Read This Before Hiring an HOA Management Company

Read This Before Hiring an HOA Management Company

What Are the Responsibilities of an HOA Manager?

Every day receive phone calls and e-mails from HOA board members angry at their current management team for many different reasons. Often, they have been with one HOA management company for several years and yet have watched their entire service deteriorate year after year until it reaches a point where they’re ready to make major changes. It’s important to recognize what’s going on before you start a discussion with your HOA’s board about drastic changes. The first step is to determine whether or not the problems you’re having with your HOA are related to your HOA’s board or management firms. You can do this by reviewing the professional fees of both the HOA’s contracted maintenance provider and the management company that you’re currently using. HOA Start provides software for an HOA Website that HOA managers can use to organize and streamline their responsibilities.

Knowing When to Outsource HOA Management

If the professional fees seem low compared to what your HOA charges for its own maintenance, you may want to consider switching to another HOA. HOA fees are based largely on the square footage of the community and can vary widely depending on the property you own. If your HOA charges more than your association’s board and management firm, it’s likely that you’ve got something to lose by switching. On the other hand, switching to an HOA that charges less than the association’s board and management firm may actually save you money in the long run, particularly if you live in a community that requires annual maintenance and rehabilitation.

Many communities have a board of homeowners, which generally consists of a dozen or so regular homeowners and their spouses. A handful of these board members belong to HOA Management Companies, which does the majority of the hiring and managing duties. These HOA Management Companies hire the bulk of the HOA maintenance employees, which are paid on a commission basis. The board also decides how much of a cut the HOA will take from your taxes, which often includes a percentage of the fees the HOA tacks onto homeowner dues. Board members typically receive hefty commission checks even if they don’t actually make a significant impact on homeowner dues.

HOA Management Company Duties & Responsibility

HOA Management Companies are employed solely to perform the required tasks associated with the job. They receive detailed information about the duties and responsibilities of each job, as well as specific instructions for performing those duties. They sign off on whether the job is being performed to the satisfaction of their fellow board members. In the case of a disagreement between homeowners and the HOA Management Company over duties or responsibilities, the board members usually sided with the homeowners. HOA Management Companies do not typically participate in board meetings or proceedings but serve as third-party professionals who perform the needed tasks.

Most HOA Management Companies charge a one-time set-up fee for the services they provide, with subsequent monthly maintenance fees ranging from a minimum of two to ten percent. These fees cover the expenses of conducting debt collections, delinquent dues collection, providing accounting and billing services, and collecting payments from delinquent dues holders. Some also have “special events” or incentive programs that homeowners can join in order to get discounted rates on their HOA fees. Monthly maintenance fees are subject to change according to the budget adopted by the HOA Management Company. Some homeowners may wish to enroll in an extended contract that will increase their HOA dues only when the property’s value increases. Homeowners may also be required to pay an annual assessment fee.

Most HOA Management Companies provide accountants as part of their accounting services. Many of them have direct access to bank accounts and/or payrolls so that they can conduct their own payroll processing for their members. Other accountants work under a master supervising process where one or more of the accountants report directly to the management company. With this setup, there is little need for the homeowner to regularly check accounts, so it helps to keep down the number of missed payments or late payments.

HOA Management Range of Services

As part of the HOA management company’s service, these firms also submit tax returns. In some areas, there are special provisions that may allow for electronic submission, but most homeowners still need to personally mail their tax returns to the appropriate local tax authority. The tax forms are then processed and submitted to the local board of tax authority for approval. Once approved, the tax forms are forwarded to the accountants who prepare the necessary reports. Most accountants charge their clients a flat fee for this service, which is often refundable upon the receipt of the tax forms.

In conclusion, HOA management companies can take many forms. It depends upon the services each firm provides, the level of interaction each employee has with homeowners, and the jurisdiction of the specific State body in which the management firm is located. In areas like Florida, there are special areas of business that must be filed separately with the Department of Revenue. Therefore, it is critical that homeowners begin the due diligence process by engaging the services of a competent HOA manager as early as possible.