Professional HOA Management vs. Self-Management
Homeowners’ Association Management, more commonly referred to as HOA Management, exists in a few common forms. Some Associations get along well with self-management, meaning that the Board takes care of all Association matters without hiring outside contractors. Others (typically larger or more complex Associations) turn to professional management.
Generally speaking, professional management refers to the hiring of a professional third party to manage the affairs of a Homeowners’ Association, but, it’s not nearly as cut and dry as it may seem. So much goes into managing an Association, and, as I’ve said in the past, community managers wear many different hats on any given day. That’s why, when deciding whether professional management is the right choice for your community, you should consider all of the different services any Association will need: from handling insurance and ensuring finances are accurate to maintaining aesthetic values and issuing violations, many factors contribute to successful community management.
Self-Management: The Pros and Cons
In my experience, the Associations who turn toward self-management are usually small, homeowner run Boards with relatively fewer day to day “headaches” than their larger counterparts. There are benefits for some Associations to self-manage: a main reason is because it can be more budget-friendly (at least, on the surface). Some Boards also appreciate being able to handle all matters for their communities without the added step of running documents and payments through a management office for processing.
But there are also risks that a Board accepts by opting for the self-management method. For starters, Board members take on the responsibility of their Association’s record keeping. Depending on the document, Boards will have to keep records for up to 7 years. Residents are also responsible for hiring contractors and making sure that all work in the community is done, and done well, by licensed professionals.
Members of a self-managed Board will also be tasked with adjudicating their neighbors. Don’t want to be the bad guy when you tell Mr. Harvey in Unit B that he can’t hang that Marines flag? Being on a self-managed Board may not be for you. Board members must even be willing to be served and could be held personally responsible for decisions they make on behalf of the Board.
Successful self-managed Boards are those who are organized and able to delegate tasks to volunteers who understand their roles. And, ultimately, whether or not self-management is the right choice for your Association may come down to time constraints for those serving on the Board.
Why Choose Professional HOA Management?
At this point, you may be asking yourself, “Do I need professional Association management?” If your Board is putting in more volunteer hours than they can reasonably handle, it may be time to turn toward professional Association management. And, keep in mind that Florida law actually requires a professional license when an individual is receiving compensation for management services of an Association with more than 10 units or that has an annual budget higher than $100,000.00.
The overall goal of a manager or management company should be the same as the Board’s: to protect home values. Beyond that, hiring a dedicated HOA management company to handle the affairs of your community offers several key benefits. Community management companies employ Licensed Community Association Managers (LCAMs) who are fully trained in state law and are able to provide the Board (and any committees) with support. You can think of an LCAM as your Board liaison: they work on behalf of the Board to help achieve their day-to-day and long term goals. Whether it’s support in the form of outlining community regulations, enforcing covenants, assisting at meetings, or anything in between, the LCAM exists in part to make the Board’s life easier.
One of the major benefits that many communities immediately recognize the need for is the ability to enforce covenants and to ensure that the rules are clear to all members. By using the professional and unbiased services of a third party, Board members can avoid any conflict of interest or favoritism issues that tend to arise when neighbors police neighbors. Not to mention, violation enforcement is more consistent when done by a professional manager, versus a homeowner Board.
Another benefit? LCAMs are skilled at vendor relations. Reputable management firms have built relationships with vendors they trust; this means that they are able to secure cost effective bids and ensure high quality services for your Association. They are also able to clarify laws and stay up-to-date with the latest state statutes that affect how your community can legally operate. Should legal trouble arise, management companies also have relationships with skilled Association management law firms.
Finally, one of the most fundamental differences between professional and self-management is that professional management also means professional accounting services. Ask yourself, would you rather have your neighbor volunteering as the treasurer handle the bookkeeping, or leave accounting duties to a team trained and dedicated to Associations’ financial management?
When a trained team is on your side to help handle the duties of your Board, the peace of mind afforded to an Association is invaluable. But in the end, each Community Association has different, unique needs that its Board is charged with meeting. Only your Board will be able to determine whether self- or professional management is right for them!
