CRITERIA TO CONSIDER WHEN RETAINING A COMMUNITY ASSOCIATION MANAGEMENT COMPANY
From A to Z
Innovative Community Management Solutions, Inc.
600 East Tarpon Avenue
Tarpon Springs, FL 34689-4202
TABLE OF CONTENTS
CRITERIA TO CONSIDER WHEN RETAINING A COMMUNITY ASSOCIATION MANAGEMENT COMPANY, FROM A TO Z
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ACCOUNTABILITY: Who is going to stand up and take responsibility?
ACCOUNTING: How does the association get the information it needs?
ADVICE: Is there any depth to the knowledge available?
APPRAISALS: What benefit do they provide the association?
ATTENTION: Does the manager have ADD?
ATTITUDE: Is there a 'can do' attitude?
AVAILABILITY: Who is there when you need them?
BILL PAYING: Are obligations taken care of in a timely manner?
BUDGETING: Are budgets prepared on time?
CANCELLATION TERMS: How long are we stuck in case it doesn’t work?
CASH CONTROL: Fidelity controls in place?
CASH MANAGEMENT: Is the banking relationship for the benefit of the association or the manager?
COLLECTIONS: Are they attended to on a timely basis with a firm policy?
CONSULTATIONS: Do they have working knowledge of consultation with other professionals?
CONTRACTORS: Do they have enough contractors available to get competitive bids?
COMMUNICATION: Is it consistent and meaningful?
COVENANT ENFORCEMENT: Do they provide the expertise to protect the covenants?
CPAs: Will they work with CPAs to provide timely information?
CREDENTIALS: Do they exhibit professionalism with recognized credentials?
DISASTER PREPAREDNESS PLAN: Is there one?
DOCUMENT REVIEW: Do they offer this service based on meaningful experience?
EDUCATION: Is there a requirement for continuing education above that of license requirements?
E-MAIL: Does everyone in the company have an email address?
EXPERIENCE: Is the depth of experience available to provide economy for the association?
FACILITIES: Do their facilities reflect pride they will also be able to exhibit in the association?
FEES: Are they reasonable and reflective of the professionalism and service provided?
FIDUCIARY: Do they feel the same responsibilities as members of the board?
FINANCIALS: Is the information provided in a format easily discernible?
INSURANCE: Are they able to garner competitive bids in the insurance market?
INSURANCE KNOWLEDGE: Are they knowledgeable enough about insurance to be able to make recommendations?
INSURANCE CLAIMS: Will they follow up and work on insurance claims?
INSURANCE COVERAGE: Does the management company itself have the proper insurance?
MEETING ATTENDANCE: Will the manager be at all of our meetings?
MEETING POLICIES: Do they have policies and procedures established to run the affairs of the association professionally?
MEMBERS: Do they relate well with the members of the association?
MINUTES: Will the manager prepare the minutes?
MISSION STATEMENT: Do they have a Mission Statement reflective of the goals of the association?
NEGOTIATION: Are they experienced enough to be able to know how to negotiate for the association?
NEWSLETTER COMPILATION: Will they provide the services necessary for newsletter communication to the owners?
NOTICES: Will the notices be prepared and posted in a timely manner to meet the requirements of law?
OFFICE HOURS: Are they generally available when necessary?
PERSONNEL: Do they have adequate personnel to meet the needs of the association?
POOLING RESERVES: Do they have the knowledge to be able to understand and prepare pooling of reserves to take advantage of the economy?
PRINCIPALS: Who actually owns the company?
PROFESSIONAL: Do they reflect professionalism?
RECORD INSPECTION: Are they available to provide a policy and facilities for inspection of records by unit owners and board members?
RECORD KEEPING: Do they have a modern consistent policy and system for record keeping?
REFERENCES: Are their references complete and do they cover a range of other professions and client base?
RESPONSE: Are they reasonably responsive to inquiries?
SPECIFICATIONS: Do they have enough experience to be able to prepare specifications to meet requirements of the association?
UNIT VALUES: Do they provide a report that exhibits increases in property values?
VOICE MAIL: Do they rely on electronic devices or on actual people?
WEBSITE: Is their professionalism exhibited in their Website with links to provide additional information?
ZEAL: Do they care about the association or is it just a job?
CRITERIA TO CONSIDER WHEN RETAINING A COMMUNITY ASSOCIATION MANAGEMENT COMPANY, FROM A TO Z
After being involved with administration, participation and management of community associations since 1975, we understand one of the most difficult questions boards of directors face is what management company to choose for administration of their association. First and foremost is the difference between a community association management company and a property management company.
