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TYPES OF HOA MANAGEMENT

The primary duty of a board of directors is to manage their association. While some duties are nondelegable, boards have the authority to delegate duties to a managing agent. Following are the forms of management commonly found in homeowner associations:

  1. Self-Management. Small associations frequently use self-management, i.e., the board directly manages the association without the assistance of professional management.
  2. Management Company. Small and medium-sized associations often employ a management company to handle day to day operations. This includes receiving assessments, paying bills, preparing monthly financial reports (Civ. Code §5500), prepare and mailing the annual budget report and policy statement (Civ. Code §5300 and §5310), performing property inspections, soliciting bids for projects, handling correspondence, preparing board meeting packets, etc. See manager fees.
  3. Onsite Management. Large and high-end mid-sized associations will often employ a full-time onsite manager to handle operations. Sending monthly invoices bills and receiving assessments is either done in-house or is contracted with a management company. The onsite manager can be a direct employee of the association an employee of a management company. The arrangement provides the full service described above but with a higher level of service since management and staff are on site.

Managers. Individual managers can be classified into the following two categories:

Portfolio Managers. A portfolio manager is an individual who works for a management company and manages multiple associations. The manager works from the management company's office handling board and homeowner requests by telephone and email.

Onsite Managers. An onsite manager handles a single association account working from an office at the association. The manager can either be employed directly by the association or be on the payroll of a management company.

Management Companies. Management companies generally fall into four categories based on size. All will offer financial management services or full management.

Small. A small company has a handful of employees taking care of a small number of associations within a small region.

Medium. A medium company has a larger staff and a region that covers multiple counties.

Large. A large company may offer services throughout the entire state and include in-house maintenance services.

Mega. Mega-companies cover multiple states and may offer management services in adjacent countries. They might provide in-house insurance and banking services, as well as maintenance services.

Finding Good Management. When contracting for management services, you want to ask the following questions:

  • Are their managers all certified (or working on certification) through CAI or CACM? You will be in better hands a management company a mangement company that places a premium on training their managers. (See Designations and Certifications.)
  • Ask how long they've been in business, since nothing can match the wisdom that comes with years of experience.
  • Ask about insurance — what do they have and at what limits?
  • Take a look at the financial statements they generate for their associations. It's really important that you can read and understand them. Otherwise, they have no value to you.
  • Ask if they maintain separate bank accounts for each association. Under no circumstances should the management company co-mingle client monies into a single account.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

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