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Management Company Boundaries -Knowing When to Break Ties with an HOA and Qualifying HOAs on the Front End to Make Sure They’ll Be a Good Fit for Your Management Company

12/01/2023 4:48 PM | Anonymous member (Administrator)

By Angela Stevens, Westwind Management Group, LLC

Having a solid foundation in the relationship between community and management is key to a successful partnership, which is why qualifying the association prior to accepting a management role and knowing when to step out of that role are so vital. Continuing a management relationship that is not fulfilling on either end only serves to burn out the management company and frustrate homeowners. By engaging in vetting client communities before and during management, management companies can ensure they are working with clients that are a good fit for their services and in line with the core values of the company, which will help prevent conflicts, misunderstandings and legal disputes down the road.

When to Break Ties with an HOA - Breaking ties with an HOA can be a difficult decision. However, there are times when it may be necessary to do so. Here are some signs that it may be time to break ties:

1. Lack of Communication: If the HOA is not communicating with the management company or homeowners, it can lead to misunderstandings and conflicts. Lack of communication can make it difficult to manage the community effectively.

2. Financial Issues: If the HOA is experiencing financial issues, it can put a strain on the management company. This can include unpaid dues or unexpected expenses that were not budgeted for, or even strained relationships with vendors whose invoices are not being paid timely.

3. Poor Governance: If the HOA Board is not performing its duty as the duly elected governing body of the community and / or as specified in their Bylaws, it can lead to a decline in the community's appeal and functionality. This dysfunction can also lead to conflicts and disappointment in management by community members.

4. Legal Disputes: If the HOA is involved in legal disputes, it can create a difficult situation for the management company. This can include disputes with homeowners or conflicts with contractors.

If you notice any of these signs, it may be time to evaluate and assist the Association in resolving the challenges, and if there is an unwillingness to do so, possibly to break ties with the HOA. Breaking ties with the HOA can help the management company prevent further conflicts or legal disputes.

Qualifying HOAs on the Front End - To help prevent these issues from arising, it’s important for management companies to qualify HOAs on the front end. Here are some steps to take:

1. Review the HOA’s Financial Statements to ensure it has a solid financial foundation. Look for any red flags, such as unpaid dues or out of control expenses.

2. Review the HOA’s Governing Documents: Review the HOA’s governing documents to ensure they are in line with the management company’s proposed services. Look for any conflicts or inconsistencies that may cause issues down the road.

3. Schedule a Meeting: Schedule a meeting with the HOA board to discuss their needs and expectations. This will help ensure that both parties are on the same page and that the management company can adequately meet the HOA’s needs.

4. Check References: Check the HOA’s references to verify they have a positive reputation in the community. This will help ensure that the management company is working with reputable and trustworthy HOA leadership.

Homeowners association (HOA) management companies are responsible for managing and maintaining community properties. These companies are hired by HOAs to oversee the day-to-day operations of the community, including enforcing rules and regulations, collecting dues, and maintaining common areas. While management companies play a vital role in keeping communities running smoothly, there are times when it may be necessary to break ties with an HOA. Additionally, it's important for management companies to qualify HOAs on the front end to ensure they'll be a good fit for their services.

About the Author: Angela Stevens is the Director of Operations – Northern Colorado at Westwind Management Group, LLC. She has over 20 years of experience in the custom home industry and 10+ years as an Association Business Manager. She has experience with all property types from single-family homes to extensive multi-family home developments and has a passion for helping people live better lives.

(303) 585-0367

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