'Community association management', as defined in Chapter 468.431(2) Florida Statutes, means any of the following practices requiring substantial specialized knowledge, judgment, and managerial skill when done for remuneration and when the association or associations served contain more than 50 units or have an annual budget or budgets in excess of $100,000: controlling or disbursing funds of a community association, preparing budgets or other financial documents for a community association, assisting in the noticing or conduct of community association meetings, and coordinating maintenance for the residential development and other day-to-day services involved with the operation of a community association. (Section 468.431(2) Florida Statutes)
'Property management' means manager of a property, for a principle, for a profit. This is considered a function of a real estate agent and has nothing to do with the complex interpersonal relationships of community associations.
ACCOUNTABILITY: It is tremendously important to have confidence in the management company and knowing if they make a mistake they are ready, willing and able to be accountable for it. This doesn’t mean every business decision be examined as Monday morning quarterbacking to see if there are any errors in judgment that can be identified and penalties assessed. We all make mistakes and boards make errors in judgment, as do managers. (Message to the men on boards, if you think your judgment is infallible, please ask your wife.)
For instance, if a manager makes a mistake or recommends a course of action in violation of the law or documents that results in a fine against the board or association he should be willing to pay any penalty involved. If the manager is negligent in someway by recommending hiring of unlicensed or uninsured contractors, he should be willing and able to account for damages the association may incur.
ACCOUNTING: A question often overlooked is, what information do we need to make an informed decision? The most important question at board meetings is always how much money do we have and do we have funds available to meet our upcoming obligations? This is a subject often debated and misunderstood in community associations and the different methods of accounting, accrual versus cash, can be misleading as far as the information being provided. We cannot emphasize enough the value of receiving timely information concerning association accounting. This is much easier to address using a modified cash basis accounting. We refer to this as modified in that the monthly financial reports provided to the board should also include specific delineation of the accounts receivable and prepaid fees. The budget report should be done on a cash basis to verify responsibilities of the association are being met in a timely fashion and it is much easier to identify areas of concern
Reserves are required to be funded fully in cash or cash equivalence. This is not as apparent on an accrual financial report as it is on a cash basis. An accounting system that provides a balance sheet with a line item for the operating account, and a separate line for the amount in the reserve accounts is essential. This ties in very easily with the liability portion of the balance sheet that shows the amount actually allocated for reserves matching the reserve amount in the asset portion of the balance sheet. Accounting should be done in house and the management company should provide assurances and show methods of operation to provide for the security of the funds of the association. Typically having different people handle different aspects of the accounting, i.e. payables and receivables, and reconciliation of bank statements, does this. Most for profit corporations use the accrual method of accounting for vastly different reasons and basis of information than do community associations. Their concerns generally deal with bottom line profit and tax considerations irrelevant in a corporation not for profit community association.
ADVICE: The myriad areas of advice boards need are seldom available from one source. It is a tremendous asset to have a management company with the depth of experience in many areas, to offer assistance and advice when necessary. Be sure the management company understands accuracy of advice is much more important than speed of response.
APPRAISALS: Does the management company recommend replacement cost insurance appraisals? This is a valuable tool to make sure the association’s insurance responsibilities for the assets are being properly fulfilled and making sure the property is not over insured, nor under insured. Many insurance companies have an automatic inflation rider in their policies. If the policy of the association is with a particular carrier for several years it is possible the compounded inflation factor is over insuring the property. If so, since it is only insurance for replacement value the total destruction of the property will not result in the full face value of the policy being exercised. There is no longer a loyalty built in to relationships with insurance carriers. Be sure the manager has relationships and contact with several insurance markets.
ATTENTION: Will the affairs of your association get the attention they need in a timely manner? Is there sufficient backup for the individual manager so when you contact the office you don’t have to wait for the manager to get back to you, or to be able to report issues of concern?
ATTITUDE: The attitude of the individual managers and the management company is critical to the smooth operation of the association and should always be a 'can do' attitude. This also equates to a 'never say no' attitude which can be best described with the credo as outlined here.
NEVER SAY NO
We are a professional service organization dedicated to the improvement of the quality of life and property appreciation of our client community associations and their members.
We represent the associations as agent and everything we do reflects on the image of the association, with the membership and in the community at large. The pride we have in our association clients is reflected in our 'can do' attitude.
Whenever anyone contacts us we will not say 'NO'.
If the request is something outside the scope of our authority we offer to present their case to the association to see if we can get consideration. Even if we know the documents prohibit something we are not the authority saying no. Quote the documents and let them draw their own conclusion. Create a report to the board on their behalf explaining the request and put it on the agenda. Copy them with the report.
If it is a maintenance issue outside the association authority to address provide alternatives to repair the problem. Have them contact the repairperson or volunteer to call them and have them call the person requesting the service. If you order the service you are responsible for the charge if the owner won’t pay it.
Please remember we don’t establish the rules, we only administer them. We are the good guys and will be an advocate for the individual owners by providing information as to how something can be done rather than using the excuse it can’t be done. We will provide the board the alternatives and let them decide if the issue is something worth considering for amendment.
