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Understanding Roles: The Board vs. Management Company in HOAs

May 20, 2024 / by HOA Manager

Homeowners' Associations play a pivotal role in maintaining the integrity and functionality of residential communities. Ideally, at the heart of every HOA's operations are two essential entities: the Board of Directors and the Management Company. While both entities work towards the common goal of enhancing community living, their roles and responsibilities are distinct. In this article, we discuss the core functions of each, explaining the symbiotic relationship between the Board and the Management Company in fostering vibrant and harmonious neighborhoods.

According to AppFolio and HOA-USA’s latest survey, which polled board members, only 23% of respondents said they’d recommend their current or most recent management company – that’s a big gap for association management businesses to fill. Additionally, more than half of board members surveyed, 66%, said lack of responsiveness was the number one reason why they switched – or are considering switching – management companies, followed by failure to quickly and accurately follow through on projects (65%) and overall poor customer service (61%).

These numbers tell us that it's possible the two entities aren't clear on expectations when it comes to the roles each should play. Explore the general roles of HOA Boards and Management Companies and get insight into how to foster great relationships between the two.

The HOA Board of Directors

The Board of Directors serves as the governing body of the HOA, entrusted with making critical decisions that impact the community as a whole. Comprising elected volunteers from within the community, the Board operates under the guidance of the HOA's governing documents, such as the Bylaws and Covenants, Conditions, and Restrictions (CC&Rs). Here's a breakdown of the primary responsibilities of the Board.

1. Policy Making and Governance:

The HOA Board establishes and enforces policies that govern the community, ensuring compliance with the CC&Rs and local regulations. From architectural guidelines to pet regulations, the Board formulates rules that maintain the aesthetic appeal and uphold property values within the neighborhood.

2. Financial Management:

One of the Board's key functions is overseeing the HOA's finances. This includes budgeting, collecting dues, and allocating funds for maintenance, repairs, and community amenities. Transparent financial management is paramount to fostering trust and accountability among homeowners.

3. Community Engagement:

Effective communication and community engagement are cornerstones of a thriving HOA. The Board facilitates regular meetings, town halls, and newsletters to keep residents informed about upcoming projects, policy changes, and community events. By fostering a sense of belonging and inclusivity, the Board strengthens community bonds and encourages homeowner participation.

The HOA Management Company

While the Board sets the strategic direction and policy framework for the HOA, the day-to-day operations and administrative tasks are often entrusted to a professional Management Company. These firms specialize in providing comprehensive management services tailored to the unique needs of HOAs. Here's a closer look at the role of the Management Company.

1. Administrative Support:

The Management Company serves as the administrative backbone of the HOA, handling routine tasks such as record-keeping, correspondence, and vendor management. By centralizing administrative functions, the Management Company streamlines operations, freeing up the Board to focus on strategic initiatives.

2. Financial Expertise:

From preparing budgets to financial reporting, the Management Company brings a wealth of financial expertise to the table. Certified professionals adeptly manage accounts payable, accounts receivable, and reserve funds, ensuring fiscal responsibility and transparency.

3. Property Maintenance:

Maintaining the physical infrastructure of the community is a multifaceted responsibility. The Management Company oversees routine maintenance tasks, coordinates repairs, and facilitates contractors to uphold the community's aesthetic appeal and functionality. Prompt response to maintenance issues enhances homeowner satisfaction and preserves property values.

Symbiotic Relationship:

While the roles of the HOA Board and the Management Company may appear distinct, their relationship is inherently symbiotic. Collaboration and effective communication between these entities are essential for the smooth functioning of the HOA. Here's how their partnership benefits the community.

1. Strategic Alignment:

The Board sets the strategic vision for the HOA, while the Management Company executes operational tasks in alignment with these goals. By working hand in hand, they ensure that the community's long-term objectives are met while addressing immediate needs.

2. Expertise and Support:

The Board leverages the Management Company's expertise to navigate complex legal, financial, and operational challenges. Conversely, the Management Company relies on the Board's guidance to understand the unique priorities and preferences of the community.

3. Accountability and Transparency:

Both the Board and the Management Company are accountable to the homeowners they serve. Transparent communication, regular reporting, and adherence to ethical standards foster trust and confidence among residents.

HOA Consulting

In situations where an HOA may feel financially constrained or uncertain about committing to full-time management services, consulting can be a strategic alternative. Hignell HOA Management offers specialized HOA consulting services tailored to meet the unique needs and budgetary constraints of each community.

Whether it's navigating complex legal matters, optimizing financial processes, or enhancing operational efficiency, our consulting experts provide targeted guidance and support to help HOAs overcome challenges and achieve their goals.

By leveraging our consulting services, HOAs can access professional expertise and strategic insights without the overhead costs associated with full-time management. Explore how Hignell's consulting services can empower your HOA to thrive and succeed, even on a limited budget.

The HOA Board of Directors and the Management Company play complementary roles in the governance and management of HOAs. While the Board sets policies and strategic direction, the Management Company provides administrative, financial, and operational support. By embracing collaboration and leveraging each other's strengths, these entities create vibrant and resilient communities where homeowners can thrive.

In the realm of Homeowners' Association management, excellence is not merely a goal; it's a commitment. At Hignell HOA Management, we pride ourselves on delivering unparalleled expertise and dedicated support to communities across Northern California.

With over three decades of experience, our team is equipped to handle the diverse needs of HOAs, from administrative tasks to financial management and property maintenance.

By partnering with Hignell, HOAs gain access to a trusted ally committed to fostering vibrant, well-maintained communities where residents can thrive. Discover the difference Hignell can make for your HOA today.

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Topics: HOA Management, HOA Board, Hire an HOA Management Company