Being on the board of a homeowners’ association is not easy. It brings a wide variety of essential responsibilities for keeping the entire organization running. Budgeting, handling repairs, collecting fees, ensuring maintenance are just some of the things demanded of the board. On top of that, being on the board is a volunteer position. Mainly because it is a volunteer position. Board members may not necessarily have all of the skills and experience needed to carry out all of the responsibilities. For instance, it is entirely possible that no one on the board has handled the size and complications of a budget on par with the association. 

For all of these reasons, many homeowners associations choose to hire a management company to run most of the day to day tasks. The board stays in charge of decisions and meetings but has a professional company shoulder a significant amount of the duties for running the association. How do you know if hiring a management company is for you? We’ll go over some of the reasons to hire a management company and what they can do for a homeowners association. 

Benefits of a Management Company

First and foremost, having a management company take on many of the days to day tasks required when running a homeowners’ association will take a lot of pressure off of the board members. All of the responsibilities the board takes on can put on a lot of time and stress. Having a portion of those duties handled by a professional company can be very helpful to individual board members. 

Another benefit of hiring a management company is that they likely have relationships with many of the types of vendors your association needs. Having developed relationships can save time you usually would spend getting proposals and vetting potential vendors. And the management company has likely found the best deal for the price, helping your organization to save money. 

What a Management Company Can Take On

These are some of the areas where a management company can often be the most useful for homeowners association boards:

  • Collection of fees. One of the essential jobs for the board is the collection of fees. But if someone is late paying, tracking it down can become awkward and uncomfortable when that person is a friend or neighbor. Having a management company handle the collection of fees means the board members don’t have to have these awkward confrontations. 
  • Keeping up with laws. Federal, state, and local laws change regularly regarding the regulation of associations. It can be a lot for a volunteer board to keep up with, or even understand fully. Having a professional company managing the association means they are well-versed in the most recent legal requirements and regulations and ensure the organization is compliant. 
  • Well-developed systems. Since management companies have been handling tasks for associations for many years, they should have well-established systems that make things smooth and efficient. They have usually not only invested in hardware and software systems designed to take on the daily running of the association, but they have invested in training their staff for the same. 
  • Depth of experience. A management company will have years of experience and skills that could be missing from the board. This will make running the organization much easier and more efficient. 
  • Clarity of rules and regulations. A professional management company can ensure that rules and regulations are communicated clearly to residents. This is where their experience can be particularly helpful. They may know where the most likely areas for confusion occur and have the language to make the rules clear.
  • Easier enforcement. Sometimes enforcement of the rules can be challenging when it is a friend or neighbor who is in violation. Management companies make enforcement feel less personal and can ensure that regulations are enforced equally. 

How to Figure Out if You Need An Outside Management Company

Not all homeowners’ associations will need a management company. How do you know if you could use one? There are a few things to consider, which can help you make a decision. 

First is the size of the homeowners’ association. Generally, if the association is pretty big and has recreational spaces and common areas to keep track of, it requires more work to manage. Some experts even suggest that if there are more than ten units in an association, a professional company should be considered. 

The next element to evaluate is the experience of the board. Do board members have the skills needed to run all the different parts of the association? Will they fully understand all the financial reporting required, have experience collecting late fees, understand changes to state laws, and more? It is not unusual for the answers to these questions to be “no,” in which case professional management will be responsible for all of those tasks. 

Something else to consider is a risk. The board is liable for decisions made regarding the public and homeowners. Governing documents will contain some protections for board members. Experts warn that the board can still be sued for mismanagement. A professional management company would take on that risk if they are running the association. 

Of course, the cost is often a huge factor to consider. But having professionals to run the organization could very well be worth it for your board. As mentioned, it’s possible their relationships with vendors could save the association money. Even if it does wind up costing more to hire a management company, many associations find that the ease with which they run the organization is well worth it for the board. 

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