AVAILABILITY: The management company must have 24/7 availability. Few emergencies occur during business hours. It is critically important to be assured if there is an emergency message it is not stuck on someone’s voice mail or answering machine. Require the 24/7 availability be backed up by an answering service with real people.
BILL PAYING: Associations are susceptible to losing credibility and getting less than satisfactory service when their obligations are not fulfilled in a timely manner. If the contractors dealing with the association feel their cash flow is not being addressed by the association, they are not as apt to provide attention to the service as expected. We recommend a set up to pay bills three times monthly on the 1st, 10th and 20th. There also has to be the ability to provide payments on shorter notice, if necessary.
BUDGETING: The budgeting process is something the manager should be doing throughout the year. Budgets must be prepared in a timely manner so there is ample time for consideration of new projects, alternative service arrangements, and anticipated maintenance. For instance, we recommend the first drafts of the budgets be prepared in July and distributed to the members of the board the first of August. This gives plenty of time for consideration or establishment of budget committees or consultation with contractors for planning for the next year.
CANCELLATION TERMS: When looking at a management agreement, make sure the cancellation terms are no more than thirty days and for no stated cause, as should be the case with any contract entered into by the association. Be careful of multi-year contracts with cancellations requiring cause and requirements for opportunity to cure. If the service is not going to work, everybody is going to know it and it is apparent management companies that operate in this manner are often not secure enough in the service they provide to offer thirty day cancellation terms without cause. This is sometimes used when a company is trying to build a portfolio of accounts to sell the company.
CASH CONTROL: The bottom line is if you don’t trust the manager to spend the money – don’t hire them. There are myriad of theories concerning the security of funds of the association and how they should be handled. The methods sometimes recommended by those who are not involved in the day-to-day operations of the association in trying to run an efficient operation can be self-serving and impractical. Additionally, other hurdles placed in the way of timely disbursement of funds can be expensive to the association in that late payments carry penalties and often times members of the board are not available.
One aspect that needs to be specifically guaranteed by the management company is if they make a mistake they stand behind it and will reimburse the association for any loss in this regard. Of course, if someone is going to steal from the association they are going to do it and a checking account is one of the misunderstood areas of control associations sometimes rely on. The best protection for the cash assets of the association is the fidelity bonding or employee dishonesty coverage on the association’s insurance policies.
A terrific system that can be initiated at the request of the board is to have the bank send a duplicate bank statement to the treasurer or one of the other board members. This would be sent at the same time the bank statement is sent to the management company for reconciliation and provides a timely method for discovering errors that may have occurred.
CASH MANAGEMENT: Does the management company have a relationship with a financial institution that provides benefits to the association, or benefits to the management company at the expense of the association? All cash deposits of the association should be earning interest. There should not have to be service charges. Records of the bank are available locally and do not require an 18 minute gauntlet of voice mails in order to provide accurate and timely information. There should be programs available for automatic debits for the payment of maintenance fees (ACH). It raises a flag of caution and consideration if the banking is done 'out of town'.
COLLECTIONS: Since cash flow and maintenance fees are the lifeblood of community association operations, it is critical to have a consistent, defensible and equitable collection policy. A plan many associations find appropriate and recommended by counsel is that on the 10th of the month when the fee is due and not paid, a reminder letter is sent out. If it is still outstanding on the 10th of the next month, it is turned over to counsel to begin collection proceedings. When an association establishes policies it should be automatic so no claims of selective enforcement or favoritism can be raised in defense of an action. If a unit can’t pay two months maintenance fees, it doesn’t do them or the association any good to wait six months before initiating action. If they can’t pay the two months they obviously aren’t going to be able to pay six months of accrued fees.
CONSULTATIONS: The management company should have enough experience and contacts in different fields to be able to draw on professionals for consultations when the occasion arises. Architects, engineers, CPAs and attorneys are often essential. This provides the association the ability to communicate with different professions and to know whom to ask about what. It is critical in making sure the proper information is sought and the questions are asked properly to get answers appropriate to the circumstances.
CONTRACTORS: A cadre of contractors to draw on is important and it is questionable when a management company gives too much business to a particular contractor. It becomes apparent to other contractors their bids for work are not going to be considered or their bidding on a job will not result in any work to be done and reduces the competitive nature of the contractor retention requirement. Besides the fact contractors look at jobs differently and have different equipment or talent, often it is imperative and a requirement of the law that competitive bids be solicited. If a management company is tied in too closely with a particular contractor, the intent of the law is thwarted.
It is imperative the management company maintain current certificates of insurance including workers comp coverage for any vendor the association deals with. Ask to see them.
COMMUNICATION: The manager’s relationship with the board is critical in the ability they must have to communicate with each other. They must all feel comfortable with the attitude of communication and the ability to listen. It is detrimental and destructive to the affairs of the association to have the board constantly criticizing the actions of the manager without realizing it is a partnership and working together to resolve problems is what makes community associations work. The manager must be able to assure the board that whenever there is any communication it is not an imposition on the manager, but it is another opportunity to provide and exhibit the level of service and pride in participation that contributes to the value of management services.
