A Homeowner’s Association (HOA) is, from time to time, faced with the task of hiring an HOA Property Manager. It is at this moment, that the Board of Directors essentially becomes an ‘employer’ searching for a new HOA ‘employee.’ Most property managers are affiliated with a large corporation, so it is also important to verify the property management company’s credentials.

There are several ways to begin the search for an HOA manager that’s the right fit for your Homeowner’s Association. Board members can opt to use old-fashioned methods like ‘Head-hunters’ or referral networks. However, there are also employment websites dedicated to matching property managers with potential employers that are reasonably helpful. When searching for the right HOA property manager, the Board of Directors must do their due diligence.

Listed below are a few important considerations to help vet property management candidates:

Select a committee (or Board Member) to complete a preliminary exploration.

The Board of Directors should be aware that hiring a new HOA Property Manager takes approximately 20 manpower hours.

Determine the specific needs of the Homeowner’s Association.

Focus your efforts on identifying the services the HOA will require of an HOA Property Manager. These lists typically differ from HOA to HOA. Remember that the HOA will need to vigilantly oversee the services performed by a Homeowner’s Association’s new property manager.

Examine the insurance and bonding credentials for any property management firm & Property Manager that you are considering hiring.

State laws generally set forth the minimum standards for bonding and insurance. HOA’s are encouraged to obtain their own insurance to protect the association against potential worker’s compensation lawsuits. It is also a good idea to ask for the property management company’s ‘Insurance Certificate.’

Confirm that the property management performs a criminal background search for each property manager.

An HOA always has the option to order a background check on any potential employee, including a property manager. Don’t forget to verify the references provided. Speak with the board members of another community the property manager currently services. Preliminary research, such as this, ensures the HOA selects a property management company/property manager that will meet the HOA’s specific needs.

Have the HOA’s attorney review the property management agreement.

Most property managers work within the confines of a contract executed by both parties. The Board of Directors should understand exactly what the contract’s provisions provide for.

Decide whether the Homeowner’s Association should strive for a one-year contract or a longer contract.

Ideal property management contracts are written for a term of one year, with renewal provisions for two additional years, at the same price. It is noted that some property management companies prefer signing a three-year lease when the contract begins. Skilled negotiation techniques are important if the HOA intends to get the contract term it prefers.

Analyze the provisions regarding the termination of the property manager.

Ask how many days’ notice must an HOA provide in order to terminate the property manager? How many days’ notice is required for a property manager to terminate their agreement with the Homeowner’s Association?

Compare property management contracts. Each potential property manager should provide the HOA with a complete fee schedule.

Property management bids typically fall in line with one another. However, it is important to know how these costs and fees are broken down. Some may include postage fees as a part of their general costs, while others separate it out from included costs. When the Board of Directors receives a bid that is significantly lower than the others, consider this a red-flag warning to tread carefully with this bid.

Check out suggestions and procedures set forth by the Community Associations Institute (CAI).

CAI’s mission is to encourage professionalism and effectual leadership throughout the industry. Explore CAI’s professional service directory.

The bottom-line:

Property management companies differ as much as the people who own them. Take the time to make an informed decision when hiring a property manager for the HOA. Overlooking warning signs or dismissing the need for appropriate research could lead to problematic issues moving forward.

About Diversified Association Management

Diversified Association Management (DAM) is best in class for HOA management. Since 1984, DAM’s principles have provided common interest development management services for condominiums, planned unit developments, industrial associations, master associations and maintenance associations. We serve communities in Orange County, Los Angeles County, and the Inland Empire. To learn more about our services, please call us at (714) 544-7755 or email us at info@diversifiedassociationmgmt.com.