Enforce Oversight of HOA Management Companies: The Problem
For many Americans, their home is their largest and sometimes only asset. If you live in an HOA, that asset is managed by a Property Management Company (PMC) that is minimally regulated by your state.
Background
Companies that manage HOAs need more supervision from the states. Many are only required by their state to have a realtor’s or broker’s license, and neither qualifies a person to manage an HOA. A few states do not have any requirements. Many of these companies do not have to disclose their relationships with vendors to the HOA board.
For Instance, a management company in Pennsylvania persuaded a condominium association’s treasurer to transfer its reserve funds to an affiliated bank. This bank was not FDIC-insured and offered an interest rate half the market rate. This example underscores the potential risks of mismanagement. If the manager had a fiduciary duty to the association, they would not have been able to make this recommendation.
Objective
The objective of this initiative is to increase legal restrictions on Companies that manage HOAs and require them to comply with the fiduciary duties that are in place for other financial managers. We must never forget that, in many cases, these management companies control the largest asset that most people have. The five key steps for this initiative are:
Five Key Steps for this Initiative
- Research the issue. We are currently in the research stage. Solutions will only be proposed after all components of the problem are understood.
- Propose a solution.
- Engage stakeholders.
- Implement the solution.
- Verify the solution.
Owners Are Asking: How can I help?
- If you have some time we need a lot of help with the Initiatives. Please consider volunteering.
- If you have more money than time, please consider donating.
- At the very least all owners should join and complete these anonymous questionnaires. (Since we have just launched, we need to build up the membership fast, so that legislators know that we have a strong cause. When you complete the forms we will use that data to show legislators what the problems are).
Oh, by the way, some initiatives are being piloted in PA to help finalize our approach for this nationwide. In 2025, we plan to launch this initiative in other high-population states.
Recent Progress on this Initiative
Progress on Oversight of HOA Management Companies in Pennsylvania
The oversight of HOA Management Companies is minimal in Pennsylvania. Pennsylvania has a very confused law regarding the requirements to be a Property Manager or Company. There are some minimal requirements, but the law has an exception for managing HOAs. There are no requirements at all in PA if you happen to manage someone’s most significant asset!