On the surface, managing an HOA may seem simple and straightforward. Unfortunately, there are several unnecessary risks HOA boards take on when they choose to be self-managed. Some of these risks are minor and some can cause tremendous financial or legal problems down the road. Today we want to highlight seven risks your HOA can avoid by hiring a property management company specializing in HOAs.

  1. Indifference – Most of the self-management problems start with ignorance or indifference. As volunteers, board members may not have the knowledge or time to conduct business as it should be done.
  2. Legal incompliance – This is one of the most dangerous risks a board takes on when they self-manage. These infractions sometimes include not submitting annual disclosures and not filing taxes properly, if at all.
  3. Vulnerable to lawsuit – One of the fastest ways to open your community up to lawsuits is to not carry insurance or to have inadequate coverage. Often times self-managed boards don’t know better, and as a result, a lack of proper insurance puts them at risk.
  4. Insufficient manpower – Board members are volunteers, and as volunteers they only have limited time to dedicate to HOA business. That means sometimes things slip though cracks.
  5. Lack of member advocates – A self-managed board lacks the neutral third-person perspective that an HOA with a property management company has.
  6. Missing accountability and transparency – A self-managed board often feels like they aren’t accountable to anyone but themselves. That isn’t true; the board is accountable to its community members.
  7. Operation inefficiency – A well-managed HOA is a full-time job and as volunteers, it is often difficult for board members dedicate adequate time and resources to getting the job done right and in its entirety. There is no reason a five-to-seven person board should have to shoulder the responsibility of managing all business aspects of the HOA. Remember, they are volunteers!

While it may make sense initially to self-manage your community, the savings from not hiring a property management company are almost never worth the above-mentioned risks. An HOA community management company provides a board with resources and industry expertise – both of which make running a successful association possible. If your community could use some assistance in remedying any self-management issues, at Spectrum we are happy to help!