How to Evaluate Your HOA Manager

Manager performance evaluation

Homeowners association board members and owners often wonder if their manager is really doing what they should be doing. Is the manager doing too much or not enough? To answer these questions, you'll need to create some clear guidelines that you can use to conduct an evaluation. Those guidelines should measure services in two areas:

Is your manager doing what they are contracted to do?

Are they doing it in the right way?

Here we focus on the second question - the manner in which your manager performs his or her tasks. If your manager is doing a good job, they will do all of the following:

  1. Provide the services that they promised.
  2. Stay informed about current laws and best practices.
  3. Avoid exposing the association to liability.
  4. Work in the association’s best interest.
  5. Treat all owners with respect.

A Manager Should Provide the Services that they Promised

Know your contract. You can’t evaluate a manager unless you measure their performance against clear standards. Your contract answers the basic questions about “what” the manager should do. Did he attend the board meeting? or Did she provide quarterly financials? are easy questions to answer.

But what about the “soft" promises? During the interview process, every company promises to provide service in a particular way. These assurances can greatly influence the board’s final selection, but the details don’t always belong in the final contract. Boards should carefully document promises such as “we respond to all owner inquiries within 4 hours” or “we deliver financials at least one week prior to every board meeting.” These are important service guarantees that aren’t always included in the contract.

While HOA boards can certainly adopt flexible standards, they should have standards that they communicate to the manager. Even great employees can make mistakes and forget about the unique priorities of a particular board. This is especially true when boards neglect to document those priorities. So what can you do?

  1. Document. Write down assurances from the management company that matter to you. You may be able to include some in the contract.
  2. Discuss. The board should review and discuss these notes to make sure that it agrees upon what was promised.
  3. Share. The board should share the final document with the manager, and let them know that they will evaluate them according to this set of criteria.
  4. Evaluate. The board should review the manager’s performance at regular intervals, and discuss the review with the manager. The board should praise success, and expect improvements when necessary.

Written agreements between management companies and homeowners associations will ideally allow the board to focus on policy rather than the day-to-day procedures of HOA management.

A Manager Should Stay Informed About Current Laws and Best Practices

Condominiums and planned developments often hire management companies to help them comply with current legal requirements and avoid liability. The growing set of laws that comprise the legal responsibilities of HOA boards of directors is constantly updated and changed by legislators and court cases. For volunteer board members, tracking the changes – or even learning all the basics – is a major challenge. Every board should understand the Legal Obligations and Potential Liabilities of Directors.

But your manager can help! Or they should - managers should understand the requirements of current HOA law, follow a plan to stay informed, and make the board aware of developments. For managers, the clear path is certification.  

Management Certification                       

In California, managers are not required to be certified, but managers who obtain a certification demonstrate a proven degree of expertise and professionalism. If they don’t have a certification, a manager may not say he or she is certified or licensed in community association management. Doing so is a violation of the law (Business and Professions Code §11502).

Certified managers have a tested understanding of laws related to community associations. They must complete at least 30 hours of education in a broad range of topics in order to obtain a certificate. These topics include:

  • California law related to managing an association (Davis-Stirling Act)
  • Risk management practices such as insurance and maintenance
  • Property protection regulations such as Vehicle Codes, local and municipal regulations, energy conservation, and daycare homes

Read the full list of Certified Manager Criteria.

While no comprehensive, state-issued management certification exam exists, national and state-wide organizations offer certifications that meet California’s requirements. But each program is unique, and your board should make sure that its manager maintains a certification with an educational program that serves the needs of the HOA. Check out our guide to community association management certifications to learn more. 

Managers Should Empower Boards with Educational Information

Under most circumstances, the homeowners association is responsible for the work performed by their manager. When elected, a board member accepts a fiduciary duty to the association. The employment of a manager doesn’t change this basic fact.

Being a fiduciary is a big responsibility that falls only on the board – not the manager. Good managers understand this difference and will encourage each board member to understand their responsibilities. So don’t be afraid to ask questions, and find a manager who will point you to answers. “That’s just how we do it” is not an acceptable answer.

Ask “why” a lot:

The answers matter, and you should know which practices are dictated by law and which are simply recommendations. While you can’t expect a manager to communicate the breadth of their knowledge to you, they can always point you to objective educational resources.

If your manager is unwilling to help you become a more informed fiduciary, you should be concerned. However, most managers value informed boards – they are the best clients.

A Manager Should Not Expose the Association to Liability

A good manager will also demonstrate integrity and careful attention to detail by not exposing the association to liability. Three of the biggest threats to your community association are:

  • Lapsed or Inadequate Insurance
  • Unlicensed or Uninsured Contractors
  • Fraud

Your manager should be aware of each of these threats and use a systematic approach to ensure your association does not risk exposure.

