How to Evaluate Community Association Services Provided by Management Firms

Homeowners who care about maintaining their community so that it is safe, clean, and aesthetically pleasing will form a homeowners association (HOA). Members of the HOA will then elect a group of board members who will act on behalf of HOA members to make strategic decisions about the state of the community. This board will…

Homeowners who care about maintaining their community so that it is safe, clean, and aesthetically pleasing will form a homeowners association (HOA). Members of the HOA will then elect a group of board members who will act on behalf of HOA members to make strategic decisions about the state of the community. This board will be responsible for creating rules regarding property appearance and will also maintain communal amenities by providing community association services. Since most board members lack the expertise needed to run the neighborhood at an efficient level, they choose to outsource these services to HOA management companies.

The best HOA management companies utilize their own expertise, resources, and existing relationships to run the community more efficiently than the board would be able to do on its own. By hiring such a company to provide community association services, the board is responsible for fewer tasks and as a result has more time to focus on the most pressing issues affecting the community. Board members expect HOA management companies to use its financial expertise to identify cost cutting opportunities while also increasing dues collections by reducing delinquent payers. The board member can then evaluate the effectiveness of a management company based on whether the community now has more cash to work with, but these are not the only ways to determine if the community should replace the firm with one of the other HOA management companies. Board members can also ask these questions

What is the firm's long-term vision for the community?

Some HOA management companies are just there to collect a check for providing community association services, but ideally the company should legitimately care about the well-being of the community. Asking this question will help the community gauge whether or not the company is a good long-term fit, with the best companies seeking to improve upon the status quo rather than maintaining it. These firms can even help the company set goals for acquiring new facilities or sponsoring more community events.

Does the homeowners association have reserve funds in place?

This is a good way to determine the financial management abilities of HOA management companies, as all communities should have a reserve fund in place. This fund can be used in the event of an emergency, which can include cleaning up vandalized common areas or restoring elements damaged in a natural disaster. A company that does not have a reserve fund in place does a poor job of collecting dues, is overpaying for community association services, or simply is not good at managing finances. In each case, it is time for a change.

How are contractors hired?

By asking this question, board members will learn how diligent the firm is when hiring contractors to provide community association services. Companies that complete this process effectively are less likely to overpay or bring in questionable contractors who could endanger tenants. Ideally HOA management companies will accept multiple offers, check references for each contractor, and conduct a background check.

Boards that ask the questions above above and are not happy with the firm's responses should start considering other HOA management companies.