The legal aspects of association management can be complicated. Ultimately, it is a delicate dance of checks and balances between HOA management companies and HOA boards to benefit the most important entity in the community: the residents.
The HOA Board
To understand this dance of checks and balances, we must first understand HOA boards. HOA boards are comprised of volunteers or elected residents from the community. They determine the rules for the community (the CC&Rs: Covenants, Conditions, and Restrictions, or bylaws). They also determine the penalties for not following the CC&Rs. The end of all the CC&Rs should be to ensure a happy, healthy community.
HOAs became fixed features in the United States during the 1960s, and as a matter of course, legislation governing HOAs soon followed. Laws were passed that made HOAs more inclusionary, that governed mortgage insurance, and that oversaw water retention and remediation, just to name a few. Today the laws that govern HOAs are many and nuanced. Because this legal side of things can be complicated and overwhelming to volunteers or electors, it is helpful to have someone on your side that is well-versed in legal repercussions. Enter: HOA management companies.
What are HOA Management Companies Exactly?
Management companies are outside vendors that the HOA board hires. They know the ins and outs of the laws that govern HOAs, and are contracted by them to enforce the CC&Rs that the HOA board makes. It is important to note that they don’t make the CC&Rs, but they can advise the board on whether the CC&Rs would violate any laws or not. They also don’t determine the penalties for non-compliance, but they do enforce the penalties.
How Regulation Works
HOA management companies themselves aren’t strictly regulated. As a business, HOA management companies naturally follow all local city, county, and state laws to ensure sound business practices, and these vary widely by location. It is up to the HOA board to hire a management company that would be a good fit for their community values. So while there are no nationwide regulations on management companies that dictate how to go about managing HOAs, the HOA board acts as their own local, invested check.
It is possible to run an HOA without a management company, but they provide many useful services that take a huge load off of the board member’s shoulders.
Below is a chart that shows a simplified breakdown of how the three main groups in the community help and check each other:
If you’re in the market for the best HOA management company, Spectrum Association Management offers a refreshingly different approach to HOA management. Spectrum offers training and resources for board members and maintains a high customer retention and satisfaction rate. Give us a call today to find out more.