I often wonder what variables factor into an association board’s decision to forego professional management and an annual retainer relationship with a law firm in favor of “going it alone”.
Naturally, money is top of mind for most directors when deciding whether to use professionals such as managers and lawyers for their community. However, financial concerns should not be the only topic of discussion during this debate. In addition to the costs involved. boards should ask themselves the following questions when deciding if they wish to be self-managed:
- Are we comfortable with handling requests from owners and pursuing covenant violations directly as opposed to having a “cushion” provided by our manager?
- Do we have the time, patience and expertise to follow through on the daily operations of our community?
- Do we have the time, patience and expertise to follow through when something out of the ordinary arises like a fire, hurricane or other disaster?
- Are other communities of our size and type typically managed professionally or self-managed?
I have lived in a Broward County homeowners’ association for more than twenty years and our community has always been self-managed. Our community could really go either way. We are relatively small (98 homes) and do not have a plethora of common areas although we have enough features (private roads, green parks, gazebo, guardhouse, perimeter wall and gate) that do require consistent maintenance and oversight. Someone buying in our community may very well expect it to be professionally managed but would likely not be shocked to learn it isn’t.
On the other hand, a high-rise condominium on the water would present a host of operational and maintenance challenges which might prove far too taxing for the average volunteer board of directors no matter how enticing the cost savings may be. This is when the old adage “penny wise and dollar foolish” comes into play.
As for boards who decide to forego legal assistance on issues like covenant enforcement, document amendments, contracts, insurance claims, hiring and firing decisions, land acquisitions, easements, recalls and more, the questions I would urge them to ask would be:
- Is our D&O coverage current and high enough and do our actions in this matter exclude coverage?
- Will we be able to hire the attorney(s) we want when we want them for this matter?
- Are we willing to learn a lesson the hard way?
Sometimes boards relax into patterns and deciding to forego useful professional assistance can be a bad one.