Homeowner Resource
HOA vs. Management Company: Understanding the Key Difference
A homeowners association (HOA) is the governing body made up of owners that sets the rules, budget, and overall direction for a community, while a management company is a hired contractor that carries out many of the day-to-day tasks on the HOA's behalf. The HOA decides what should be done; the management company handles how it actually gets done.
The Relationship Between HOAs and Management Companies
The Decision Makers
Your HOA board consists of volunteer homeowners who establish community vision and policy. They determine what needs to happen, when, and why—setting the strategic direction for your neighborhood.
This elected body holds legal authority under your community's governing documents and state law, making final decisions on budgets, rules, and major initiatives that affect all residents.
The Implementers
Management companies are professional firms contracted by the HOA to handle operational execution. They transform board decisions into action, managing the countless details required to keep a community running smoothly.
These paid professionals bring expertise and bandwidth that volunteer boards typically lack, serving as an extension of the board's authority within the scope defined by their contract.
What Is a Homeowners Association?
An HOA is a nonprofit governing organization made up of homeowners in a community—whether condos, townhomes, or planned subdivisions. When you purchase property in an HOA community, you automatically become a member and are subject to its governing documents, including Covenants, Conditions & Restrictions (CC&Rs), bylaws, and community rules.
Legal Structure
Nonprofit corporation governed by state law and recorded CC&Rs
Membership
All property owners are automatic members with voting rights
Authority
Legally empowered to create rules and enforce compliance
Core HOA Responsibilities
The HOA board shoulders significant governance duties that directly impact your property value and quality of life. Understanding these responsibilities helps homeowners appreciate the scope of volunteer board service and why professional management support often becomes necessary.
Rule Creation & Enforcement
Establishing and upholding community standards for property appearance, noise levels, parking regulations, and use of common areas. The board ensures consistency and fairness in applying these rules across all residents.
Property Maintenance
Maintaining and repairing common areas and shared amenities including lobbies, roofs, landscaping, pools, playgrounds, and other facilities. This preserves property values and ensures safe, attractive spaces for all residents.
Financial Oversight
Approving and managing the annual budget, maintaining adequate reserve funds, and determining regular or special assessments—the dues that owners pay to fund community operations and long-term capital improvements.
Vendor Management
Hiring and overseeing contractors for services like landscaping, snow removal, security, and maintenance. The board decides what services the community needs and evaluates vendor performance.
Owner Representation
Representing the collective interests of all homeowners through an elected volunteer board of directors. This includes holding regular meetings, communicating decisions, and making policy choices that affect the entire community.
What Does a Management Company Do?
An HOA management company (also called community association management) is a professional firm that the board contracts to handle operations the volunteer board cannot or does not want to manage itself. Crucially, the company and its manager act as the board's agent—not as the HOA's "boss."
1
Administrative Operations
Scheduling and attending board meetings, preparing agendas and minutes, maintaining official records, and handling routine communications with homeowners through newsletters, emails, and mailings.
2
Financial Management
Managing bookkeeping, preparing detailed financial reports, assisting with budget development, collecting monthly assessments, tracking delinquencies, coordinating with accountants, and ensuring proper financial controls.
3
Vendor Coordination
Soliciting competitive bids, negotiating service contracts, coordinating routine maintenance and emergency repairs, and managing large capital projects like roof replacements, parking lot resurfacing, or new amenity installations.
4
Compliance Support
Sending violation notices, tracking compliance with community rules, organizing hearing logistics at the board's direction, and helping ensure enforcement procedures follow governing documents and state law.
5
Risk Management
Advising the board on applicable laws and regulations, coordinating insurance coverage, recommending best practices for safety and liability reduction, and helping navigate complex legal and regulatory requirements.
Understanding Decision-Making Authority
Who Has the Power to Decide?
One of the most common misconceptions in HOA communities is about who actually holds decision-making authority. The answer is clear: the HOA board retains all legal authority under your community's governing documents and state law.
Management companies operate only within the scope defined by their contract with the board. They implement decisions, offer professional recommendations based on experience, and handle execution—but they cannot make policy, set fees, create rules, or override board directives.
Think of it this way: the board is the client, and the management company is the service provider. The board always has the final say and can terminate the management contract if service doesn't meet expectations.
1
Board Authority
The board holds complete legal decision-making power
2
Manager Authority
Managers have no independent authority—only delegated tasks
Key Differences at a Glance
Understanding the distinction between HOA boards and management companies becomes clearer when you examine their roles side by side across critical dimensions of community governance and operations.
The Working Relationship in Action
Effective HOA governance requires smooth collaboration between volunteer board members and professional management. Here's how this partnership typically functions across common scenarios that arise in community management.
Board Identifies Need
The board recognizes a community issue or opportunity requiring attention
Manager Researches Options
Management company gathers information, bids, and provides recommendations
Board Makes Decision
The board evaluates options and votes on the course of action to pursue
Manager Executes Plan
Management company implements the board's decision and monitors progress
Board Reviews Results
The board evaluates outcomes and provides direction for next steps
Why Both Roles Matter
The Value of Volunteer Governance
HOA boards bring intimate knowledge of the community, direct investment in outcomes, and authentic representation of homeowner interests. These volunteers understand neighborhood dynamics, resident concerns, and local priorities in ways that no outside party can match.
Volunteer boards ensure decisions reflect the collective will of owners while maintaining accountability to the people they serve—their neighbors. This grassroots governance structure keeps communities responsive and democratic.
The Value of Professional Management
Management companies provide specialized expertise, operational bandwidth, and institutional knowledge that volunteer boards rarely possess. They bring experience managing multiple communities, understanding of legal requirements, and established vendor networks.
Professional managers handle time-consuming administrative tasks, financial complexities, and day-to-day problem-solving that would overwhelm most volunteer boards—allowing board members to focus on strategic governance rather than operational details.
Making the Partnership Work
The most successful HOA communities recognize that boards and management companies play complementary but distinct roles. Clear communication, defined expectations, and mutual respect create the foundation for effective collaboration that serves all homeowners.
1
Clear Communication
Establish regular reporting schedules, maintain transparent information flow, and ensure all parties understand current priorities and challenges facing the community.
2
Defined Boundaries
Document which decisions require board approval versus manager discretion. Review and update the management contract regularly to reflect evolving community needs.
3
Mutual Accountability
Boards should evaluate management performance objectively, while managers should provide honest feedback and professional recommendations even when difficult.
4
Shared Goals
Align around common objectives: protecting property values, maintaining community standards, ensuring financial health, and creating a positive living environment for all residents.
Understanding the difference between your HOA and its management company empowers you as a homeowner to engage more effectively with community governance, ask the right questions, and hold both parties accountable to their respective responsibilities.