A lot of homeowners’ association (HOA) boards can manage their association without outside help. HOAs come in different shapes and sizes. While some HOAs supervise big communities with hundreds of houses, others are small with only a few residents. However, regardless of your HOA’ size, it must stay compliant with government laws and governing documents while acting in its members’ best interests.
A lot of associations leave HOA management to a management company to get support in running the community effectively and efficiently. But some HOAs prefer to self-manage. Although some HOAs function well this way, others do not.
The risks of managing your HOA on your own:
1. Non-Compliance
A lot of self-managed HOAs break the law or fail to stay compliant with it, sometimes, unknowingly. For instance, HOAs must stay up to date with HOA laws, practice ethical and accurate accounting, and submit annual disclosures. A self-managed HOA can easily fail to meet these legal requirements as its board members may not be aware of their implications.
2. Lawsuits
Without proper insurance coverage, an HOA can face possible lawsuits. Board members, being just residents of the community, may not be familiar with non-monetary claims and the importance of directors’ and officers’ liability coverage. Some associations may have insurance coverage; however, are underinsured. Without expert help, the HOA board may not be aware of the necessary coverage that protects the association from lawsuits.
3. Operational Inefficiency
Managing an HOA community involves a lot of work. HOA management includes coordinating meetings, collecting dues and fees, negotiating with vendors, handling complaints and requests from residents, handling HOA finances, maintaining the aesthetics of the community, and more. While volunteers can do great work, they may not match the resources and efficiency of a professional HOA manager.
4. Lack of Accountability and Transparency
Self-managing your HOA can make it hard to maintain board member accountability, leaving no room for transparency. Sadly, some board members may just want to take advantage of their power. Other members may not work well with others. Sometimes, this can lead to ethical breaches. Your HOA can avoid this when you let an HOA management company do their job for your association. A lot of HOAs prefer to work with a property manager to avoid the risks associated with self-management. By bringing a professional manager on board, HOAs can function optimally as well as get valuable guidance and support.
