When comparing the HOA board vs management company, it’s important to understand their distinct roles within a community. The HOA board is comprised of elected homeowners responsible for making key decisions and establishing community policies. In contrast, the management company is hired to carry out the board’s directives, offering administrative support and expert guidance. Learn more about their different roles here.
The Importance of Differentiating HOA Board vs Management Company
The HOA board of directors consists of elected leaders of a homeowners association. They are volunteer homeowners tasked with facilitating operations, maintenance, and management. For an HOA, the board serves as the governing body and the entity that makes the decisions.
When the lines become blurred between the HOA board vs management company, trouble will ensue. It is important to differentiate between these two entities, as confusion and overlaps can lead to misunderstandings, a lack of transparency, and diminished accountability.
Although professional management is typically necessary, the HOA board retains final decision-making authority. After all, the board consists of homeowners, too. This means they have more at stake and a vested interest in the association’s success. Board members are more likely to put the HOA first.
HOA Board vs HOA Management Company: Roles and Duties
Board members hire professional management to offload some of the burden of HOA management. As a result, the HOA board and management company often share similar responsibilities, particularly on paper. Still, there are distinctions.
How do the HOA board vs management company differ from one another? Let’s break it down below.
HOA Board
The HOA board is responsible for the upkeep of shared or common areas. Meanwhile, homeowners are responsible for the maintenance of their own properties. Common areas can include, but are not limited to, pools, clubhouses, parks, entry signs, and lobbies. They can even include shared structures such as walls and plumbing.
Common area maintenance requires a significant amount of work, especially behind the scenes. Board members are responsible for preparing yearly budgets, hiring and managing vendors, enforcing rules, and supervising maintenance activities.
The HOA’s governing documents should outline the board’s responsibilities more specifically. Board members are also required to act in the best interest of the community by fulfilling their fiduciary duties. The HOA’s primary objective is to maintain curb appeal and preserve property values, and maintenance plays a crucial role in achieving this goal.
Although the board’s role is essential, board members don’t receive any special benefits. They follow the same rules as other residents and must pay their dues as well. Since they are unpaid volunteers elected by the community, they also do not earn a salary.
HOA Management Company
Managing a homeowners association is much like managing a business. Both require time, effort, and organization. Smaller communities may function well with just the HOA board, but larger ones often need help from professional management.
Many boards hire an HOA manager or management company to help with daily operations. Although these companies assist with various tasks, the board still makes all final decisions.
What does an HOA management company do exactly? The specific duties can vary depending on the management agreement. Typically, functions include administrative support, board education and guidance, homeowner communication, and other related tasks. The HOA management company is there to assist the HOA board in fulfilling its duties.
It is important to remember that the HOA management company does not create policies or make final decisions. These companies serve in an advisory role, not a leadership one.
Specific Examples
Here are some more specific circumstances wherein the roles of the HOA board vs management company differ:
- The HOA board creates and enforces fine policies, whereas the management company implements them. The management company sends notices, collects fines, and communicates with homeowners. Board members retain the power to waive fines or late fees.
- A management company receives maintenance requests and coordinates with vendors to address them. Meanwhile, the HOA board approves or rejects maintenance requests.
- The management company can make small withdrawals and disburse petty cash up to a certain amount. Any amount larger than the pre-approved one will require the express permission of the HOA board.
Does an HOA Board Need Professional Management?
While an HOA is not required by law to have professional management, there are numerous benefits to hiring a management company. Medium to large communities, in particular, are better off with an HOA management company.
A management company can manage finances, maintenance, and homeowner concerns. These can quickly overwhelm volunteer board members who have no prior experience in dealing with such matters. An HOA management company can also handle bids, contracts, and scheduling for services, with the HOA board retaining final say.
Moreover, a management company can help with legal compliance. Professionals are more well-versed with the law and can also help the board interpret the HOA’s governing documents. Other services include accounting and financial management as well as administrative work.
On the other hand, an HOA may not need professional help if the community is small and the board is experienced. These associations can usually manage on their own.
Another reason not to hire an HOA management company is when the community is working with a limited budget. Hiring a management company comes with costs, which may not be the best option for HOAs that can’t allocate money for professional management services.
Does the HOA Manager Become a Board Member?
No, the HOA manager or the management company does not assume a position on the board. Board members are elected by homeowners, whereas the board hires management companies. Most governing documents don’t allow management companies to hold board roles, especially since it creates a conflict of interest.
The HOA management company essentially acts as a paid service provider or employee. For this reason, the management company does not have the authority to vote on matters or make policy decisions. The company or manager implements the board’s decisions and offers guidance.
Texas law provides some limitations on board member eligibility, but it does not expressly prohibit management companies from holding positions on the board. A board member doesn’t even have to be a resident of the community. That said, the statutory limitations emphasize the avoidance of conflicts of interest, which can be a significant problem if managers become board members.
HOA Board vs Management Company: Answered!
The line between the HOA board and the management company can become blurry, leading to oversteps and confusion. Still, there are key distinctions when it comes to responsibilities and authority. Having a robust management contract can also prevent misunderstandings.
Graham Management provides exceptional and reliable HOA management services to Houston communities. Call us today at (713) 334-8000, request a proposal, or contact us online to learn more!
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