4 ways to strengthen your association management relationship

It used to be that when people bought property, they could live in it and care for it the way they wanted.

For example, if they didn’t want to mow the grass in their own backyard, no problem. If they wanted to decorate it in Christmas lights all year long, so be it. But, as residential models and housing preferences have changed, so too have the way many housing units are governed.

An uptick in urban multifamily housing and increased demand for suburban subdivision living means there are more people than ever living in properties governed by a condo association, homeowners association or co-op board than ever before. A survey by the Community Associations Institute (CAI) finds the number of communities covered by associations has increased from 10,000 in the 1970s to more than 330,000 today.

Evan McKenzie, political science professor at the University of Illinois explains that buying one of these properties means “You’re handing over control of the way you want your home to look, and what you want to do in and around it to the association’s board of directors.” What’s more, the board of directors “can be untrained people with no knowledge of the law or business, and sometimes have very bizarre ideas of what they want in their community.”

Furthermore, many of these untrained, volunteer boards of directors decide to hire property management companies.

The good news is that a property manager is usually better equipped to manage HOA financials, collect rent and other dues, maintain the property and fix major repairs. The bad news is that dealing with an HOA that isn’t familiar with basic property management can be nightmare.

Here are a few handy tips for property managers who have been hired by an HOA:

1. Make sure roles and responsibilities are clear from the outset.
   Property managers are usually hired to take on routine maintenance (indoor common areas and outside), to fix minor repairs (like broken locks), and to hire/oversee contractors needed to make major repairs (e.g. roof leaks). Usually property managers are responsible for the HOA’s finances, from collecting dues to making payments to outside vendors. Property managers may also be called upon to enforce HOA rules and regulations, such as giving homeowners proper notice if they are in violation of the HOA’s rules, restrictions and covenants. So what aren’t property managers responsible for? It may seem obvious but homeowners and renters are responsible for any in-unit cleaning or repairs; they should not be calling you to replace a kitchen light bulb! Most often, residents are responsible for trash collection and recycling, unless the HOA has hired a separate company to manage refuse removal.The scope of work for property managers contracted by HOAs can vary greatly so it’s important to be clear, so HOAs don’t call on property managers unnecessarily. If the HOA feels the property manager isn’t living up to his duties, it can lead to major tension. Similarly, contracts should carefully spell out all charges, costs and fees. Avoid surprises.
2. Stay in regular communication with the HOA Board of Directors.
   “There is no substitution for communication between the association and the residents,” says Frank Rathbun, vice president of CAI. Property managers should offer to regularly attend HOA meetings. At a minimum, if the HOA holds an annual meeting, be sure to go. This will give you important face time with the Board of Directors and gives you an opportunity to get to know some of the other homeowners – many of whom probably don’t attend regular HOA meetings. During these meetings, many homeowners have questions or want to voice concerns; being there will help you understand their priorities and gives you a chance to answer questions. Remember, most HOAs don’t understand complexities of real estate, building maintenance or property management—your role is to listen and to serve as a trusted advisor. Don’t be afraid to ask questions and solicit feedback as a way of improving the community.
3. Keep detailed records of financials—or encourage the HOA to do the same.
   If you’ve been contracted to manage the financials, always keep detailed records readily available. Bring a copy of all statements to HOA meetings so the Board of Directors knows exactly how association dollars are being spent (or not). If you haven’t been contracted to manage money or other financial paperwork, be supportive and give guidance to the HOA Treasurer as needed. Some HOAs may be skeptical to open their books to an “outsider,” but if you have a handle on the financial situation you’re better able to make recommendations about improvements that can be made that will benefit the HOA in the long-run. A flexible HOA management software can be invaluable when preserving records. At the end of the day, hiring a property manager does not eliminate the Board of Director’s fiduciary duty for its members.
4. Add value by sharing knowledge of real estate markets and trends.
   For instance, an HOA may not know that if the number of owner-occupied units falls below 50%, it might be more difficult for a prospective buyer to get a mortgage. While property managers may not be required to share such knowledge, it provides a tremendous value for HOAs and helps build trust.

With 55 million Americans now living in developments overseen by HOAs and other oversight entities, the demand for property management will only continue to increase. Following these steps will ensure a mutually beneficial relationship for HOAs and property managers alike.