You're an organization, they're an organization: Can you work together? If you're a property manager working with homeowners' associations (HOA), you need to know how to navigate this relationship and have a clear understanding of responsibilities to ensure you maintain a good working partnership.
Negotiating the Scope of Work
Work with the HOA to assess its needs and create a list outlining the scope of your responsibilities as a property owner and/or manager. Consider asking:
- Who is responsible for organizing repairs and maintenance?
- Who is responsible for accounting?
- What does the HOA require?
According to an article from NOLO, a property manager may simply take on responsibilities such as common area maintenance including heating and lighting a common clubhouse, maintaining the community pools and elevators, and providing landscaping services for common parks. For other properties, management might include rule enforcement or accounting. A thorough needs assessment with the HOA will help determine whether your company is a good fit and whether to take on the work the HOA requires.
[caption id="" align="aligncenter" width="674"] The HOA makes the rules, and property managers enforce them.[/caption]
Who Makes the Rules?
This is a tricky question for many HOAs and property managers who work together. The HOA's responsibility is to make the property rules and, as the manager, your role is to enforce them. Those who live on the property must talk with the HOA if they have a problem with the rules of the community. According to the Institute of Real Estate Management, a property manager does not negotiate disputes between owners or advise on legal matters, as they are the responsibilities of the HOA and the HOA's attorneys.
What Process Does the HOA Require?
As an entity responsible for particular properties, the HOA is also responsible for doing its due diligence to make sure you're a company they can work with. Be prepared with your licenses and credentials, and make sure the licenses and certificates you hold conform to state requirements. Check to see how your insurance and their insurance will work together to cover any lawsuits or damage to the property. Be ready to provide references and a background check to the HOA.
Contract Negotiation With an HOA
Once you've determined your company and the HOA are compatible, create a management contract using the guidance of an attorney. The average contract with an HOAs is 1 to 3 years. Before signing a contract with an HOA, review its obligations, including fees, and understand the process for terminating the contract if the relationship is not working well.
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