HOA vs. PMC – What’s the Difference?!

These days many homeowners are finding themselves purchasing a home in homeowner association communities, whether they choose a condominium, townhouse or a newer single-family home. Many of these associations have hired a property management company (PMC), like Omega Property Management. Homeowners who are living in a homeowner association (HOA) for the first time may be confused as to what exactly the property management company does if they aren’t the Association.

Homeowners are governed by the HOA. The HOA is responsible for:

• the operations of the community and maintenance of common areas (if applicable)
• establishing, collecting and allocating dues
• determining and managing the budget of HOA expenses that are necessary
• adequate insurance coverage for all common areas
• hiring and managing staff, contractors and vendors (maintenance, management, etc.)

The Board of Directors, which are elected volunteer homeowners, govern the HOA. The Board of Directors get their powers and direction of action from the governing documents of the Association (Declaration, Bylaws, Articles of Incorporation) to create covenants, conditions and restrictions (CC&Rs), better known as “Rules and Regulations.” They also will define officer positions, enforce standards, ensure fiduciary responsibility and clarify Association responsibilities versus homeowner responsibilities. The Board of Directors enters into contracts (grounds care, tree care, management company, insurance, etc.), sets policies and rules, and also determines penalty policies for noncompliance of homeowners.

So, after all of that, what does a property management company do then? Well, the Board of Directors is a group of individuals who have volunteered for the position. If the governing documents of the Association allow it, the Board can hire a property management company to take over some of the duties and responsibilities. This does not relieve the Board of their responsibilities and duties to the Association, but it does make this volunteer position a little easier when members of the Board have other commitments to balance, such as work, family or even long-term travel plans.

The Board hires a property management company for their experience and knowledge in:

• handling an Association’s daily operations
• overseeing maintenance duties
• enforcing the rules
• communicating to homeowners
• executing all Board decisions
• ensuring federal, state and local laws are being adhered to
• performing accounting and contract management

The property management company does not set any policies or rules and does not determine the penalties for noncompliance. Policies and regulations made by the Board of Directors on behalf of the Association are enforced by the property management company.

The Board and the property management company should have the same goal in mind to be effective for the Association: improve property values and foster a sense of community and cooperation to help cultivate a friendly atmosphere for all homeowners.

(Photo credit: Ed Uthman via Flickr cc)