Do any HOA's operate without a management company?

The short answer is - Yes, some HOAs embark on self-management.

The much longer discussion is whether it is desirable for your particular community or not. Rather than re-hash such a discussion, I would suggest you search this forum for "self management" topics/threads where there is a healthy discussion about the pros & cons and the multitude of community specific factors that enter into the decision.

Well said, Stephen!

Depending upon the size of your community, self-management may be the most practical way to go. However, even if your community is very small, if you cannot get enough dedicated, hard-working individuals to serve on the BOD, then self-management will not work. When I decided not to run for re-election, my former HOA of only 49 homes was forced to hire a mgmt co for bookkeeping services only. There was one other member who was willing to serve as treasurer but was not qualified and several others who could have handled the job just weren't interested.

Sidney,

You said: "So if you are or have that motived person to run your Association go for it, use the saved money wisely." I agree, but only if you pluralize the word "person". It take more than one motivated person to effectively run the BOD. One motivated person taking up the slack of all the others unwilling to do their jobs gets old fast. I know; I've been there, done that and my HOA only had 49 homes!

I think self-management is great. But, aside from needing all the board members to be motivated, they also need to be up on state laws and know the gov. docs inside out. There really is alot of work involved to do your job effectively. Most people either don't have the time or don't want to make the time. Then the other thing to consider is that it is a thankless job. Don't be expected to be congratulated for a "job well done"; instead expect to recieve complaints about just about everything the BOD does. Everyone may not complain about some things, but someone will complain about everything. If the HOA is small, the board members will hear it all -- word gets around in a small community, you know!

100 townhomes, quarterly assessments, no complicated ammenities. We have a management company.

Elizabeth if it's done properly a self-managed HOA can be just as financially healthy as one with a Management Company or just as financially un-healthy. But self-management takes knowledge, time and effort...if you don't have dedicated volunteers and resources to do things correctly, things can go downhill very fast. Whether your association consists of 6 units or 6000, it is a business and the BOD has the fiduciary responsibility to act reasonably and properly.

You need to ask if you have people with the dedication for the long-haul to make self-managing work. A group of dedicated volunteers can quickly dwindle to one or two people doing all the work and you need homeowners willing to step up and participate as the volunteers move on. Don't have any one person do too much; burnout can occur and there are often only a handful of good volunteers. If you put the proper policies and procedures in place to make transitioning from one Board to the next easy the work is not that hard but understand that there is work involved and it must be done.

Also you need to check your CC&R's to find out if a MC is required and may even need to check everyone's mortgage. Someone posted a clause here recently from his mortgage that prohibited doing away with the Management Company.

Self-management is a viable option for many HOA's and is almost a necessity for small ones (i.e. - less than 30-40). But, no matter the size of your association, it is a legal entity and should be conducted as a business. The BoD responsibility “to act reasonably and properly” in conducting this business will help you answer the question of whether or not you can/should self-manage. I would consider the following as pre-requisites for self-management

• Dedicated volunteers – Reliance upon non-paid volunteers to run your Association business can leave you exposed on several fronts. The biggest problem can be to get someone qualified to even volunteer in the first place. For many, this would be a part-time job that was taken because no one else would volunteer.

• Basic business and leadership skills – A self-managed BoD will have to deal with budgets, insurances, association covenants, conditions and restrictions (CC&Rs), handling disgruntled members, solving disputes, conducting meetings, and a host of other responsibilities. Your BoD should very carefully their interests, qualifications, limitations and whether or not they are willing to perform this role and put in the necessary energy and time that comes with the job.

• Knowledge of what to do – Even for those BoD members familiar with business practices, managing a condo or homeowner association has its own set of unique challenges. Whether you are a mature association or just starting off, you will have to pay attention your association's management infrastructure (business processes, how decisions are made, communication system, etc). You will have to understand all your governing documents, as they set up what you legally can and can not do as a BoD. Finally, you will need to know when to act or react to multiple situations as they arise. This is not as daunting of a challenge as it might first appear, as there are books and numerous resources available on the web to help you along this journey

If these pre-requisites can not be met, then the BoD should consider hiring a management company to assist them. Even if that is the choice, this does not have to be an all-or-nothing proposition. A savvy BoD will only contract those services that are absolutely needed. For example, you might choose to use a local accountant to handle the billing of the monthly assessments and the payment of basic bills.

JoeK
www.*********.com

John,

I'm glad things are working out for you. But the pitfalls are many.

Volunteers being burnt out, moving, getting ill and no longer able to serve which means you will have to find a replacement to fill that position. Having to contact attorneys to learn what you do not know. Keeping up with recent legislation that may affect your documents. Disgruntled owners contacting you at all hours of the day (who contribute nothing) and lots of criticism.

