Real Estate

Hiring HOA Property Managers

By Will Van Vactor, J.D.
HOA property managers can be a huge asset to your HOA and take on many of the day-to-day tasks that can't be completed by a volunteer board of directors. Because the HOA is ultimately responsible for the manager's performance, though, a manager can also be a liability. Find out what an HOA needs to do when hiring a manager, and what to do if you have complaints about your current HOA manager.

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The homeowners’ association (HOA) of a planned community has many responsibilities, from maintenance to enforcement to attending regular meetings. Sometimes, an HOA’s board of directors (board) will hire a manager (sometimes referred to as a “property manager” or “community manager”) to assist with these responsibilities. These responsibilities may be broad in scope, and require the manager to be on the property on a day-to-day basis. Or, the manager’s responsibilities may be limited to only one or two tasks.

Because homeowners pay the manager’s bill, and because a manager’s performance may impact property values in your community, hiring a good manager and understanding the scope of the manager’s job is important.

Responsibilities of the HOA Property Manager

Managers can provide a long list of services to residential communities. These include maintaining all common-use structures on the property, arranging for landscaping of the grounds, coordinating trash removal, checking safety equipment (such as fire and carbon dioxide detectors), scheduling homeowner meetings, providing security, and keeping all financial books and records current. The manager also often serves as the first person a community member contacts with a complaint, concern, or question about the HOA.

Some managers may also have enforcement responsibilities. For instance, a manager may contact a homeowner who begins to construct an unauthorized addition to the home or who has a barking dog. To avoid conflict, enforcement must be done consistently. The enforcement procedure should be spelled out clearly in the HOA’s governing documents.

It is not the manager’s responsibility to set HOA policies or create rules and regulations for the HOA. That responsibility falls on the board and the HOA members. The manager acts in accordance with and, when appropriate, enforces the policies and rules that the HOA adopts. For example, if the HOA decides to replace the existing landscaping with drought-tolerant plants, it will likely be the manager’s job to choose and coordinate the landscape contractor. Or, after the board determines the amount of an annual assessment, the manager may be responsible for collecting the assessment.

Ultimately, the HOA decides the scope of the manager’s role in the community. Even when a management company is hired to perform a wide range of tasks, the HOA remains responsible for oversight and liable for most financial and legal matters. It is important that the board makes sure the manager acts in accordance with the HOA’s governing documents and treats all community members consistently and fairly.

Hiring an HOA Property Manager

Prior to hiring a property manager, the board should review the HOA’s governing documents to confirm that the HOA has the power to take this action, and if so, determine whether there are any limitations as to what the manager can be hired to perform. If, after reviewing the governing documents, it remains unclear whether a manager can be hired by the HOA, the board should consult with the HOA’s attorney.

Next, assuming the board gets the green light on hiring someone, it should determine whether the governing documents impose any particular requirements on the property or community manager. A few states require a license or certificate in order to serve as an HOA manager.

For instance, Nevada requires obtaining a Community Management Certificate before one can serve as a common interest community manager. Some states, like Alaska, just require a real estate license. If your state has specific requirements, ensuring that a prospective manager meets those requirements should be the first thing that your board looks for when evaluating different property management companies.

The HOA will also want to determine who, specifically, will serve as the manager. Since management companies often have more than one manager on staff, the HOA should find out ahead of time who the management company will appoint as manager. The board should check this person's educational background and years of property management experience. The board should also confirm that the prospective manager has experience handling the specific tasks that the HOA intends the manager to perform.

The Management Agreement Defines the Manager’s and HOA’s Responsibilities

The contract between the HOA and the manager describes each party’s responsibilities and, if drafted well, will protect the HOA. For example, in the case of an underperforming manager, the HOA will want to be able to terminate the contract on short notice, in accordance with the contract’s own terms. (Thus the HOA cannot be accused of breaching the contract.) Having the HOA’s attorney help draft or review the agreement before it is executed by the parties can help ensure that it comprehensively covers future issues such as the need to terminate.

Homeowners Pay All Property Management Fees

Homeowners in a covenant-controlled community pay the management company for its services through monthly fees and assessments. When these services aren't being provided—for example, the manager fails to having the swimming pool regularly cleaned, or is a no-show on days when expected to be on-site—homeowners have the legal right to challenge their HOA. They may also question the amount that is being spent on a property management company.

If you are a homeowner and have complaints about the management company serving your HOA, you should alert your HOA board, in writing, to your concerns and begin to document the complaints you have against the management company for future reference.

Questions for Your Attorney

  • We can’t find authorization in our governing documents to hire a property manager, but neither is there any prohibition. Can we go ahead with hiring if our state’s law allows it?
  • Our governing documents prohibit hiring a property manager, but there is widespread agreement amongst the board and HOA members that one is necessary; can we amend our governing documents to allow the HOA to hire a manager?
  • Are there limits on the tasks we can turn over to a management company?
  • I’m having a dispute with the manager our HOA hired. To whom should I turn?

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