“I thinkifa communitycan‟tafford management, self–management is relevant,” says JamesDonnelly,presidentandCEO of CastleGroup,a propertymanagement companyin Plantation,Fla., that manages 60,000 association units.“Somehavea strong,long–termboard thatwantsto do the management itself. I‟mnotoffended by
that.”
If you‟re among thegroup of self-managedassociations,herewe offerrulesto liveby soyoucanbe aswell managedasthoserunbycareerprofessionals.
1.Knowand adhere totherules.
“Know your documents,and follow your documents,” says NancyPolomis,a partner
atHellmuth& Johnson PLLC in EdenPrairie, Minn.,who advises associations.“I‟ve
hadassociationswhere thehawksoftheneighborhoodwill calloutthe boardonevery misstep, andthe board gets veryfrustrated.The boards don‟talwayslike hearing it, butItell them, „Ifitsays you have to have your meeting on the secondSaturday of November,youhavetohaveitonthesecondSaturdayof November,evenifnobody likes that date.‟ They‟relike „Yeah,but what‟sthe bigdeal [withmoving the meeting date]?‟ The bigdealis that‟swhat yourdocuments say.Youcan amend your documents,but ifyou don‟t, youhave to follow them.”
DennisJ.Eisinger,a partneratEisinger,Brown,Lewis&FrankelPAin
Hollywood,Fla.,who currentlyrepresentsmorethan500condoandHOAassociations, agrees.“Becomeeducatedonyour governingdocumentsand applicable statutes,” he says.“If you‟re not goingto have managerialexpertise, you must be more
knowledgeable aboutthe statutes anddocuments.”
2.Reachouttoexperts.
“Ifyou‟reself–managed, you have to use expertsmore,” says Eisinger. “Attorneys, insuranceagents—whatever—foradviceregardingtaxes,employeeissues,insurance, and financialreporting. Some associations can‟tafford management,but they probablywill and should be paying morefor professionals.”
Donnellyagrees.“Make sureyou‟vegot your attorneyandCPA interviewed and
in place,” he says.“You can geta lotoffree adviceandbest practicesfroma managementcompany,but youdon‟thave thatifyou‟reself–managed.”
If you‟re ona tight budget, that‟sall the morereason to relyon professionals
for expert advice. “Iknow a lotof associationsarewary to call their attorneybecause theclockisticking,butit‟sfarbetter to spend alittle moneyon the frontend getting anopinion fromyour attorney than litigating anissue you could have avoided,”says Polomis.“In addition, be sureto hirea good attorneyand insurance agentwho understandassociations.I‟veseen situations whereassociations have verycompetent professionals, but professionals who aren‟t well versed in associationmanagement.”
Communityassociation professionalsdon‟thave tobe expensive.“I‟veseen associationslookforalicensedcommunityassociation manager who‟sopen to providingadviceasaconsultantonalimitedoras–neededbasis,suchasto provide help during abig bidding process,” says Worrall.“I‟veseen themcharge $75–$150 per hour.”
Ontheotherhand,trynottohireemployees.“I‟dprobablyhave contract workers versusemployees,” says Donnelly. “You justdon‟tneed employment liability ifyours isa smallassociation.” Be careful, however, to consultaCPA to ensurethat you‟retrulycreatingan independent contractorrelationshipwith workers. Ifyou‟re tryingto avoid employmentliabilityissues,thelastthingyouneedis problemswith
theInternalRevenueServiceoverthe employee-independentcontractorclassification.
3.Makesureyouand yourassociationarewellinsured.
“It‟svery hard to have people live in a communitywithout therebeing some potential for a litigiousevent,” says Donnelly.“So one of the firstthings I‟ddo is seewhat kind ofinsurancethereis for the association. AndifI‟mon the board, I‟dwant directors
4.Maintaingoodrecords.
“One of the problemswithself–managedassociations iscontinuity,”says Donnelly. “You could literallyhave an entireboard move and resignatonce,andthe new board wouldn‟thave any history with the decisions that have been made.Arecord-keeping policyshouldbeestablishedandadheredto sothatit surviveseachboardbecause there‟sno management company to handle the record keeping. It‟salso probably smart ifyoucanafford it to have your association‟sbooksdone bya third party.It‟s not good having residentstransacting the cashof the association.”
5. Communicatewithand draw inresidents.
“Try to get morecommunityinvolvementthrough committees and notoperate as a one–manshow,” says Eisinger. There‟stheoreticallya greatersenseofsecurityif there‟sprofessional management,so I thinkthere‟seven greater reason to have better communication withmembers ifyou‟reself–managedsoyourboardmembers will be perceived as doingthe rightthing for residents.”
Thatalsorequiresthat youdo the rightthing for residents.“Make surethere‟s
noself-dealingamong board membersand even residents,” says Eisinger. “There
tendsto be moreself-dealingwhen nobody‟slookingafter the board and residents.”
