Who regulates HOA management companies? This is a question many homeowners and board members ask. When you have a problem with your HOA management company, your first thought may be to report them to a governing agency. However, you must understand the relationship between management companies and HOAs before you can do that.
Who Regulates HOA Management Companies in the United States?
It is not uncommon for homeowners associations to hire HOA management companies to ease the burden of work from the board. Management companies typically take over the day-to-day operations of the HOA, handling back-office work and administrative tasks, among other things. They make it easier for board members to focus on making meaningful decisions and planning for the future.
However, when you encounter problems with your HOA management company, you might be keen on reporting them to an agency or authority. This leads you to ask, who regulates HOA management companies?
HOA Board of Directors
The primary responsibility of regulating HOA management companies falls on HOA boards. It is your job as a board member to oversee the company, as it essentially works for the HOA. The management company exists to serve the needs of the association. As such, if the company is no longer fulfilling its duty, your board should take action.
The first course of action is to communicate with the company. Inform them of your dissatisfaction and attempt to come up with a solution. Managers and support teams can experience lapses in their service, as it is only natural. As such, communication should be the initial step before taking further action.
If communication doesn’t work out or the problem continues, consider discussing with the board how to proceed. Oftentimes, this means exploring the decision to terminate the management contract and look for new management. Of course, review the agreement to ensure you can terminate without penalty.
Board members should do their best not to let it reach this point, though. You can implement safeguards to regulate the HOA manager or management company. These include but are not limited to the following:
- Requiring more than one board member to sign off on hiring new vendors
- Mandating board approval for invoices or payments over a particular amount
- Asking for daily or monthly reports on operations, finances, and violations
State and Local Level
Some regulations may be in place at the state or local level. These regulations can vary widely, though, depending on where you are. As such, you should always check the specifics in your state or city.
There are usually no strict regulations that apply specifically to HOA management companies. More regulations exist to control or restrict homeowners associations or condominiums themselves. However, state and local laws on businesses normally apply to HOA management companies.
Federal Level
As of writing, no federal laws exist to specifically regulate HOA management companies. That being said, management companies must comply with federal laws on businesses and best practices. Otherwise, an HOA may pursue litigation against management companies.
Some specific issues can be directed at agencies or departments. For instance, the U.S. Department of Housing and Urban Development may cover a fair housing issue. A debt collection issue may fall under the Federal Fair Debt Collection Practices Act, which the Consumer Financial Protection Bureau oversees.
HOA Management Companies Regulated as Businesses
There is no federal agency that specifically regulates HOA management companies. The same applies more often than not to state and local levels. However, HOA management companies are businesses. Therefore, they must follow all federal, state, and local laws that govern businesses and business practices.
As with most laws, these business laws and practices differ from one location to another. The HOA board is responsible for hiring a management company that matches the association’s needs, criteria, and values. In this way, the board acts as the regulatory entity that oversees the HOA management company. The board can hire, restrict, and terminate the management team.
Which Agency Regulates Homeowners Associations?
Homeowners associations are typically regulated by a combination of state laws and the governing documents specific to each HOA. Some federal laws may apply, but state-specific statutes dictate how HOAs operate.
In most states, there is no single agency that directly regulates HOAs. Instead, they operate as private entities or nonprofit organizations. Internal dispute resolution or alternative dispute resolution is often employed when there’s a dispute within the community. They can sometimes escalate to litigation, which is time-consuming and expensive.
Some states have introduced agencies or ombudsman offices to assist with disputes and provide education. However, beyond that, these agencies don’t typically police HOAs unless it’s within their scope.
Frequently Asked Questions
Who regulates HOA management companies in North Carolina?
In North Carolina, no state agency directly regulates HOA management companies. The HOA board is responsible for regulating the management companies they hire. However, you may be able to file a complaint regarding HOA management practices with the North Carolina Real Estate Commission.
Who regulates HOA management companies in South Carolina?
In South Carolina, no state agency directly regulates HOA management companies. The HOA board is responsible for regulating the management companies they hire. However, you may be able to file a complaint regarding HOA management practices with the South Carolina Department of Consumer Affairs.
Who regulates HOA management companies in Arizona?
In Arizona, no government agency directly regulates HOA management companies. The HOA board is responsible for regulating the management companies they hire. However, you may be able to file a complaint regarding HOA management practices with the Arizona Department of Real Estate.
Who regulates HOA management companies in Tennessee?
In Tennessee, no government agency directly regulates HOA management companies. The HOA board is responsible for regulating the management companies they hire. However, you may be able to file a complaint regarding HOA management practices with the Tennessee Real Estate Commission.
Who regulates HOA management companies in Texas?
In Texas, no government agency directly regulates HOA management companies. The HOA board is responsible for regulating the management companies they hire. However, you may be able to file a complaint regarding HOA management practices with the Texas Real Estate Commission.
Who regulates HOA management companies in Wyoming?
In Wyoming, no government agency directly regulates HOA management companies. The HOA board is responsible for regulating the management companies they hire. However, you may be able to file a complaint regarding HOA management practices with the Wyoming Real Estate Commission.
Who regulates HOA management companies in Washington?
In Washington, no government agency directly regulates HOA management companies. The HOA board is responsible for regulating the management companies they hire. However, you may be able to file a complaint regarding HOA management practices with the Washington Real Estate Commission.
The Bottom Line
Now that you know who regulates HOA management companies, you can take your complaint to the right agency. However, remember that board members are the primary regulatory entity. If you have a problem with your management company, your board should first attempt to resolve it internally.
Clark Simson Miller is an HOA management company you can trust. We deliver exceptional services and prioritize our clients’ best interests. Call us today at 865.315.7505 or contact us online to learn more!
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