Written by Richard Thompson
Whether due to rugged individualism or perceived lack of viable alternatives, many homeowner associations are self-managed. One might suspect that most self-directed HOAs are small or lacking in common area amenities. Actually, many are quite large, complex and the kind that would typically have professional management.
Size of the development is an important factor. Although it should not be the ultimate factor in deciding to self-manage, a sound case can be made for limiting self-management to HOAs of fewer than 10 units with limited common area space and no recreational facilities.
The main advantage of self-management is cost. However, if the motivation for adopting self-management is purely economic, the board should scrutinize that decision closely. It makes little sense to save each unit owner a few dollars a month in management fees when the value of their property many decrease by thousands of dollars as a result of that decision.
From a volunteer’s point of few, the cost savings only comes because volunteers are doing the work for free. Volunteerism often has a problem with continuity. Today’s “house-afire” is tomorrow’s “burn-out”.
The board must consider the legal implications of self-management, since the board itself is liable for its decisions or indecision. The board’s responsibility is to both fellow unit owners and the general public. Although many governing documents contain a hold harmless clause that seeks to protect board members from legal repercussions for their actions, this does not prevent their being sued for mismanagement.
Member enthusiasm may be high enough to make self management successful. However, that enthusiasm usually decreases as the demands on volunteers increase. A breakdown in the system can spell disaster for the entire community. Consider the nasty aspects like having to enforce rules or collection on your neighbors. This situation will happen in every HOA at some point. No volunteer should be put in the position of lording over neighbors.
Self managing a homeowner association can work under the right set of circumstances as long as the approach is professional. If it isn’t clicking, consider the alternatives that professionals can offer.