COVENANT ENFORCEMENT: Appropriate covenant enforcement is probably one of the most valuable tools management can offer a community association. Horror stories the press seems so intent on blowing out of proportion create tremendous tension and adversarial conditions in community associations. The community association manager should be experienced and trained enough to be able to address situations without becoming confrontational and adversarial. The experience and influence of the manager can be exhibited with the following compliance policy.
It is the express intent of the Association Documents and the various provisions thereof which are enforceable by the Association and which govern or regulate the uses of the Association property were written and are to be interpreted and enforced for the purpose of enhancing and maintaining the enjoyment of the Association property and value thereof.
The Association is not empowered and has not been created to act as an entity that enforces or ensures compliance with the laws of the United States, State of Florida, Lee County and/or any other jurisdiction or the prevention of tortuous activities.
These Policies do not reflect the full responsibility of ownership or residency. Refer to the Declaration of Covenants or Condominium, Articles of Incorporation, Bylaws and Rules and Regulations for complete information.
Alleged violations will be presented to the Community Association Manager for resolution. If voluntary compliance is not achieved, the party will be invited to mediate the question using a trained mediator and sharing the cost.
If the violation is still not resolved, it will be presented to the board for determination as to whether it should be referred to counsel or a policy change should be considered.
If in the sole discretion of the board s a violation is considered an eminent threat to safety or property it may take whatever immediate steps deemed necessary.
If a violation of the Declaration of Covenants and Restrictions or Declaration, Articles of Incorporation, Bylaws or Rules & Regulations is observed or brought to the attention of the Community Association Manager, it will be addressed generally incorporating the following procedure as appropriate.
Before any action is taken the violation will be documented or confirmed in as non-adversarial method as possible. This will sometimes necessitate a phone call, an on-site inspection or an email inquiry to determine the facts surrounding an alleged violation.
If the violation is abated or corrected at the time of the initial verification process, no further action will be taken.
Based on the reaction of the violator to the inquiry the next step taken would be:
If voluntary compliance were not forthcoming, the violation would be documented in writing with a request for compliance.
If there is a disagreement, a response will be requested indicating the reason or reasons why compliance is inappropriate, impossible or the restriction is not interpreted properly.
If the response is defiant, adversarial or threatening, a recommendation will be made to the board as to whether this is an issue that needs to be referred to counsel for legal redress or if it is a matter the board would like to address as a change in policy concerning the issue being violated; or
If the response is reasonable and there is a possibility for compromise or further discussion of the issues, a list of the mediators from the Division of Florida Land Sales, Condominiums and Mobile Homes will be made available to the violator as an alternative to further adversarial procedures.
If mediation comes to an impasse the board will be provided a recommendation from the manager as to whether it should be submitted to counsel for redress or considered for a policy or restriction amendment.
CPA’s: Some management companies have an aversion to working with Certified Public Accountants. This question should be raised to be sure there is no hesitation in working with CPA’s or any other professionals. When the occasion arises for an association to provide statutory financial statements, such as compilation, review or audit, it is incumbent on the manager to work closely with the CPA not only to provide proper information but also to provide information in an efficient manner to reduce the cost of the service being provided. As a matter of policy we recommend every association have an audit to provide the highest opinion of accuracy to the financial reporting. We understand this is not practical in considering the typical operations of a community association and also not financially prudent. Examine closely the sample year-end financial reports provided by the management company.
CREDENTIALS: Professional credentials earned and obtained by individual managers and management companies seem to carry little weight as far as the consideration by boards. It is important to be knowledgeable as to what the credentials represent and the qualifications that must be exhibited in order to obtain them. The most nationally recognized professional credentials are those from the Community Associations Institute and include CMCA – Certified Manager of Community Associations, AMS – Association Management Specialist, PCAM – Professional Community Association Manager, and for management companies the highest achievement and recognition is AAMC – Accredited Association Management Company. The field of community association management is very fluid and the laws and rules concerning operation of an association are generally changed every year and new products, techniques and systems are developed on a constant basis. The recognition given to individuals with professional designations indicates they are in fact professionals and have pride in their profession and maintain a high level of education and continued experience in varied fields of the profession in order to provide the most value to their clients. Property management companies, by definition, 'manage a property for a principal for a profit.' Community Association Managers have specific training and responsibilities unique to the profession.
DISASTER PREPAREDNESS PLAN: Planning for eventualities are essential to good business practices. The management company should have alternative locations available to continue operation and communication after a disaster. They should also have contingency plans in place for local and national assistance in case of major devastation. Prearranged plans with local companies are important and backup coverage by a national organization should be in place if the local assets are also destroyed.
