Risks and Rewards of Association Self-Management

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There are both advantages and pitfalls for common interest realty associations (CIRAs or associations, plainly) that wish to self-manage. A self-managed association typically employs an onsite professional manager who works directly at the board’s behest and is given authority to complete assignments, coordinate departments, collect and disseminate information to the board, protect assets, enter into contracts, handle the accounting for the association, manage other association employees, work with the board and sub-committees, and serve as a liaison between the board and individual homeowners and contractors.

An association can benefit in many ways by employing its own onsite professional manager. The primary advantage of self-management is that it provides an association with additional control over its day to day operations. Often, these managers work on the property site, which in turn provides both board members and property owners with increased access to management. For the board members, having their own association manager onsite makes it easier to get answers quickly and to address homeowner issues expeditiously. For homeowners, having an onsite manager makes it easier for them to get help when emergencies or problems arise.

In some communities, particularly in affluent areas, onsite professional managers offer various “concierge” services, services which go well beyond what is typically offered in communities employing a management company. Examples of concierge service include picking up mail for residents who go on vacation, watering plants, taking out refuse, starting cars, and opening units for service people (i.e., exterminators, cleaning professionals, etc.). While these extra services typically involve a reasonable fee, such services make things much easier for busy professionals and individuals who may not be living at their residences throughout the year.

Aside from the increased personal attention, an onsite professional association manager can resolve issues more quickly and hopefully reduce the red tape in doing so. In contrast to associations that utilize a management company, a professional manager who is employed only by that association is less prone to having a conflict of interest between the association (to whom the manager has fiduciary duties) and the management company employing him or her (since an onsite professional manager is directly accountable to the association that employs him or her). An onsite professional association manager also can be more responsive to his or her community and can more effectively manage projects occurring at associations. Often, by cutting out the “middle man” an association can save a significant amount of money by hiring an individual manager as opposed to hiring a management company.

While the advantages are many, employing a professional manager does create certain issues and pitfalls. First, an onsite professional manager may have less support and fewer resources than a management company, which may have dozens or even hundreds of employees. In that sense, an association who hires an unqualified onsite manager may find itself in a particularly precarious position. A professional management company with multiple managers could also have countless years of experience, an extensive network of vendors in various industries to call upon for advice and proposals, and a plethora of experiences to draw from in providing guidance to each association they manage. A self-managed association that has had the same manager for a long time has only its own limited experiences from which to draw upon… especially if that manager has only managed that one association.

Additionally, an association can find itself “shorthanded” should its manager go on an extended vacation without a suitable short-term replacement, be stricken with illness, or leave an association unexpectedly. Management companies typically have various licensed and qualified managers who can step in to cover unexpected absences more efficiently than a self-managed association placing “help wanted” ads to find temporary or replacement managers.

Any association considering self-management should consider its particular needs and weigh the cost-benefits. Given the benefits and the risks, it is fair to say that self-management could offer greater rewards in many circumstances, but it also carries potentially greater risks should an association fail to hire a qualified, competent and hard-working professional. Do the proper research on your candidates and make sure they are bringing to the table exactly what your association needs.

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