Community Management Companies

What a management company actually does

A community association manager's job spans three areas: financial operations such as billing, payroll and budget preparation; administrative tasks such as organizing meetings and maintaining records; and maintenance oversight, coordinating vendors and monitoring their performance without directly supervising their employees. The manager also directs enforcement of the covenants and rules the board has adopted, and advises the board on decisions it is about to make.

What the manager does not do is set the rules it enforces. It works for common areas and the business operation of the association, not individual owners' units, and it stays out of homeowner disputes unless an actual governing-document violation is at stake.

"The manager does not set policy. That is done by the board of directors."

Source: Responsibilities of a Community Manager, CAI HOAresources

The hierarchy that decides who has authority

Four layers govern what a manager may do, in order. State statute sets the outer limits, whether a manager must be licensed at all, what tasks cross into practicing law without a license, and what happens when a contract ends. Your association's governing documents set what the board itself may authorize. The management contract is where that authorization actually gets written down: scope, spending limits, fees, termination rights. CAI's voluntary standards, the CMCA code among them, sit below all of that legally but function as the industry's working definition of ethical practice.

"Uphold their fiduciary duty to the Client Association(s) by acting with due diligence, loyalty, and care in all aspects of community management."

Source: Standards of Professional Conduct (CMCA), CAMICB

Hiring a manager does not transfer the board's own fiduciary duty. The business judgment rule protects the board's good faith, informed decisions, not whatever the manager does independently.

"even if hindsight reveals that a board's business decision turns out to be a bad one, that outcome is insufficient alone to overcome the protections of the 'rule.'"

Source: Fiduciary Relationship and the Business Judgment Rule, Florida Condo & HOA Law Blog

Whether your manager must hold a state license depends on your state. Only a handful currently require it, and the list changes as legislatures act, so confirm your own state's current rule rather than assuming.

"Currently seven states in the U.S. require a license to practice as a community association manager, Alaska, Connecticut, Florida, Georgia, Illinois, Nevada, and Virginia."

Source: 2025 Legislative Report for Community Association Manager Licensing Regulations, CAI Advocacy

Where boards get this wrong

The most common mistake is not a bad manager, it is a board that stops paying attention once one is hired. A manager acting as the association's agent is bound by, and limited to, the authority the board actually gave it in the contract or by a specific vote; it cannot sign the association into something the board never authorized. And a board that lets a manager quietly take over enforcement, communication or decision-making has given up ground it was never supposed to give.

"a disengaged, or cowed, board can allow management companies to assume too much control over enforcement, communications, and even governance decisions."

Source: California HOA Management Company Red Flags Fact Sheet, MBK Chapman