DOCUMENT REVIEW: Whether a homeowner association with Declaration of Covenants or a condominium association with a Declaration of Condominium, the review of the documents sometime after turnover should be considered. When the association has been in control of its own destiny, it is recommended to review the documents to bring them current with existing law to provide for the ease of modernizing to stay current with changes in the law and to remove the references to the developer and give the association the ability to operate efficiently. The management company can be of tremendous assistance particularly if they deal with many associations and are able to recommend provisions in documents to facilitate this procedure. Of course, before the owners vote on any documents, counsel should review them.
EDUCATION: Is there a policy and requirement with the management company that managers have continuing education above and beyond that necessary for continuation of licensure? Does the management company participate in educational programs and are any of the managers actually instructors in aspects of community association management?
E-MAIL: Communication and the ability to communicate is another vital aspect of association operations. E-mail is becoming more and more valuable as a tool to communicate between management, association members and board members. There is no necessity to call someone, leave messages, play phone tag or try to get someone unfamiliar with the situation to communicate the proper information. Be sure you have the e-mail addresses for everyone in the management company. It is appropriate to copy someone else other than the manager to help facilitate the return of the requested information, or attend to the requested maintenance.
EXPERIENCE: Not only does the experience of the manager and the management company become critical but it is also the experience of the staff that provides the backup support and assistance to the manager that is vital. As a benchmark our support staff has an average employment time of almost nine years and the average time with us for our managers is almost seven years. Since personnel are one of the most difficult aspects of managing any company, it is reassuring to know the depth of experience in the organization is not all at the top and when circumstances change and personnel change there is not a new learning curve and they are able to address the affairs of the association, professionally and knowledgably. Examine the areas of experience of the management company in areas of developer turn-over, construction litigation, litigation administration, condemnation, code enforcement, arbitration, mediation, small-claims actions, foreclosures, court appearances, permitting, contract administration and anything else relevant to your community.
FACILITIES: Go to the offices of the management company. Does the office reflect pride of ownership? Is the staff helpful and courteous? Is it reflective of organization? Do you feel comfortable and welcome? Are the facilities owned or leased?
FEES: Regrettably management fees are what less inexperienced persons look at as a determining factor in deciding which management company to hire. It is traditional for newer or less experienced management companies to charge less than older; experienced management companies, much as it is in most professions. Experienced managers are more economical for an association in that the mistakes made by the newer companies are not repeated at the expense of the association.
Management fees and manager compensation must be high enough to provide a return commensurate with the investment, responsibility, experience and professional pursuits.
Management companies with the lowest fees may have the highest ratio of associations to manager and units to manager that ends up creating dissatisfaction and frustration for both parties. When a manager handles so many associations and units in order to make a decent living and is not able to provide the service they want to provide they get burned out. Statistically we hear the average career life span, as a community association manager is only about 4 years. Typically being a community association manager is second, third or fourth career and the previous life experience of a manager is a terrific indicator of management abilities they are able to bring and share. The longevity of some managers with a company and the turnover of new managers can be reflective of the high standards necessary to meet the criteria of management required by the company. Not all managers can maintain the benchmark of excellence in a company with high standards.
Beware of management companies 'buying' business to try to build a portfolio as quickly as possible and end up not being able to service the accounts properly and provide the service necessary to run a professional organization. The longevity of a management company is reflective of appropriate fees and the appreciation of services they provide their clients. Management companies need not apologize for their fees, nor have to justify the value of their service as reflected by their professionalism and client loyalty. The adage that, 'The most expensive attorney can be the one that charges the least' is also applicable to community association management firms.
FIDUCIARY: Be sure the manager and management company accept the responsibility of fiduciary in much the same way members of the board accept that responsibility. The manager’s job is to do everything they can for the benefit of the association. The manager should not be additionally compensated for costs charged to the association. There should be no mark up on any contract administration entered into by the association unless it is specifically delineated prior to any work being initiated. Repair, maintenance, accounting, administration and secretarial services are all part of management services that should be included in the management fee.
FINANCIALS: Financial reports are the EKG that should be provided on a monthly basis in a timely manner so the association can quickly and easily identify areas that may need attention. As another benchmark, the financial reports we provide our associations are ready the first day of each month for the previous month. They are prepared on a modified cash basis in order to provide timely and accurate information to be able to make decisions. It is especially ludicrous to try to analyze financial reports that are received a month late when by that time problems could have become critical. A quick review of the budget report should allow the manager and board members to be able to anticipate future expenses and ascertain that the financial condition of the association is in fact staying current. Remember you need an x-ray of the condition of the association not an autopsy.
INSURANCE: Negotiating insurance for associations for many years used to be an enjoyable process since many agents had the capacity to offer coverage and the market was very competitive. Over the years we’ve been in this business, the premiums have gone up probably tenfold and the coverage has been reduced. It is still important to maintain relationships with as many agents and carriers as possible. The volume of insurance premiums a management generates should command attention in the marketplace. Also an important factor making insurance business desirable is the loss ratio (i.e. premium vs. loss). As an example, the loss ratio in our associations over the years is less than 5 percent, when the industry average is closer to 40 percent.
