5 Rules for Self Managed Associations

 

1. Know and adhere to the rules.

“Know your documents, and follow your documents,” says Nancy Polomis, a partner at Hellmuth & Johnson PLLC in Eden Prairie, Minn., who advises associations. “I‟ve had associations where the hawks of the neighborhood will call out the board on every misstep, and the board gets very frustrated. The boards don‟t always like hearing it, but I tell them, „If it says you have to have your meeting on the second Saturday of
November, you have to have it on the second Saturday of November, even if nobody likes that date.‟ They‟re like „Yeah, but what‟s the big deal [with moving the meeting
date]?‟ The big deal is that‟s what your documents say. You can amend your documents, but if you don‟t, you have to follow them.” Dennis J. Eisinger, a partner at Eisinger, Brown, Lewis & Frankel PA in
Hollywood, Fla., who currently represents more than 500 condo and HOA associations, agrees. “Become educated on your governing documents and applicable statutes,” he says. “If you‟re not going to have managerial expertise, you must be more knowledgeable about the statutes and documents.”

2. Reach out to experts.

“If you‟re self-managed, you have to use experts more,” says Eisinger. “Attorneys,insurance agents—whatever—for advice regarding taxes, employee issues, insurance,and financial reporting. Some associations can‟t afford management, but they probably will and should be paying more for professionals.” Donnelly agrees. “Make sure you‟ve got your attorney and CPA interviewed and in place,” he says. “You can get a lot of free advice and best practices from a management company, but you don‟t have that if you‟re self-managed.” If you‟re on a tight budget, that‟s all the more reason to rely on professionals for expert advice. “I know a lot of associations are wary to call their attorney because the clock is ticking, but it‟s far better to spend a little money on the front end getting an opinion from your attorney than litigating an issue you could have avoided,” says Polomis. “In addition, be sure to hire a good attorney and insurance agent who understand associations. I‟ve seen situations where associations have very competent professionals, but professionals who aren‟t well versed in association management.” Community association professionals don‟t have to be expensive. “I‟ve seen associations look for a licensed community association manager who‟s open to providing advice as a consultant on a limited or as-needed basis, such as to provide help during a big bidding process,” says Worrall. “I‟ve seen them charge $75-$150 per hour.” On the other hand, try not to hire employees. “I‟d probably have contract workers versus employees,” says Donnelly. “You just don‟t need employment liability if yours is a small association.” Be careful, however, to consult a CPA to ensure that you‟re truly creating an independent contractor relationship with workers. If you‟re trying to avoid employment liability issues, the last thing you need is problems with the Internal Revenue Service over the employee-independent contractor classification.

3. Make sure you and your association are well insured.

“It‟s very hard to have people live in a community without there being some potential for a litigious event,” says Donnelly. “So one of the first things I‟d do is see what kind of insurance there is for the association. And if I‟m on the board, I‟d want directors and officers insurance.”

4. Maintain good records.

“One of the problems with self-managed associations is continuity,” says Donnelly. “You could literally have an entire board move and resign at once, and the new board wouldn‟t have any history with the decisions that have been made. A record-keeping policy should be established and adhered to so that it survives each board because there‟s no management company to handle the record keeping. It‟s also probably smart if you can afford it to have your association‟s books done by a third party. It‟s not good having residents transacting the cash of the association.”

5. Communicate with and draw in residents.
“Try to get more community involvement through committees and not operate as a one-man show,” says Eisinger. There‟s theoretically a greater sense of security if there‟s professional management, so I think there‟s even greater reason to have better communication with members if you‟re self-managed so your board members will be perceived as doing the right thing for residents.” That also requires that you do the right thing for residents. “Make sure there‟s no self-dealing among board members and even residents,” says Eisinger. “There tends to be more self-dealing when nobody‟s looking after the board and residents.”

Should you need assistance with your self managed association – Community Association Management offers a full line of  products and services called eManageSuite.  Contact us today for more information.