Lapsed or Inadequate Insurance

Your manager should monitor the association’s insurance policies closely, and immediately inform the association about upcoming renewals. Lapses in coverage should be disclosed immediately. And the management company should maintain its own liability insurance.

Unlicensed or Uninsured Contractors

Third party contractors can expose an association to significant liability. If your manager is contracted to help the association to hire contractors for construction projects (such as reroofing, painting, lighting, etc.), he or she should obtain proof of the following information from each prospective company:

  • Contractor’s license. The contractor should be licensed in the state of California to perform the specified work.
  • Proper insurance. The contractor should have its own liability insurance and surety bond, and should have workman’s compensation insurance that covers any employees that will work on the job. Some insurance policies exclude common interest developments, and your manager should check on the coverage.

Ask your manager to explain the steps they take to verify contractor eligibility. 

Fraud

A manager should follow procedures that protect the association from fraud. and should explain these procedures to the homeowners association. Here are three basic fraud-prevention strategies that every manager should recommend:

  1. Two signatures on checks. If you pay bills using checks, your banking arrangement should require two board member signatures on checks. The manager should never sign checks. If you use online banking, your process should require the participation of two board members to monitor and send payments.
  2. Two bank statements. Your manager should recommend that one board member receive an original copy of your monthly bank statements. This copy is in addition to the statement sent to the management company.
  3. Spending limits for managers. Managers need the freedom to approve urgent work without involving the board. However, a manager should recommend that you adopt a policy that reasonably limits that freedom to a specific dollar amount.

Your attorney should also review your management contract to make sure that the association is adequately protected in the event that your association is the victim of fraud.

A Manager Should Work in the Association's Best Interest

Ethical managers work in the homeowners association’s best interest. While individual managers are employees of the management company, they should never allow a conflict of interest to influence their work for the HOA. Make sure that your manager recommends best practices and maintains appropriate relationships with service providers.

Ethical Governance Policies

Have you ever employed a manager who told you that the board’s desired course of action was against the law? Did they decline to participate and explain why? If so, you’ve got an ethical manager! This means that they value honesty, and are willing to risk discomfort and their business relationship in order to protect the association and their own professional reputation. Many certified managers are required to abide by the ethics policy of their certifying organization. For managers who obtain the CCAM certification from CACM, you may read their ethics guidelines here: CACM Code of Ethics.

Vendor Gift Policy

A manager can and should offer guidance about which contractors to hire or services to use, but allow the board members should make the final selection, or to define the parameters within which the manager may choose a contractor.

Management companies should have a policy that govern gifts from vendors to managers. Vendors will often develop close relationships with managers by taking them to lunch, offering event tickets, etc. These relationships are common, but they can lead to bias or the appearance of bias. In our opinion, managers should disclose to the board any gifts that they receive from bidding contractors.   

Bids and Contract Renewals

Managers should advise boards about expiring vendor contracts, and give them plenty of opportunity to decide whether to renew or to seek new bids.

A Manager Should Treat All Owners with Respect

Managers should conduct themselves professionally and respectfully towards board members and homeowners alike. All management company employees should treat every homeowner as if he or she is a future board member.

While all owners are worthy of respect, not every complaint deserves equal attention. If you want to understand how well your management company treats owners, you will need to do a little research. You may want to consider the following options:

  1. Call the management company. Many board members interact with the management company by emailing or calling the manager. But you can get a better sense of an owner’s experience if you use the same process that they follow. Are you greeted courteously by a human being, or are you passed to an automatic call-forwarding system? Different arrangements work well for different HOAs, but you should choose one that fits the needs of your membership.
  2. Survey the membership. Develop a process to help you gather regular feedback about the manager or management company services. You may ask how management handles billing, emergency calls, complaints, etc. You should also ask about positive experiences.
  3. Hold an executive session. Boards may meet in executive session to discuss “personnel matters.” It is good policy to meet in private to discuss your manager’s performance at least annually. This meeting will help you identify positive changes that you can make, or opportunities to praise the manager’s performance.

Talk to Your Manager

Good management requires frequent, clear communication. You must talk to your manager about your needs and provide clear direction if you want to receive great service. Do the work to define a management relationship that works for your HOA, and then talk to your manager about how to achieve your goals.

Give your manager an annual review, similar to those you receive in your professional career. Acknowledge and praise their successes, ask for necessary changes, and develop a relationship that lasts.


Article by Tyler Coffin and Sara Montecino. Tyler is ECHO's Director of Communications and a former community manager. Sara Montecino is a writer and content editor on ECHO's staff.

Image courtesy of marin at FreeDigitalPhotos.net

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