How an HOA or condo board should choose a management company
An eight-step process for boards: scope, license checks, protecting association money, conflicts, bids, the contract, references and the handover.
Hiring a management company is one of the largest decisions an HOA or condominium board makes. The firm will handle the association's money, its records, its vendors and much of its contact with owners. This guide is a practical process for choosing one, built around what the license laws in Florida, Illinois and Virginia actually require.
Before you start: self-management or a firm?
Small communities sometimes manage themselves, with volunteers or a paid bookkeeper. The license laws allow that within limits: Illinois exempts managing associations of 10 units or less, Florida's definition of community association management applies only above 10 units or a $100,000 budget, and Virginia exempts volunteers and residents doing bookkeeping. Once the community is larger or the work goes beyond bookkeeping, a licensed firm is the legal route as well as the practical one. Even boards that self-manage should carry their own crime or fidelity coverage and keep accounts in the association's name.
Step 1: decide what you are buying
Management contracts range from financial-only (collecting assessments, paying bills, budgets and statements) to full service (adding vendor management, inspections, meetings, owner communications and project oversight), up to on-site managers for large communities. Write down what the board wants done and by whom. A clear scope is what makes bids comparable.
Step 2: confirm the license
All three states licence the firm itself, not just the people:
- Florida requires a community association management firm license for a firm managing more than 10 units or a budget of $100,000 or more, and the firm's license is cancelled automatically if it has no actively licensed manager (s. 468.432).
- Illinois requires a firm license with a designated licensed manager; associations of 10 units or less are exempt (225 ILCS 427/50, /20).
- Virginia requires a common interest community manager license, plus certified employees for anyone with principal or supervisory responsibility (§ 54.1-2346).
Every firm listed here has a current license in its state's public file on the date shown. Re-check it with the state on the day you sign: Florida DBPR, Illinois IDFPR, Virginia DPOR. Then check the individual manager who will be assigned to you.
Step 3: protect the money
Theft of association funds is the risk that keeps boards up at night, and the laws address it directly:
- In Illinois, a firm may not have access to association funds unless fidelity or crime insurance is in place, and a firm with several clients must keep separate, segregated, custodial accounts in each association's name (225 ILCS 427/55).
- In Virginia, the firm must carry a blanket fidelity bond or employee dishonesty policy equal to the lesser of $2 million or its clients' highest aggregate balances in the prior year, and at least $10,000 (§ 54.1-2346(D)).
- In Florida, the statute requires the firm to account for all funds and act with full disclosure (s. 468.4334). Florida condominium law sets the association's own insurance and fidelity requirements; ask your attorney what applies to you.
Whatever the state, insist that operating and reserve accounts are in the association's name, that board members can see them directly online, and that large transfers need a board signature.
Step 4: ask about conflicts
Many management companies have affiliated businesses: maintenance crews, insurance agencies, collection services, resale-certificate processors. Florida requires managers and firms to disclose conflicts and presumes one if they or their insiders profit from a vendor working for the association without prior notice (s. 468.4335). Virginia requires each licensed firm to have a code of conduct on conflicts. Ask every candidate for a written list of affiliated companies and any referral fees or rebates.
Step 5: compare bids properly
- Base fee, usually per unit per month or a flat monthly amount.
- Extras: additional meetings, mailing and copies, collection letters, estoppel or resale certificates (often paid by the selling owner), project management, insurance claim handling.
- Staffing: how many communities the assigned manager handles.
- Technology: owner portal, online payments, board access to bank accounts and work orders.
- Reporting: monthly financials, delinquency report, reserve tracking.
Step 6: read the contract
Look for the term and renewal, termination without cause and the notice period, fees owed on termination, the records-return clause, the scope of indemnification, and insurance requirements. In Florida, the contract must include the statement that the manager will abide by the Part VIII professional standards, may not waive those standards, and the firm must return all official records within 20 business days after the contract ends or a written request (s. 468.4334).
Step 7: check references and the record
Ask for three current clients of a similar size and type, and one that left in the last two years. Call them. In Illinois, our listings show any disciplinary action IDFPR has recorded against the firm's license. In Florida, our listings show how many condominium associations name the firm as care-of in their DBPR filings, which gives a sense of its condominium experience. In Virginia, check DPOR License Lookup for disciplinary orders.
Red flags
- The firm cannot give you its license number, or the name on the proposal differs from the licensed name.
- Association accounts would sit in the firm's name or in a pooled account.
- No certificate of fidelity or crime coverage, or coverage far below your reserves.
- Vague answers about affiliated vendors, or "preferred vendor" lists with no explanation of the relationship.
- A long automatic renewal with a large fee for ending early.
- An assigned manager who is not individually licensed or certified.
Step 8: plan the transition
Most problems happen at the handover. Agree in writing on the date, the list of records and the transfer of bank accounts, and get the outgoing firm's cooperation early. Florida's 20-business-day rule gives associations there a statutory deadline to enforce.
General information only, current as of the date above. The information on HOA Manager Check is not a recommendation or a guarantee of anyone's work. A license record shows registration status on the date shown, not workmanship, insurance coverage at the time of your job, or suitability for your project. Confirm license, insurance and permits directly before you hire. Rules and programs change; check the official sources linked in this guide.