Understanding HOA management fees is essential to all association boards, especially those hiring or considering hiring professional management. These fees cover the services of the management company, but some have surprise charges or hidden costs. Additionally, fees can vary depending on the type of management the HOA seeks.
What are HOA Management Fees? 
The HOA board is responsible for maintaining, operating, and managing the community. Their duties include collecting dues, budgeting, planning reserves, maintaining common areas, enforcing rules, coordinating with vendors, and communicating with residents. While self-management is an option, it is not always feasible.
Many association boards struggle to juggle their responsibilities, particularly when they lack the necessary time or skills for the job. For this reason, communities often opt to hire an HOA management company.
Professional management offers ease of operations and a much lighter workload for the board. Of course, management companies don’t come free. This is where homeowners association management fees come in.
Simply put, HOA management fees or condo management fees are the fees that associations pay in exchange for professional management services. These services can vary depending on the management agreement. That said, they typically include the following:
- Financial management
- Budget preparation
- Dues collection
- Reserve fund planning
- Vendor management
- Maintenance coordination
- Property inspections
- Rule enforcement
- Board meeting facilitation
- Recordkeeping and documentation
- Legal compliance support
- Insurance management
- Architectural review assistance
- Communication with homeowners
- Emergency response coordination
- Policy development and implementation
- Violation tracking and resolution
- Election and voting administration
- Technology and portal support
- Management certificate filing
HOA Management Fees vs HOA Fees
While they may sound the same, HOA management fees and HOA fees are completely different. The former refers to the professional fees paid to the company in exchange for services. Meanwhile, the latter refers to the dues that homeowners pay to the HOA on a regular basis.
Homeowner dues, also known as HOA fees or condo fees, cover the association’s operating expenses. This can include professional fees, such as HOA management fees, accountant fees, legal fees, and the like.
Types of HOA Management Service Levels
HOA management company costs will generally depend on the types and scope of service the association avails. There are four types of HOA management service levels: full-service HOA management, remote HOA management, financial-only services, and consulting services.
Full-Service HOA Management
Full-service HOA management provides all the services, including on-site support from the manager. This manager will oversee the operational needs of the association, including maintenance, communication, and financial services.
This type of service is best for large communities or associations with a hands-off HOA board. Because this service level already includes all the necessary components, boards can step back from administrative work and focus on big-picture decisions.
Of course, given the nature of this service, the fees tend to be much higher than those below.
Remote HOA Management
Remote management provides all the operational and administrative services, but without on-site support. No manager does site visits or conducts in-person inspections. Instead, the association board receives virtual help with matters involving management, maintenance, and operations.
This is a more affordable option for associations that don’t have the budget for full-service management. Of course, not all companies offer this type of service, so it is best to check first before diving into anything.
Financial-Only Services
Some associations excel at the operational and administrative aspects of management, but struggle with the financial side. This is understandable because accounting and financial management are arguably the most challenging parts of the job. They require a certain level of expertise.
Many companies offer HOA financial support as a separate or standalone service. This service usually includes accounting, budget planning, dues collection, insurance reviews, reserve planning, and financial reporting.
HOA Consulting Services
Finally, some companies offer consulting services, which is the level that requires the least involvement. If an HOA only needs professional insight or help on specific projects, the board can go for consultations instead. Upon completion of the project, the service contract also comes to an end. Due to the situational nature of this service, it is the most affordable option.
How Much do HOA Management Companies Charge?
Companies come in all shapes and sizes, offering varying degrees of service and scope. Because of this, it is difficult to generalize the fees they charge. The typical HOA management fee considers all factors, including location, association size, association type, and the extent of services. Generally, the more complex the services, the higher the fee.
Some companies even take the age of the property into account. Older communities tend to require more maintenance and attention, which would need more resources. That said, it will still depend on the company.
Before settling on a company, HOA boards should shop around and ask for proposals. This will cast a wide net, making it easier to make comparisons based on a standard metric. It is also important to interview the final candidates to ensure they are a good fit, both in terms of work culture and personality, with the association.
What is the HOA Management Fees Average?
While management fees will depend on several factors, the average cost of HOA management typically ranges from $10 to $20 per unit per month. Some companies charge on a percentage basis, collecting 5% to 12% of the total monthly dues.
It is worth noting that the per-unit rate tends to be cheaper when there are more units. For example, a company may charge $20 per unit for a 50-unit community but charge $15 per unit for a 100-unit community. This is because administrative and overhead costs scale very well, allowing the company to charge less for more units.
What Do HOA Management Fees Include?
Associations should carefully review their management contract. This contract should clearly outline the management services as well as all the fees due. Many companies charge additional fees apart from the monthly management fee. These include initiation fees, extra charges, termination fees, and transition fees.
Let’s break them down below.
1. Initiation Fees
Management companies charge initiation fees to cover the cost of taking on a new client. It takes time and resources for companies to familiarize themselves with a new community, and this fee should pay for all of that. It can also include the cost of setting up a new account, a resident portal, and other technical activities.
2. Monthly Management Fees
This refers to the actual fee that covers the management services. Management fees can vary depending on the number of units, the extent of services, and other factors. The management contract should clearly detail this amount.
3. Added Charges or Services
If an HOA does not require a certain service regularly, it can be included as an added service. This means that the association will only incur the charge every time they ask for the service.
For example, a company may charge a flat rate for each board meeting the manager attends. If the HOA does not need the manager to attend the meeting, they won’t have to pay this rate.
4. Termination Fees
If the association wishes to terminate the management contract ahead of the expiry, it will usually need to pay a termination fee. The same can happen the other way around, if the company is the one that initiates the early termination.
5. Transition Fees
If the association wishes to transition to a new company, the old company typically charges a fee to cover the cost of transition. This includes orienting the new company on all processes, collating and handing off the necessary documents, and helping set up the accounts.
Say No to Hidden Charges and Fees
Association boards should always review the management contract thoroughly before signing. This way, they can identify any damaging clauses or hidden fees and resolve the issue with the company. A few companies might hide the extra charges in certain language. Then, later on, boards will be shocked to find additional fees in their invoice.
Reviewing contracts isn’t always a strong point of board members. If the HOA doesn’t have a board member with a legal background, it is advisable to have an attorney review the contract to make sure it is fair and favorable.
The Bottom Line
If an association wishes to hire professional management, it must pay HOA management fees. These fees cover the cost of management services; however, exact amounts may vary depending on several factors. Associations should always review their management contracts carefully to understand all the fees included.
Graham Management offers exceptional HOA management services, including legal guidance, to Houston communities. Call us today at (713) 334-8000, request a proposal, or contact us online to learn more.
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