Homeowners Associations (HOA)
When it comes to the concepts of Homeowners Associations (HOA) vs. property managers/management companies, there can be a great deal of confusion out there as to what the differences are between the two. After all, both entities are typically tasked with managing housing communities, so in this article we will present a brief description of both to see how they are different, and how they are also alike. This should assist property owners looking for management services for a variety of reasons to determine what suits them best- a HOA, a property manager or management company, or – most often – a combination of the two.
A Homeowners Association is made up of members that own property in the community in which they live – as opposed to a separate management company – and typically form an elected HOA board to propose and vote on rules, and ensuring that those rule are followed by the other residents in their community, as well as making sure all other responsibilities are met. Homeowners may need to share the responsibility for certain things, and there are usually expectations for the way properties are maintained and how residents conduct themselves overall. For example, there may be guidelines about lawn condition, how to handle garbage, behavior in common areas, and so on.
Typically a property owner will transfer control of the association to the homeowners after selling a predetermined number of lots in the community. Generally any person who wants to buy a residence within the area of a homeowners association must become a member, and must obey the governing documents including Articles of Incorporation, CC&Rs (Covenants, Conditions and Restrictions) and By-Laws, which may limit the owner’s choices.
Typical HOA responsibilities include maintaining common areas, such as playgrounds, swimming pools, and landscaping; collecting dues from residents to pay for said maintenance or other items; obtaining needed insurance; hiring contractors and staff, and so on. Sometimes – depending on the size of the community – an HOA may hire an individual property manager or full property management company to handle most of these responsibilities.
The property managers – who could also reside in the community that they serve – would undertake a great many of the day-to-day tasks that the HOA would require to ensure that residents are both happy and in compliance with the rules set forth by the HOA board. Property management would also handle paying employees and contractors, collecting dues, and more, and would report directly to the HOA board. Property managers who reside in the community that they serve would also be required to abide by the same HOA rules that their neighbors do. There is typically a clause in any lease regarding adherence to HOA rules and – in the event that a resident rents out a property – to make sure that renters know the guidelines as well.
If rules are not adhered to, most HOAs have the legal authority to enforce said rules. Usually an initial transgression will garner warnings; repeated violations may result in punitive measures taken against the offender, such as a lien or higher fees being imposed on a property if dues are not paid or if landscapers are required to be brought in to groom a lawn that is not in compliance with code. If a HOA employs a property manager or management company, they would be in charge of handling this aspect of rule enforcement.
As you can see, HOAs and property management companies serve different purposes and can often effectively go hand-in-hand when it comes to running a community that you own; you simply have to see what degree of personal control you wish to maintain – do you want to be completely hands-on, hands-off, or somewhere in-between – and then set things up accordingly.