What to choose to manage your house – a management organization or an HOA

The editors of Housing and Communal Services News, together with DomOnline specialists, compared the methods of managing an apartment building - the HOA and the management organization, and analyzed the possible pros and cons of each of them.

Let us recall that there are three main ways to manage apartment buildings: ● management organization; ● homeowners' association or cooperative; ● direct control. The last option is only possible in small houses (no more than 30 apartments), so it will not be considered here. Its pros and cons are discussed in a separate article.

Warning Both management organizations and partnerships can be both good and bad in real life. To avoid comparing a bad management company with a good HOA or vice versa, we will decide that we are comparing the work of the best representatives from these organizations. Finally, we will touch on poorly performing management organizations or partnerships.

Housing maintenance fee

If the house is small, then the fee with a management organization is usually less than with a partnership. It is more profitable to create an HOA in a large house than in a small one: some items of expenses differ insignificantly, and the distribution of these expenses over a smaller number of apartments sadly affects the amount of fees.

For example, the HOA or management company must provide 24-hour emergency dispatch service for the home. To do this, you either need to involve dispatchers in the work, or enter into an agreement with an organization that provides such services. It will be cheaper for owners if the total area of ​​the apartments is larger. The management organization has many houses under management. All of them, through monthly payments for housing maintenance, finance the work of the emergency dispatch service. An HOA has a smaller area of ​​managed housing stock, so the owners' expenses are higher. The reader can verify the validity of the above at breakfast. The larger the piece of bread, the thinner the layer of 20 grams of butter placed on it.

In a partnership, some of the work is done by the owners themselves on a voluntary basis.

The HOA is a non-profit organization; it does not have the goal of making a profit, so the fee is usually set at the minimum required amount. It does not include “profitability”. Management companies need income, otherwise there is little point in managing houses.

Efficiency of use of collected money

The money you save in your HOA doesn't go away. They can be spent on a house next year. The savings of the management organization “by default” remain with the company (Part 12 of Article 162 of the Housing Code of the Russian Federation).

In an HOA, the owners themselves are on the board. They are more interested than the management organization in how to do more high-quality work at lower costs.

The price of the issue: the main disadvantage of the management company

Let's start, perhaps, with the price component of this issue, because owners are interested not only in receiving appropriate services, but also in paying an adequate price for them, and avoiding overexpenditure of resources.

In this regard, a management company is not the best option, since payment for the work of the management company is automatically added to the tariffs for resources and other services. The management company is not at all interested in reducing the consumption of resources and various services by residents, since payment for the company’s work is calculated precisely on the volume of resources and the number of services. Accordingly, it is in the interests of the management company as a commercial enterprise to offer its clients as many services as possible, especially if it has the resources to provide them independently. The more money the residents spend, the more the management company will earn.

All payments go through the management company, and it is quite difficult to control this process, and, in essence, there is simply no one to do it. Moreover, the heads of management companies often make decisions on home maintenance on their own, without consulting the owners.

By the way, the introduced services may not be provided in full or not at all, and meanwhile, bills continue to be issued and paid. For example, who will count how many times a week the garbage was collected from containers? That’s right, no one, but every trip and work of special equipment is not a cheap pleasure...

A homeowners' association is quite capable of organizing the operation of relevant services on its own territory at significantly lower costs. The HOA is vitally interested in reducing costs and therefore will not order unnecessary services and will control the consumption of resources (for example, install driveway water meters)

. In addition, paying for the work of the HOA board will cost the owners much less.

Financial transparency

The activities of the HOA are more transparent for owners:

• annual audits are provided;
• you can familiarize yourself with the financial statements of the partnership;
• by decision of the meeting, an audit can be carried out;
• reports are not just posted in the Housing Information System, but are approved at a general meeting of members;
• personnel costs are visible in the budget approved annually at the meeting; the chairman’s remuneration is approved (or not approved) by the meeting of members.

With a management organization, its financial and economic activities are more hidden from the owners: usually they can only see the justification for the amount of fees, certificates of work performed, and the company’s annual report. The accounting reports of the management company can also be viewed in the Housing and Communal Services GIS, but since the company has many houses and other activities are possible, less useful information can be extracted from such reports.

