Effectively running a community can be a real challenge.
It’s actually quite involved, and the industry as a whole, is constantly evolving.
A homeowner association (HOA) is any residential or mixed use (residential and commercial) community which may consist of condominiums, townhomes or single family detached homes. Some may be gated while others are not. Some may have amenities such as a pool, tennis courts, fitness center, etc. Some are small and consist of only three homes while others have thousands of homes. Practically any residential community that has been incorporated as a Common Interest Development must be professionally managed to insure compliance.
To help you better understand the role of an HOA Management Company, we’ve asked and answered a few questions that are frequently submitted.
Does the management company make all the decisions regarding what goes on at the community?
No, the Board of Directors make all the decisions affecting the community. The management company simply implements the decisions the board makes. Although some people are under the impression that the management company makes all the decisions, this is not the case. Every community has a volunteer Board of Directors. These are homeowners who choose to serve their community. The number of board members per community depends on what is written in the bylaws. There will always be an odd number of board members in order to prevent a tie when it comes to voting on community issues. Essentially, the Board of Directors are the Officers of a non-profit corporation, the association. Board of Directors are either elected by the homeowners at the annual membership meeting or they are appointed by the existing board members to fill a vacancy. The offices of a 5 member Board are: President, Vice President, Treasurer, Secretary and Member at Large. When the Bylaws only require a 3 member Board, the Vice President also holds the office of Treasurer and there is no member at large.
What are the duties of the volunteer Board of Directors?
The Board of Directors have a fiduciary duty to enforce the rules and regulations that were established for the betterment of the community. It is also their responsibility to maintain the values of the homes within the community. They will meet monthly, bi-monthly, or quarterly (depending on the Bylaws) to make reasonable, business decisions that are in the best interest of the community. Occasionally a person will get on the board because they have a personal agenda. When this happens, they are typically unable to be objective and it can be difficult to conduct business. However, if Boards conduct their meetings according to Roberts Rules of Order, this usually is avoided.
What is Roberts Rules of Order?
Board meetings are most productive when they are run according to Roberts Rules of Order. This happens when an issue on the agenda needs to be voted on. Ideally, every board member has reviewed their entire board package prior to the meeting so they are prepared to discuss and vote on various issues. After there has been ample discussion regarding a particular issue, its time to “call for the vote”. A motion is made to approve, then someone seconds the motion, then if there is no further discussion, everyone casts their votes (usually verbally) and if a majority of the board approve, the motion passes, if not, the motion fails. It is a very democratic process, however, this does not mean things won’t get heated when a vote does not go the way someone intended. At times, homeowners can get very angry and emotional. It’s understandable since decisions are being made about their home; the most expensive investment they will likely make.
So what exactly does an HOA Management Company do?
In general, HOA management companies will have a Finance Department, a team of Community Managers and various support staff such as Assistant Community Managers, Administrative Assistants, and Maintenance Staff. Some companies have additional support staff such as a Delinquency Department and an Escrow Department.
The Finance Department produces a very detailed and comprehensive monthly Financial Statement for the Board to review and approve at each Board Meeting. The Board must also approve an updated operating budget annually. in order for HOA Dues to be increased to cover rising maintenance costs, etc., the budget must be approved by the board and mailed out to the membership at least 30 days prior to the fiscal year end. The Board of Directors has the freedom to enact up to a 20% dues increase without a vote of the membership as long as they get the new budget out in time. This restrictive timeline is an incredibly important aspect of the finance department of the management companies. Usually there are two check cycles per month to ensure all invoices are being paid on time.
The Accounts Payable Staff processes invoices from all the various service providers which are then sent to the Treasurer for approval. At the direction of the Board, the Finance Department will also open new interest bearing savings accounts (either CD’s or Money Markets) for large expenditures such as reroofing or new asphalt throughout the community.
The Accounts Receivables Staff processes all incoming HOA Dues (fees) and assists homeowners with their billing statements. Depending on the specific Collection Policy, typically late fees are 10% of the Dues or $10.00, whichever is greater. Also, depending on the specific Fine Policy for the community, fines are applied to homeowner billing statements any time a homeowner is in violation of one of the Rules or Regulations. Again, this is at the direction of the Board, not the management company.
What does a Community Manager do?
The Role of a Community Manager is multifaceted. They are the face of the management company because they have the most frequent interaction with the Board. The manager takes direction from the Board, but also gives advice and guidance. It’s common for community managers to be passionate about the advice they are giving to Boards. Most Managers are certified through the California Association of Community Managers (CACM) or Community Association Institute (CAI). It’s commendable when community managers are passionate about their work, however, it’s imperative that they always remember that it’s not their community and even though good advice is given, if the Board chooses to not implement it; that is their prerogative. They are the Officers of their Non-Profit Corporation (the HOA) and they make all the decisions. The specific responsibilities of a community manager include, but are not limited to, attending Board Meetings (usually monthly, but can be bi-monthly or quarterly), conducting property inspections (usually monthly, but can also be bi-monthly or quarterly), taking Minutes of the meetings and documenting Action Items to be completed prior to the next meeting. Examples of Action Items include, but are not limited to getting bids to replace any of the current service providers such as the landscaping, janitorial or maintenance company, attorney, reserve analyst, or CPA. Bids are also requested for large projects such as re-roofing, new asphalt, or renovating the landscaping.
A successful community manager must have the ability to continually reprioritize as emergencies occur. They must have the ability to keep people (support staff within the company as well as service providers) on task.
The Administrative and Maintenance Department are two key departments that provide essential support for a thriving community. These departments not only support the community managers, but also directly and indirectly assist homeowners by providing common area keys, gate remote access, reserving clubhouses, issuing and following up with work orders to vendors, preparing violation letters and tracking when they are complied with, preparing board packages, creating and distributing property inspection reports.
Due diligence in hiring the right HOA Management Company will help ensure that your community is well maintained, has a balanced budget & reserves, and the residents are happy owners.
President and CEO
Menas Realty Company
Office: 858-270-7870 x 31
Meet the Author
Julie Menas was born and raised in La Jolla, California; a graduate of Chico State with a degree in Communications. For seven years, she gained a very high standard level of customer service skills while climbing the corporate ladder for the Hyatt Regency San Diego. These skills transferred well as she joined the family business, Menas Realty Company in 2000. Since then, she has been a proud and very active member of the San Diego Building Industry Association. Over the years, her participation in the various committees and councils include: The Home Building Council, The Building Resource Council, The Membership Committee, the Board of Directors, BIA Cares, and most recently the Y-Gen Council as a Mentor.
Julie Menas is certified through the California Association of Community Managers and holds a designation of AMS (Association Management Specialist) and CMCA (Certified Manager of Community Associations) through the Community Association Institute.
Menas Realty Company has been specializing in managing homeowner associations since 1973. We serve 160 communities throughout the San Diego area and have recently expanded into the Inland Empire area. Menas Realty Company is constantly looking for ways to improve our customer service. To help us achieve that goal, we have moved to a larger more centrally located facility in Mission Valley. We are known for providing personalized customer service and are proud to be a trusted partner helping communities thrive.
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