The HOA Board vs. HOA Management Company: What's the Difference?

In the typical homeowners association, a Board of Directors works hand-in-hand with a professional management company, ensuring the community runs smoothly.

While these two bodies are meant to work harmoniously, and while there may be some overlap between their roles, there are also some important points of distinction.

It's important for community members, along with Board members, to understand the different tasks and issues that these two bodies address. Clarity of roles is important for the peace and efficiency of the HOA.

At Kuester Management Group, we are pleased to be a top HOA management company in Charlotte, Huntersville, and Myrtle Beach, while also providing HOA management in Fort Mill SC. We are happy to share some insights regarding the relationship between the Board and the property management company.

The Importance of Differentiated Roles

Think of your HOA like a machine. The Board and the management team represent two different components in that machine. They each perform a different function, and they are both necessary for ensuring everything runs the way it's meant to.

When lines between the two entities begin to blur, it may result in the Board performing tasks that really should be left to the management company, or vice versa. It may also result in redundancies, inefficiencies, or in important day to day operations slipping through the cracks. Finally, it can lead to frustrations among homeowners, who may not know who they are supposed to go to with their questions or concerns.

For these reasons, it's critical to maintain a separation between the two entities.

HOA Board Responsibilities?

First, let's consider an overview of the Board's duties.

• The Board is generally tasked with the maintenance of shared properties and common areas, including clubhouses, pools, even the signage at the community's entrance.
• In pursuit of this task, the Board may also be tasked with a number of administrative duties, including procuring and paying vendors.
• The Board is also tasked with upholding and enforcing community rules, as defined in the community's governing documents.
• The Board must also uphold their own fiduciary duties, which can include budgeting and financial reporting.
• The overarching goal of the Board is to maintain property values for residents.

Management Company Responsibilities

Running community associations is a bit like running a business. And while smaller communities can run with just a Board, larger HOAs will typically need the resources and expertise that only a professional management company can offer.

• While the Board generally makes all the big-picture, strategic decisions, an on-site manager can help with the daily administrative tasks.
• The property management company may also facilitate communications with residents.
• Professional management services often include handling maintenance requests. This does not mean the property manager directly provides maintenance services; rather, management companies can recruit and supervise the best local vendors, ensuring efficient work for an affordable rate.
• The management team may also serve in an advisory role, supporting the Board's strategic decision-making with financial audits, assistance running productive Board meetings, and more.

Specific Duties within HOA Communities

Beyond this general overview, it might be helpful to look more closely at some specific responsibilities that are needed for the smooth functioning of an HOA.

Late Fees and Fines

A big part of the Board's fiduciary responsibility is to ensure that feels and fines are enforces in a fair and consistent way.

While the Board creates policies related to fines and fees, it often falls to the management company to actually process these payments.

Note that the management company does not have the authority to waive late fees. Only HOA Boards can do this.

Rules and Regulations

For any HOA community to flourish, it's important to have clear rules and regulations in place. Only the Board can create these rules.

The management company's role here is related to communicating with members, specifically letting them know of any violations. Again, it is important to note that the management company cannot waive the rules, excuse violations, or bend the rules in any way.

Maintenance Requests

The management team can receive and review maintenance requests, then submit them to the Board for final approval.

When a maintenance request is approved, the management company can communicate it to members of the community.

Audits and Financial Duties

Generally, it's best for HOAs to hire third-party CPA firms to handle financial audits. In some cases, the management team may be able to recommend the best vendor.

It is common for Boards to assign check-writing powers to the manager, allowing them to pay vendors and discharge their other day to day responsibilities. However, it's a good policy for Boards to limit the amount for these checks, ensuring there are some financial controls in place.

Understand the Key Functions of Your Board and Association Management Company

To ensure your community runs the way it's supposed to, it's critical to know the distinctions between your Board and your management company. Keep their roles separate, and ensure they work together in harmony... for the good of the entire community.

Frequently Asked Questions

What are some HOA board vs management company pros and cons?

For a self-managed HOA, the pros include:

• More direct involvement in the community.
• Potential cost savings.
• Greater flexibility.

Meanwhile, cons include:

• A huge time commitment for Board members.
• Limited expertise, particularly with regard to financial management.
• Potential conflicts of interest.

Meanwhile, the pros of outsourcing to an HOA management company include:

• Time savings (community management can basically be a full-time job).
• Greater expertise.
• Access to vendors and other resources.

Cons include:

• Higher up-front costs.
• The potential for communication barriers.