Intermediate option: reducing costs without compromising quality of service

In addition to forming an HOA, there is another option to minimize costs and ensure timely completion of work related to home maintenance. At a general meeting of residents, a decision may be made to elect a representative who supervises the work of the management company. Such a representative can analyze invoices, monitor the quality of services provided (determine their need)

and, as necessary, conduct a dialogue with the management company.

In this case, residents, on the one hand, will receive good service provided by a specialized organization, and on the other hand, they will not pay a penny of extra money. Of course, all this only takes place if the elected representative is sufficiently motivated and has the necessary skills.

Professionalism

To effectively manage a home, you need knowledge in completely different areas, for example, construction, law, accounting. The management organization has a whole staff of necessary specialists who service many houses at once.

In an HOA, hiring many professionals to service one home can be expensive. Therefore, often in small houses the chairman of the board is both a Swede, a reaper, and a trumpet player, which affects the quality of work. This disadvantage disappears in large houses or in residential complexes, as well as with the involvement of a “professional” HOA manager.

Other forms of association of residents

Housing and communal services

Housing and communal services are an organizational structure that directly services the infrastructure of the house.

The responsibilities of housing and communal services include:

• supply of hot and cold water;
• heating;
• provision of drainage (sewerage);
• conduction of electricity;
• cleaning the local area and entrances;
• organizing waste collection;
• elevator maintenance.

In fact, housing and communal services (housing and communal services, housing and communal services, etc.) are one of the forms of management companies. Most often, HOAs hire some kind of housing and communal services organization to maintain the house, and the board of the house itself is responsible for monitoring its activities. So the question of which is better - housing and communal services or HOAs, is not entirely correct, since organizations are engaged in different types of activities.

Housing cooperative

ZhSK is a housing construction cooperative. Usually it is formed at the stage of building houses, and is subsequently transformed into a HOA. However, this form of control can continue indefinitely after construction is completed. The minimum number of members of the housing cooperative is 5, the maximum is based on the number of apartments in the building.

Important! At the stage of building a house and at first after putting it into operation, the best form of management will be the housing cooperative. The main purpose of such an organization is to complete the construction of the house and make sure that there are no flaws in its design.

Reasons why, over time, it is better to transform housing cooperatives into HOAs:

1. All income received by the housing cooperative is distributed among its members. The income of the HOA remains in the organization and can be spent on home improvement.
2. The powers of the housing cooperative to maintain the house are less than those of the HOA.
3. The board of housing cooperatives can consist of 5 people who make all decisions without regard to the others. Decision-making in the HOA is possible only if more than 50% of the votes of all residents of the building are received.

TSN

TSN is a partnership of real estate owners. In fact, this is the same as the HOA, but the HOA can include legal entities and owners of non-residential premises, and the HOA can only include individuals, i.e. tenants.

If the building, for example, has shops or offices on the ground floor and if legal entities operate in the apartment building on an ongoing basis, it will be more convenient for all owners to create a TSN . In this case, there will be fewer problems when distributing payments for utilities, when collecting rent, when resolving any conflicts, etc.

Responsibility of the organization

Homeowners' associations and management organizations may receive a fine - both for violations during the management of the house, and for extraneous violations, for example, violations of labor and tax laws.

The partnership almost always pays these fines with money collected from the owners. If the fine is significant, for example, 300,000 rubles, then less money will be left for housework (at best), or the partnership may go bankrupt. The same situation arises when it comes to compensation for damage caused, for example, by flooding of an apartment.

A management organization can engage not only in managing houses, but also in other income-generating activities. She has more sources from which she can pay a fine or compensate for damage. Even if she uses the owners’ money for this, it is financially invisible to the residents. Among the disadvantages of having a management organization: fines for violating licensing requirements when managing apartment buildings are higher than the fines for HOAs provided for in other articles of the Code of Administrative Offenses of the Russian Federation for similar violations.

Current standards

Types of MKD management have their own frameworks and standards:

• residents of a small house (up to 30 apartments). The contract with the RSO is concluded directly by the owners or an authorized person; issues regarding the maintenance of the house and the surrounding area are decided by themselves;
• Homeowners' associations (housing associations) are created in one apartment building or several, united by communications. The owners' association elects a board, which is responsible for maintenance. You can involve a management company;
• The management company enters into contractual relations with apartment owners. Serves any number of homes.

