If you’re a homeowner in a recently-built development or an HOA board member dealing with a troublesome management company, you may be looking to understand if you need a professional company to support your homeowners association. Self-managed associations are those that, while getting ad hoc assistance, do not employ a contracted professional manager. By following best practices and getting some helpful hints, you may come to find that self-management is the right solution for your HOA.
If you're wondering "Can an HOA be self-managed?", the answer is yes. About 30-40% of HOAs today are self-managed, or roughly 125,000 communities. However, this doesn't mean that every HOA board is ready for the level of commitment that's required to self-manage an association, or that every association should be self-managed.
An HOA community with more shared services and amenities will necessitate greater management responsibilities. For example, a 300 property single-family home community with shared landscaping, few/no amenities and annual dues collection will certainly be more suitable for self-management when compared to a 35-unit condominium with numerous shared amenities that include plumbing, elevators, a roof, and gym/community space.
The first thing you should consider before going down the path of self-management is if it is right for your community. While that may seem obvious, it’s critical to go into the decision with full conviction and confidence that this is the right medium-term path for your association.
Firstly, the board should detail why you’re considering self-management at the moment - this will help you understand the aspects that are most important to your community and understand if self-management is the solution. Some of the most common reasons that communities switch to a self-managed HOA structure include:
Once you’ve articulated the reasons why you want to self-manage, it’s then important to understand if the community has the capacity. Regardless of your feelings towards management services in the past - management companies do bring a number of benefits such as managers with professional certification and familiarity with state laws, dues collection and financial management, and general availability during working hours for vendor interactions.
To determine if self-management is the right path for your community, it’s best to create a list of all the expected tasks the board (and committees) will need to perform as a self-managed HOA, who you would expect to be responsible for each of these and what software/service providers you would need.
Some common responsibilities are:
Once you’ve documented the tasks that are relevant to your community you can properly understand whether the HOA board is willing to take on the increased responsibility.
While there’s no no perfect way to self-manage an HOA and undoubtedly every community and its members are different, there are a few key things board members can do to set their community up for self-management success.
First, if you're transitioning from a management company to a self-managed HOA, you want to set yourself up for success early by ensuring a smooth transition for your community. While it might be challenging to work with your outgoing property manager, it's imperative that you gain access to important community documents, homeowner contact information and account details, projects in flight, and vendor information. If you want to be certain that none of this information is mishandled, try to maintain a good business relationship with the outgoing manager and make sure you give a fair amount of time to consolidate this information before the management company’s contract expires.
During this transition, it's also highly recommended that you maintain open communication amongst your board and community members to make sure that everyone's on the same page and that frustrations don't build while moving to a self-managed HOA. Making this transition as smooth-as-possible gives both the board and community members confidence in the community’s capabilities to self-manage.
When you transition to a self-managed HOA, your board will want to have a strong understanding of your community’s bylaws and CC&Rs as it will be your responsibility to adhere to and enforce these. Additionally you’ll want to have a general understanding of association laws for your state to ensure you are following the letter of the law.
Some quick research can go a long way towards helping you avoid making mistakes. To make it easier, certain states like California offer advocacy and educational organizations for any HOA board member (e.g. Echo), which may be useful in the months following the transition to a self-managed HOA.
Deciding to forgo a management company doesn't mean that you should forego receiving assistance from professionals altogether. Contrary to what it sounds like, self-management doesn’t mean you need to go at it alone. Instead, hire and rely on professionals as needed.
You likely already have a lawyer but if not, make sure your community has counsel if you ever need to address legal issues in the community. Make sure to find a firm that specializes in HOA law.
One pro tip is that you can also hire HOA consultants who are professionally trained and certified. The primary credentials you should look for include ones by CAI and CAMICB. These consultants typically charge per hour and can be relied on for ad hoc issues. While hiring a lawyer is a necessity, some communities overly rely on legal counsel for community issues that could be supported by a credentialed HOA consultant who bills at a lower rate.
Additionally, whenever you need to file taxes or independently audit financials, don't hesitate to seek help from a financial accountant. There are a number of firms that specialize in, or largely serve, homeowners associations.
One benefit of having a community management company run your HOA is that these companies bring their own software, which goes with the company as they depart. However, the majority of management software solutions are relatively antiquated and challenging for non-professionals and professionals alike to use. Oftentimes poor HOA management software leads to a poor manager experience as professionals handle tasks and communication outside the platform, and boards don’t have visibility into the current state of the community.
Instead, consider modern, easy-to-use, software built for self-managed HOAs that can help your board maintain organized home data, bill and automatically collect payments from homeowners, and communicate with the community. This type of software is not only a time saver for any HOA community, but also helps deliver greater visibility for homeowners.
When communicating with your community and receiving inbound requests, it's also helpful to create a shared board email address (e.g. firstname.lastname@example.org), which provides an official channel for interactions with community members and vendors.
You should consider any other services that could be helpful for your HOA community. For instance, community members may be grateful to have access to online voting for any HOA ballot measures that arise. Any piece of software that can make the board's job easier while also increasing homeowner convenience should be considered.
While it’s no small task, for the right association, transitioning to a self-managed HOA can end up being highly advantageous for your community, reducing management costs and homeowner dues and providing the board with greater visibility and control.