Pay-As-You-Go Model for Community Association Fees
Community association management agreements are a common way for homeowner's associations (HOAs) and condominium associations to ensure that their communities are well-maintained and properly managed. These agreements typically include various services, such as maintenance of common areas, financial management, and communication with homeowners.
Benefits of a Pay-As-You-Go Model
One common approach to pricing these agreements is to offer a pay-as-you-go model rather than charging one full price for everything. There are several reasons why this approach can be beneficial for both the community association and its members.
Different communities have different requirements for management services, and a one-size-fits-all approach may not be appropriate. First and foremost, a pay-as-you-go model allows community associations to tailor their agreements to the specific needs of their community. By offering various services on an a la carte basis, community associations can ensure that they are meeting the unique needs of their community while also controlling costs.
In addition, a pay-as-you-go model allows community associations to be more flexible in their management approach. For example, suppose a community has a hectic season or a significant project that requires additional management support. In that case, they can add the necessary services for that period, which helps ensure that the community is adequately managed during increased demand while avoiding unnecessary costs during slower periods.
Examples of Pay-As-You-Go
For instance, in the case of a construction project, the management company's Regional Director would likely be more involved with the property and requires more attention to address any concerns with the project. In such a scenario, it would be reasonable for the management company to charge an additional fee for their services. When pricing services separately, members can see what they are paying for and how much it costs. This transparency helps build trust and confidence in the community association, as it assures members that their money is being spent wisely.
Reduces Financial Burdens
A pay-as-you-go model can reduce the financial burden on community association members. By offering services on an a la carte basis, members can choose which services they need and can afford rather than forcing them to pay for everything upfront. This type of agreement can help to ensure that community association management remains accessible and affordable for all members, regardless of their financial situation.
Regarding potential kickbacks, while it's uncommon, it goes without saying that such unethical practices have no place in the business world, and any manager found guilty of demanding or accepting kickbacks should face the full force of the law.
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