Why Self-Management is a Risky Practice for HOAs

Managing an HOA in-house may sound like a good upfront chance to take. Whether being able to make decisions apart from a third-party HOA or looking at the financial benefits of being self-managed less expensively, there are some major pluses. But being self-managed also opens the door to plenty of possible risks that can be devastating to an HOA.

Resident neglect, low oversight, and overworking HOA members can all be combined to create unwanted legal trouble for a self-managing group. Here are some risks to consider when it comes to this choice of management and leadership.

Lack of Legal Compliance

Self-managed HOAs can find themselves in legal trouble even by making simple and honest accidents. Local regulations may offer boundaries when it comes to reserve studies and it’s important to stay within the limits of the law. There would have to be someone in the self-managed team who coordinates the regulations and is in charge of helping other members understand what the boundaries are.

Lawsuits Can Arise

An HOA management company will be sure an HOA does what they need to do in order to avoid lawsuits that come out of everything from resident negligence to employee theft. Oversight isn’t just related to complying with local regulations–it can also be related to HOA members feeling like there is no one watching what they do. This can lead to theft and dishonesty in other ways.

Whether it’s a dishonest employee or neglected community, protecting against crime claims is important for HOA’s, be they self-managed or not, to operate more seamlessly and without interruption. HOA insurance coverage, such as comprehensive crime insurance, can protect self-managed organizations and keep risks low.


An HOA community isn’t the easiest operation to run. There’s a lot of work that goes into making sure everything runs smoothly. Scheduling and preparing meetings, coordinating with vendors, and handling complaints are just some of the day-to-day issues that need to be handled. While volunteers can do a lot of this work, there needs to be an on-site manager overseeing these tasks or things can slip through the cracks.

Lack of Transparency

When an HOA is self-managed, it can be hard to keep an eye on accountability. Most board members are volunteers with good intentions and professional backgrounds, but there may be some people who come aboard with their own intentions. Harkening back to the employee dishonesty above, some members may feel like they can take advantage of a situation where accountability isn’t as well-checked as a traditional HOA system.

About Kevin Davis Insurance Services

For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our president Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (877) 807-8708 to speak with one of our representatives.