Association Answers

Should we hire an HOA management company?

CorrespondentMay 10, 2013 

Q: The residents of our condo complex want to hire a property manager for our complex. The HOA’s board of directors says it will cost too much. Our opinion is that the board is not managing our finances well. We have had special assessments for the last five consecutive years, and we do not see any improvements.

We are wondering if there is any way the owners can hire a management company without the approval of the board. We have talked to an attorney and a management company, and they both suggest that it would be wise for us to hire a management firm since our finances are in such disarray.

Typically, the decision about hiring professional HOA management company centers on the size of an association community, the type and extent of its amenities and the time and talents of its Board of Directors.

If you are in a larger association community, have significant structures, amenities and landscaping that need to be maintained, or you have difficulty finding enough qualified volunteers to serve on your board and manage your condominium, your board should consider hiring a professional management company.

Factors to consider are whether your board members have experience leading a non-profit corporation, handling preparation of budgets, financial statements, tax returns and insurance issues, experience with investments and long-term capital finance planning, or the background to competently negotiate vendor contracts.

Managing a condominium requires skills in a wide variety of areas, including finance, contract negotiation, insurance, building maintenance, real estate management, and familiarity with federal, state and local laws that affect HOA’s and real estate in general.

The laws are constantly changing. After 20-plus years of representing HOAs, I still encounter unique issues every week. Self-managing an HOA, with the potential impact that on the values of all individual condominiums, carries great risk for inexperienced board members and the homeowners.

Most management companies offer a menu of services. If all your HOA needs help with is collecting assessments, paying bills and generating financial statements, you will have no problem finding one. If your HOA prefers a more hands-on, full-service approach, you can find that as well. Some management companies even provide full-time on-site personnel, such as a maintenance supervisors or concierge.

An HOA acts through its Board of Directors, and only the board has the authority to negotiate and enter into a management contract. Individual condo owners cannot, acting by themselves, take any legally-binding action on behalf of the HOA.

If your board is reluctant to hire a management company, and the majority of owners disagree with this decision, you should consider whether your board members (who are elected by the homeowners) are adequately representing the best interests of all owners.

The real question might be, can you afford not to hire a management company?

Attorney Michael Hunter represents community and condominium associations for the Charlotte law firm of Horack Talley. Email questions to home@charlotteobserver.com.

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