MKD management is carried out only by a licensed organization. The entire legislative aspect is spelled out in Chapter 19 of the Housing Code.

The activities of the partnership with rights, powers, obligations, etc. are regulated by chapters 13 and 14 of the Housing Code.

Responsibility of management and dependence of the house on it

The leadership of a partnership can be changed at a meeting of members. The owners cannot change the director of the management organization. When the chairman of the board changes, the new management of the HOA may try to recover through court the losses that the old chairman caused through his actions. This to some extent prevents abuses in the partnership.

On the other hand, the work of the partnership and the management of the house greatly depends on the life of the chairman. If he decides to move, or something happens to him, then a new good chairman is often not found: few people want to take responsibility. In such a situation, they can choose just anyone, and the partnership will turn from good to bad.

HOA efficiency factors

What can interfere with the normal functioning of the HOA? There are a number of factors that can turn an initially transparent and economical format for managing a home into an unprofitable and ineffective one.

• Much depends on the competence of the chairman of the board. A person who is unable to properly organize the processes for providing services and ensure control over their implementation will definitely fail the entire job. In addition, the chairman is required to be efficient in terms of the ability to organize work with minimal costs. Therefore, the chairman must have the appropriate skills and understand what needs to be done and in what sequence;
• Important aspects are the motivation and honesty of board members; in fact, these aspects have some mutual connection. The activities of HOAs involve collecting funds for settlements with suppliers, and residents’ funds, let’s say, can be used for other purposes. If a manager’s work is not driven by obvious motivation and a person claims that he is “working for an idea,” most often he is more interested in the opportunity to receive additional income than in the implementation of this idea. Sometimes the situation is aggravated by the fact that all members of the board (including the audit commission)
  work as a single team, simply stealing money from their own neighbors.

By the way, one of the most popular issues that are raised at the general meeting are issues related specifically to the expenditure of funds

Participation of owners in house management

In an HOA, owners have more opportunities to manage their home:

• you can join the board or even head a partnership;
• there is an opportunity to become a member of the audit committee to monitor the work of the board;
• the presence of an HOA in a house does not negate the opportunity to hold a meeting of owners and, if necessary, change the way the house is managed.

Under a management organization, owners can only be elected to the house council with modest powers or to the owners' commission, which are only collegial advisory bodies.

Among the disadvantages of management in an HOA: owners need energy, time and other opportunities to manage the house and the partnership. At the same time, few people want to work for free, and the members of the partnership are not always ready to approve the remuneration of the board or at least its chairman, because these are additional expenses.

Under what conditions can an HOA be effective?

On the other hand, in terms of the efficiency of organizing services, an HOA may well compete with a management company, naturally, under certain conditions. If a group of people (the board of the HOA)

who have some experience in practical management
(managerial experience)
, and also have the necessary amount of time, there is a possibility that the HOA will do everything no worse than the management company. The best option would be to hire a retired housing office manager as chairman.

In principle, the work of an HOA to provide a home comes down to the initial conclusion of direct contracts with suppliers of resources and services, as well as monitoring their provision and delivery. This does not take much time; it is enough to quickly respond to current needs, the provision of which was not planned. For example, urgently negotiate and order snow removal equipment if there is a chance of snowfall, or empty the contents of garbage containers that, due to the holidays, filled up faster than expected.

That is, the current activities in the HOA are reduced to control and are carried out by one person, the rest of the board members are involved sporadically - we will talk about the structure of the HOA in more detail below.

Yes, the HOA does not have the material and technical base, so it is not always possible to carry out any routine repair work on its own, which determines the need to turn to private contractors for any reason. In this regard, costs will increase. However, the costs associated with the planned supply of resources will be reduced significantly, and this will cover the costs associated with the periodic ordering of some services. And you certainly won’t have to pay for unnecessary or non-existent services.

Moreover, according to the law, the HOA has the opportunity to raise funds from which the home budget can be formed. For example, a partnership may charge a fee for renting wall planes on which advertising is placed, for renting part of the area of ​​the local area, renting basement and attic spaces (for example, for a loading area for a store located on the ground floor, etc.)

. Funds can be used to cover costs associated with maintaining the house or for other general house needs, for example, for the arrangement of a parking lot, a playground, planting green spaces, etc.