A thankless job to save everyone some money. Even serving on a board with a management company I sometimes wonder why I volunteered again. One owner asked why "we" couldn't just collect the assessments. How little he knew and naturally he did not volunteer to collect the assessments or to follow up on owners who did not pay. It's the same old same old.."they" should do something or "we" should...One time faced with an owner who asked why "they" didn't do something I told her you are "they".

Ellen,

Yes, the pitfalls can be many. We (on the Board that took us self-managed) knew that going in. But when the PM proposed its 2008 contact, upping dues by 14% to cover nothing more than their increased management fee (which would have eaten up about 1/3 of our budget), we decided amongst ourselves that was crazy.

And it's not all about saving money; we were more intent on allocation of those monies. $6K "extra" out of a $20K annual pot is a bunch to be diverted to improving/funding our common areas and reserves.

So far, so good. Virtually all communications with Membership are via e-mail and as there're really very few probs amongst HOs that involve the Board, no late night communiques.

And as previously noted, if our experiment tanks, we can always opt out of self-management.

sure, send me an E-Mail [email protected] I will correspond with you. I have been in both managed and un managed.

It wasn't me that posted that, but I would add that it is very important to check.

Our declaration (CCRs) includes a "mortgagee protection" section that includes a clause that all mortgagees need to be notified by the association if the association chooses to be self-managed. My mortgage contract also includes a clause stating that the borrower cannot vote to be self-managed without notifying and receiving permission from the bank to do so.

One should also check the carrier for the association's D&O insurance. Premiums for D&O insurance can sometimes be higher because the risks for a claim are greater for a self-managed HOA.

Self-management works well for some HOAs; not so well for others.

One can find articles on the subject on the internet; especially on this site. Check out the "Library" tab above.

Our association uses a management company.

Our HOA is kind of in between. We are relatively large (800 homes) with many amenities. Our board directly hired a general manager and staff as employees of the association. We only use a management company for financial and accounting duties, they (the management company) have no role in the day to day operations.

we have been self managed for 10 years and have done a very poor job. Our biggest issues is covenant enforcement, no one want to be the bad guy to their neighbor. It is possible if you have some strong willed people and plenty of them. We are looking into management for that reason, we just don't have the work force.

Thanks for that. I'll review the rules. This is my first time using this site.

Thanks for the link! I'm actually just excited about the work we've done. If I could delete the posts I would. I'm not sophisticated enough to "spam", I just know the term. But Property Management I know!! I've been reading a lot of the discussions and many of them have specific legal answers and I'm no lawyer! But it's difficult to read a problem and not mention a specific solution. Other than that, it just seems like coffee talk. But, OH WELL, I'll just browse!!

My HOA of 156 townhouses has been self-managed for 30 years. Last month we hired a property manager.

For 20 of the HOA’s 30 years, one woman pretty much ran the place all by herself. She was retired and did it as a full-time job. Eventually her health deteriorated and she passed away a year after she resigned. Now, she did plenty of things badly and even against the rules, but no one on those boards challenged her until the end.

Three years ago, a new, energetic board took over, the old members resigned, and after many exhausting months/years the HOA got back on track. But now the board is down to five members (from seven), only four of which do any work. No one else, and I mean literally no one else, volunteers to do anything, big or small, and we’re burning out. We all have full-time jobs, commutes, and families, and want to have non-HOA activities. We five (four) simply don’t have the free time to run the HOA as well as it should be run.

So we voted to hire a management company. In a self-managed HOA, if the community doesn’t help out, the board members are expected to do everything. When they resign, and no one volunteers to replace them, the burden gets heavier for the remaining board members. A property manager will do all the duties that time-strapped board members were trying to do, and has the added benefit of experience and knowledge. It’s a hedge against an apathetic community. Also, having a management company will provide continuity and help future boards of varying commitments and/or competency run the HOA in years to come. The board just has to be committed enough to make sure the management company is competent and honest.

We started out by using a company for our financial management this year and were pleased with them, so now we’ll try them for full property management next year.

The HOA has to function. If no one can devote their full-time energies to running it, and the community doesn’t support the HOA and the board by volunteering, then as I see it, the only thing to do is to hire a professional. For us, it’s an extra $4 per house per month. Priceless.

A good property manager in conjunction with a decent HOA board that realizes its function is as an oversight committee is worth its weight in gold. I'd highly consider it if your amenities and dues collections procedures are cumbersome.

There's likely enough efficiencies to be gleaned in your budget to cover the approximate 10% of gross revenues you'd pay for the daily service.

But, I can understand the reluctance and never override a huge majority of opposing homeowners. Not that I care about being voted out of a free job but that the HOA board represents the general will of its supporters.

Tim, you've removed my violation (which is fine) but left the scolding. If you have the capability of striking a post, should my chastising be left as an example to others or can you remove the entire thread between you and I?

I think I'll just leave the site. I've been chastised and scolded for my opinions, etc. with many steps, rules and links to restore my name. Net negative for me. Be well.