Community Associations do not run well by accident. Anyone who has ever served on an association’s board of directors understands this position can be both rewarding and thankless. Each day brings new challenges while trying to juggle jobs, families and association duties. The responsibility of running an association only grows larger when a decision is made to self-manage.
In most homeowner associations the question of whether or not to self-manage arises every so often. How often these debates take place usually depends on the level of satisfaction with the management currently in place, as well as the availability and willingness of volunteers to serve. Once the management issue is on the table, board members often look at the budget line item for management fees and take the position that “This can’t be that difficult, so why can’t we do it ourselves?“
Before deciding to self-manage, numerous questions should be considered:
• Who will prepare the budgets and monthly financial reports—in accordance with generally accepted accounting principles?
• Who will prepare the annual Federal and State tax returns along with 1099’s and 1096 submittal forms?
• Who will accept the responsibility for signing off on resale documents for prospective buyers?
• Who will be on call 24/7 every day of the year to handle complaints and emergencies?
• Who will ensure continuity in decision-making for capital reserve funding, repairs and replacement as the population of the community and the officers of the board come and go?
• Who is knowledgeable about proper construction specifications and quality control for major projects at the property?
• Who will act as the monthly-fee debt collector?
• Who knows what the appropriate insurance coverage is for the association and how new state laws will affect the covenants governing the community?
• Who is going to keep the associations files and ensure they are up to date? And will they be accessible when needed?
The list goes on and on.
How these and the many other tasks are handled on a day-to-day basis is crucial to the residents of a community, to the volunteer trustees who carry out the day to day management, and to third parties such as insurers and mortgage companies who have a vested interest in the well being of the community.
Once an association has decided to make the plunge into self-management, they need to consider how much the Board of Directors can do on its own, and how much should be contracted out to professionals. Just because an association has a qualified volunteer to handle accounting or legal work today does not mean that person will be willing or available to handle it in the future.
Next, it is imperative the Board setup an operating structure that others can easily follow after the current board’s tenure is up. This may include creating committees, such as an ARC (Architectural Review Committee) or grounds committee to assist the board in management of day to day tasks. The association should consider producing director and committee handbooks that clearly define the expectations, roles and responsibilities of each volunteer, and documenting key decisions so that future volunteers will be able to manage the association in a consistent and efficient manner. Consistency is the key, especially in violation code enforcement in the community. It is very important that the board be familiar not only with the covenants, but also with the NC Planned Community Act (47F), and other recent changes in legislation that now over-ride some of the enforcement remedies and policies older associations governing documents previously laid out.
Communication, communication, communication! One of the biggest obstacles to a successful self-managed association is keeping the community informed. The board should consider publishing a periodic newsletter or have a website for announcements and a calendar of events to help keep its residents informed and working together. It is also recommended that the association setup up a hotline or an email account accessible by board members, so that homeowners can submit urgent matters, questions or complaints. Homeowners who are well informed are more likely to be involved and willing to volunteer for service.
Finally, once the volunteer association is up and running, don’t forget to recognize those who have given their time to the community. An inexpensive plaque or a certificate of appreciation presented in front of the community at an annual meeting goes a long way to attracting and retaining talented people.
If you would like more information or assistance in becoming self-managed, or to see the tools we’ve made available for Self-Managed Associations, please visit our website at www.CommunityAssociationManagement.com.