General meetings

In a building with a management organization, meetings of owners are held. In a house with an HOA, there are meetings of owners and meetings of members, while the approval of the amount of fees and the re-election of the board of the association take place precisely at the meeting of members.

Under a management organization, owners rarely hold annual meetings, although this responsibility lies with the owners. In the HOA, the board regularly holds annual (reporting) meetings: it is necessary to approve the work plan, budget, amount of fees, and also re-elect the board and audit commission every two years.

In a partnership, it may be difficult for the owner to initiate a special meeting of members: sometimes the bylaws provide that a meeting of members can be initiated by a group of members with 10% or 20% of the votes throughout the house. In a management organization, a meeting of owners can be initiated by any owner.

The decision on the amount of fees in the partnership is made by a smaller number of votes, since only members of the HOA vote for it. This can be considered both a plus for houses with busy owners who have no time or are too lazy to vote, and a minus for supporters of a democratic management style.

Management Company

Unlike an HOA, a management company is a commercial organization that is established by private individuals. The functions of the management company are almost identical to the tasks of the HOA.

However, there are some features:

1. The management company is established by private individuals, regardless of whether they are owners of housing in controlled apartment buildings or not.
2. A management company is an entrepreneurial structure that operates on the basis of a collective or individual agreement with homeowners.
3. This organization must have reserve funds and cash reserves, since it bears financial liability to counterparties within the limits of all its property.
4. The management company provides the supply of utilities or supplies them itself and determines tariffs, having previously agreed on them with the homeowners.

However, a management company can also be formed on the initiative of the homeowners themselves, by merging several adjacent apartment buildings. However, the owners themselves will not be able to manage the organization or participate in management in any way.

The management company is an independent economic entity whose main goal is to make a profit.

Owner's rights

The Housing Code guarantees owners in HOAs a larger volume of documents for review (Article 143.1 of the Housing Code of the Russian Federation). In houses with a management organization, it may be more difficult to familiarize yourself with the same technical documentation for the house: not all courts recognize such a right for the owners.

It's easier to interact with a fellowship. The office of the HOA board or the chairman's apartment is always close to the residents, and the office of the management company can be located almost 3 km from the house.

In order for the management organization to protect the interests of the owners in court, many judges want to see the decision of the general meeting of owners to grant the company such authority. For HOAs, this is required less frequently, since it was initially created by the owners themselves and to protect the interests of residents.

MC and HOA - what's the difference?

So, the owners can transfer all the worries about maintaining the house to the management company (MC)

, which itself will interact with suppliers of various resources and services
(including waste removal companies, intercom service companies, etc.)
or the owners can enter into contracts directly with the listed suppliers and service structures
(HOA)
.
It must be said right away that each of the schemes has its own advantages and disadvantages.

If the company or partnership is performing poorly

The above comparison of the HOA and the management organization may not correspond to reality if the partnership or company performs poorly, violates the law, or embezzles the owners’ money. Someone tries to solve these problems with complaints, but complaints often lead to fines, which are paid from the owners' money. Therefore, you can try to take more radical steps: - with a management organization - change the company or management method (to an HOA); - in the case of an HOA - change the management of the partnership or the method of managing the house (to a management organization).

With both methods of government and with any chosen course of action, temporary anarchy or confusion is possible: those who manage the house in bad faith rarely want to give up power peacefully. The owners do not understand who to pay, who maintains the house. Payment collection rates are falling, and so is the quality of management.

Table with comparison results

More useful

Sample agendas for the general meeting, other documents for the work of the management organization and the HOA can be downloaded on the DomOnline website.

If you need more useful things, you can purchase inexpensive access to the service for a quarter or a year. Such access will allow management organizations to: ✔ maintain convenient records of owners based on FSIS USRN data, work with debtors; ✔ promptly prepare documents for general meetings of owners, including personalized ballots, and count the votes after voting; ✔ organize the work of the emergency dispatch service and not miss deadlines for requests from residents.

If access is acquired by an individual owner, then this makes it possible to: ✔ draw up a good register of owners for holding a general meeting, ✔ prepare all other documents for the meeting and summarize the voting results; ✔ hold online meetings after the owners have chosen this information system.