC Requests

A homeowner must file an ARC request to make architectural improvements. Many groups have an Architectural Review Committee that oversees and reviews these requests.

The committee collaborates with the HOA board to approve or deny requests while complying with the governing documents. The management business will then send letters under the board’s instructions.

  • HOA Finances and Audits

Some HOA managers are authorized to sign checks on behalf of the board. As a precaution, the board should limit the amount of money managers, or management companies can spend. Any cheque over that amount should be signed by a board member (usually the treasurer). In addition, financial audits must be performed by a third-party or independent CPA hired by the HOA board. Like California, several state rules require HOAs to conduct financial audits regularly. Other states, such as North Carolina, have no such restrictions. Regardless, each organization’s accounts should be thoroughly examined or audited. The board should organize and oversee the audit to deter fraud rather than the management business.

What to do to avoid Common Misunderstandings?

HOA board members may assign decision-making chores to the management business to ease their load, as tempting as it may be. These businesses have minimal authority and are only carrying out their contractual obligations. On the other hand, HOA boards have a responsibility to the community. They must avoid handing the management firm too much power.

Focus Keyword: homeowners association, property management

Keywords: homeowners association, property management

Tags: home maintenance, home management