INSURANCE KNOWLEDGE: We have offered testimony in Tallahassee concerning insurance issues and work very closely with the insurance department and still have agents willing to take a shot at trying to improve on the coverage for our associations. The management company should be acquainted with the different types of coverage necessary. This includes property, casualty, liability, directors and officers, fidelity bonding, automobile, workers compensation, boiler and machinery, umbrella and flood. Their knowledge of the types of coverage available through these different policies is essential to be sure the insurance package is going to cover the assets of the association properly.
INSURANCE CLAIMS: When the impossible happens and there are claims, the management company is typically the first line of asset protection with the claimant and the insurance carrier. The ability to deal with insurance adjusters in determining whose policies cover what, are essential when there is damage to association property along with unit owner property.
INSURANCE COVERAGE: One item often overlooked by associations is getting certificates of insurance from the management company. It is quite common to require certificates of insurance from contractors, but certificates of insurance from the management company are often overlooked. Included in the coverage the management company carries must be professional liability coverage. This will provide the association the ability to collect on a claim against the management company if something disastrous happens caused by negligence of the manager, such as failing to renew insurance coverage. There should also be coverage for general liability, automobile and workers comp.
LEGAL ADVICE: Community Association Managers cannot give legal advice. The manager must be able to identify those areas of inquiry and operations that require the advice of counsel. Different attorneys may be recommended for different areas of law, i.e. corporate affairs, collections, covenant enforcement, etc. A manager should have experience with enough different discipline to be able to make a recommendation.
MEETING ATTENDANCE: The manager should be in attendance at every board meeting and membership meeting. Additionally, where appropriate the manager should be in attendance at committee meetings. This is another area that requires established policies to efficiently address association business. Meetings cannot be allowed to deteriorate into debates with the audience nor interrogation of the board. The manager can assist the board as parliamentarian and head off adversarial confrontations.
MEETING POLICIES: Can the management company provide recommendations for policies and procedures consistent with law and the documents to compliment the operation of the association, such as this?
POLICIES AND PROCEDURES
This is offered as a guideline for consideration so the board will not run the risk of 'knowingly and willfully' violating the Condominium Act. Knowing and willful violations of the Act could result in fines of up to $5,000 being assessed individually against board members.
Only board members may introduce motions or vote at a board meeting even though unit owners are allowed to speak on a question.
As a reminder, the only time the board can discuss non-emergency special assessments or amendments to the rules and regulations regarding unit use are if the unit owners have been mailed a notice of the board meeting 14 days ahead of the meeting and notice has been posted on the property 14 continuous days ahead of the meeting.
I. CALL TO ORDER
Is done by the Chairman of the meeting after determining a quorum.
II. PRESENTATION OF THE MINUTES OF THE PREVIOUS MEETING
The board members should have received copies of the minutes before the meeting and a motion would be in order to approve the minutes as presented without wasting the board's time to reread them.
III. TREASURER'S REPORT
The board members should have received copies of the financial reports before the meeting and if there is nothing in the report that needs discussion the Chair may proceed to the next agenda item. If there are questions on individual items in the report they should be raised before the meeting so the information can be available at the meeting if necessary. There is no requirement for a motion to accept the Treasurer's report except if it is a year-end report.
IV. COMMITTEE REPORTS
Committee reports must be submitted in writing at least five days ahead of the meeting so any suggestions to be considered can be properly added to the agenda. Committee reports must include an attestation the meetings of the committee were properly noticed and minutes must be kept.
V. UNFINISHED BUSINESS (Must be a specified subject on the agenda.) These are subjects previously addressed and not resolved or disposed of. There may or may not be additional consideration of these subjects based on availability of information. The subject may be deferred by the Chair or by vote of the board. If a question is addressed by the board it must be in the form of a motion and after a second would be open for discussion. Unit owners may only address the board on a subject after a motion has been made and seconded and after having been recognized by the Chair. Comments must be limited to a reasonable period of time as established by the Chair and no one may speak for a second time on a question, unless all other persons wishing to speak have had an opportunity to speak on the question.
Votes on all questions will be considered unanimous unless the minutes specify otherwise. Subjects will be taken off the agenda if resolved or so approved by vote of the board.
VII. NEW BUSINESS (Must be a specified subject on the agenda.) These are subjects placed on the agenda at the request of a board member, unit owner or manager prior to the posting of the agenda for the meeting. A unit owner may request an item be added to the agenda for a future meeting if it is proposed to the board or manager. No question may be moved unless it is included on the agenda of the meeting as posted, except in an emergency. There will be no discussion of a question unless a motion is made and seconded on the subject. The same rules of procedure as in 'Unfinished Business' apply.
