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Thursday Feb 17, 2022

'HOAs also need professional managers'

Most home buyers in residential estates are prepared for the fact that stands may be smaller than those in ordinary freehold suburbs, and that they will probably have to sacrifice some measure of privacy in return for the additional security, facilities and convenience of living in a gated community.

However, they are often unprepared for the fact that their purchase will also make them members of the homeowners' association (HOA) and subject to the 'rules' of the estate regarding residents' conduct as well as the appearance and usage of the individual properties    
 
And similarly, says Andrew Schaefer, MD of leading property management company Trafalgar, they often don't think about all the additional responsibilities of the HOA, such as the maintenance of roads, pavements, streetlights, landscaping and communal green spaces within the estate, stormwater management and refuse removal, as well as the maintenance of the security systems and equipment.
 
'The HOA also has many financial management, statutory reporting and governance responsibilities and on top of that many estates also have extra facilities that need to be managed, such as clubhouses, restaurants, wellness centres, tennis courts, swimming pools and golf courses – and quite possibly back-up electricity and water supply systems too.'
 
When an estate is well-run, he notes, these are all the things that make it attractive to buyers, 'but the bottom line is that the quality of the environment and services depends on the ability and willingness of all the owners to pay their levies, and on the directors of the HOA having the know-how and time to manage them.
 
'But unfortunately, those owners elected to run an estate as directors of the HOA are most often well-meaning volunteers who actually don't have much property management experience or time - and unlike the trustees of Sectional Title schemes, also have no specific legislation to guide them.'
 
On the other hand, says Schaefer, effective management of an estate really requires a working knowledge of the Companies Act, the Consumer Protection Act, the Protection of Personal Information Act and Community Housing Schemes Ombud Services Act at least – and an efficient accounting and levy collection system.
 
'Sometimes the directors will also need to enforce the appearance/property usage rules contained in the HOA constitution or institute legal proceedings against owners who are in arrears with their levies, and that can lead to them being at odds with their neighbours.'

'This is why it is strongly recommended that HOAs should appoint an experienced, knowledgeable property manager to assist their directors. A good management company will be able to provide a range of services, from straightforward levy collection and payment of accounts to maintenance management, planning and supervision and even emergency responses to service failures.'

It will also, he says, be able to provide the continuity that is often lacking in HOAs by filling the gaps where volunteerism falls short, keeping centralised records and arranging induction sessions to help new directors maximise their effectiveness. Because it has no personal axe to grind, it will also be able to execute unpopular decisions without posing a threat to the unity of the HOA.
 
'Having said that, though, it is also important for the HOA not only to choose a property manager with estate management experience, but also to draw up a clear, written agreement setting out all the manager's duties and responsibilities. This will enable the directors to monitor performance and decide whether the HOA is getting value for money – or whether it is time to change managers.
 
'An estate manager working on-site and reporting to the directors is generally a good idea if levy income affordability allows, because the estate manager will be able to oversee and quickly respond to any facility management needs, while an off-site manager is best placed to oversee the financial management and administration of the HOA in parallel.'

    
 

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