The Chair may announce, 'Without objection this meeting stands adjourned.'
MEMBERS: The manager’s relationship with the members should be as informal and comfortable as possible. We must be sure everyone remembers it is the member’s association, it is their money, and they have every right to know what is going on. Whenever there is any hesitation concerning information about the association or its affairs, it waives a red flag and can lead to disastrous consequences when in essence the issue is actually minutia.
MINUTES: The manager should be responsible for taking the minutes of meetings. They should be prepared in a manner consistent with good business practice and typically according to Robert’s Rules of Order. This means the minutes are prepared showing the business transacted at the meeting and is not a verbatim transcript of discussion, impressions, personalities, insults, arguments or insinuations.
MISSION STATEMENT: Do they have a mission statement that exemplifies and corresponds with the mission of the association such as this?
'To assist and advise associations to accomplish appreciation of property values, cost effective maintenance and professional administration, in a manner consistent with fiscal and ethical standards, at a level expected to enhance the quality of life for association members.'
NEGOTIATION: It is not enough the association should limit itself to simple negotiation of getting competitive bids and take the lowest bid. In the real world it is not that simple. There may be circumstances that arise where negotiation even with the lowest bidder can provide the association an advantage either in time or money that may not be reflected in the bid itself. That doesn’t mean every bid received for work to be done at the association should involve chiseling the contractor to the point where they take the job out of desperation and at the same time have in the back of their mind they are using it as fill in and will dump the association as soon as something more profitable comes along. Usually it is not even a matter of dumping the association when something more profitable comes along, but a matter of letting the service deteriorate to such a degree the association becomes disgusted and replaces the contractor for not fulfilling their contractual obligations.
NEWSLETTER COMPILATION: The secretarial service available through the management company should provide for newsletter compilation. It is not appropriate for the management company to create or edit the newsletter but their services should be available for assembly of the newsletter for distribution by whatever means is most appropriate.
NOTICES: Notices of meetings are essential to maintain the chain of integrity for association business. Generally this requires posting of board meetings at least 48 continuous hours before a meeting and posting unit owner meetings at least 14 continuous days before a meeting. Some documents do have other requirements and the manager should be aware of those and be able to fulfill those obligations in a timely manner.
OFFICE HOURS: Office hours are important to show the professional dedication of the management company and typically should be at least 9:00 AM to 5:00 PM and other times by special arrangement Monday through Friday, except for holidays. The arrogance exhibited by requiring appointments or limiting business hours for the convenience of the manager are contrary to the promise of professional community association management.
PERSONNEL: Be sure the management company has enough personnel to have a reasonable ratio of associations or units to the number of personnel available to provide service. There is no strict formula for determining what is appropriate, but it is just one more question to be addressed and scored as far as rating the different management services.
POOLING RESERVES: Make sure the manager understands and is able to explain the theory of the pooling method of reserve calculation. This is a tremendous financial asset approved by the Division of Florida Land Sales, Condominiums and Mobile Homes for the computation of full funding of reserves. If the management company does not understand the pooling method of reserves, you may want to consider a management company that does. Whatever additional fees may be involved with a properly experienced management company will be more than offset by the savings in the contributions to the reserves.
PRINCIPALS: Make sure the principals of the company are licensed as managers since if they are not they didn’t have to go through a background check. Who actually owns the company and who are the principal officers? If there is a serious issue who is available to address it? Are the people you are dealing with able to make a decision? Please make sure you know the corporate makeup of the company so you can be assured of viability and authenticity. Be sure the principals are and will be personally available if needed so you are not relegated to dealing with a subordinate.
PROFESSIONAL: Professionalism can be exhibited in several ways and sometimes subjectively. The manager should be able to present information and recommendations in a neutral manner and provide enough information to the board so they can make an informed decision. The board and the manager do not necessarily have to agree on a policy or position, but the manager must be willing to uphold the decision of the board as long as it is legal and ethical. On the other hand if the manager feels ethically or legally at risk they must notify the board in writing of the conflict and be willing to withdraw when necessary.
Professional is defined in Waters’ Dictionary of Florida Law as, 'Any employee engaged in work in any two or more of the following categories: 1) work predominantly intellectual and varied in character as opposed to routine mental, manual, mechanical, or physical work; 2) work involving the consistent exercise of discretion and judgment in its performance; 3) work of such a character that the output produced or the result accomplished cannot be standardized in relation to a given period of time; and 4) work requiring advanced knowledge in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study in an institution of higher learning or a hospital, as distinguished from a general academic education, an apprenticeship, or training in the performance of routine mental or physical processes.'
RECORD INSPECTION: Be sure the manager has facilities for the inspection of official records by members of the association. It should not be an imposition or an extra charge to fulfill the legal obligations of record inspection by members. The records must be available at all reasonable times and in a place readily accessible to the board and the members. They should be willing and able to assist the members in the pursuit of information. Here is a sample policy to meet the intent of the law.
WHEREAS the manager is the custodian of the records of the association and is generally available during regular business hours, an appointment can be arranged by phone for examination of the records available as part of the normal course of business that can reasonably be examined in less than fifteen (15) minutes.
If more of the records are to be examined or more time is necessary a written request may be required. The request shall state the records requested to be examined, the amount of time needed to examine the records and the persons who will be present for the examination. The manager shall use it's best efforts to accommodate the inspection as soon after the request as possible, but in no event longer than five (5) working days from receipt of the request.
Upon presentation of the records to be examined the person inspecting the records shall sign a receipt indicating which records are provided, the date and time of the request to inspect, the date and time of the beginning of the inspection and the date and time of the conclusion of the inspection. Copies of the records may be requested and shall be furnished as soon as is reasonably possible. The manager shall not be required to provide the copies at the time of inspection if it would cause a disruption of the normal course of business but shall do so within forty-eight (48) hours of the identification of the copies of the records requested.
RECORD KEEPING: Some associations are emotionally attached to boxes and boxes of old stuff that has not been examined for many years. Don’t allow the association records to become so cobwebbed and accumulated so as to make the retrieval of important information impossible. We recommend dating all materials and keeping the official records recommended by the IRS and counsel in a separate box. If other items are kept for historical purposes they should not be mixed in with other association items. Clean out all the records as often as possible and convert appropriate records to a CD for easy retrieval. There is, of course, a cost involved with this but it is more than offset by the ability to retrieve information when and if it is necessary, and saving of storage costs.
REFERENCES: The management company should be able to provide a list of all their accounts, along with the name of a contact person. Don’t rely on their providing a few names to check with since this may be a cherry picking operation without giving the association the opportunity to check as many sources as they feel appropriate. Be curious if there is some reason they don’t provide the entire list. Get names of attorneys, accountants and other professionals they have dealt with also. Ask the references to confirm the integrity and reliability of the management company.
RESPONSE: Is the manager as responsive as necessary to the affairs of the association and to the requests, whether ordinary or emergency? The more means of communication there are with the manager, the more security the association can feel in its dealings with the manager or management company. There should not be any reason to have the manager as the only contact in the office. Any member of the staff should be available to answer questions without having to refer them all to the manager and create frustration with the response given. Likewise, any emergency situation should be able to be handled by anyone in the office, another manager who happens to be in at the time, or by contacting any of the managers by cell phone and, when necessary, having the office staff have the available information as far as what vendors are available for which associations and which vendors are familiar with which associations and which contractors handle what items for each association so there is no delay in contacting a contractor or vendor for assistance; e.g. someone stuck in an elevator obviously shouldn’t be asked to wait until the manager returns from lunch or is contacted.
SPECIFICATIONS: There are certain specifications the management company should be capable of drafting (i.e. pool service, landscape service, etc.) and experienced management companies will have examples to draw from to fit the needs of different associations. There are certain items and specifications the manager should recommend being done by professionals who also have the capacity to oversee work being done to make sure it meets the specifications. This includes concrete restoration, roofing, waterproofing and other items that often fall within the reserve fund expenditure category. Remember the manager can do specifications but cannot legally write contracts for others.
UNIT VALUES: An informative tool appreciated by boards is the annual unit value report. When an association is first entered into the computer, the sale price from the property appraiser is entered into the database. Each time a unit is sold, the selling price is entered as the new value. Each year this report is run and the board and we are able to track the average property appreciation for the association to make sure the value of the property is in fact increasing and the owner’s can feel secure in their investment.
VOICE MAIL: One of the most aggravating things we have in what is supposed to be the modern business world is voice mail. We are opposed to voice mail in community association affairs. This is a very personal business and the members and board members must not be estranged from the personal aspects of being able to deal with the manager and any of the personnel in the management company. This is complimented by not having voice mail, except for the possibility of having voice mail on cell phones since the managers are required to turn off their cell phones whenever they are in a meeting, but real people should attend the office switchboard and the answering service.
WEBSITE: Does the management company maintain a website? Is it current? Is there information available helpful to the board and members for management and administration of the association? Are there links to help association members get information? Is there information about personnel in the company so if someone has a specific question they know whom to contact? Does everyone have an email address?
ZEAL: And finally, 'Z'. Does the manager have passion for the profession and the goals of the association or is it only a job? Do you feel confident the manager will be an advocate for the association and not a 'yes' person?
Items mentioned here are what can be expected in an ideal situation. Since we are dealing with people with different expectations and experiences often times it can be difficult to fulfill everyone’s expectations in the manner hoped for. When such a situation arises the board should feel comfortable enough to address the management company to determine if the problem is with a particular community association manager and their personality or if it’s something else that can be addressed in a professional manner to resolve differences that could be causing uncomfortable or unfulfilled expectations. The core of community association management is proper communication working in all directions.