Friday, October 9, 2009

Changing/ Starting Out With Condominium Association Managers

Once Upon a Time...
"All your condominium documents are in a box -- somewhere. Someone passes the box to another person. The box ends up somewhere else.

"Everything gets taken care of. Everybody lives happily ever after."
The End.

Funny you should ask. Too many condominium owners and board members believe that story of what happens to the business of condominiums; that the association managers fix/ repair/ adjust/ moderate/ mediate/ pay/ collect and so forth, and pay themselves out of your assessments. All based on the contents of a box of documents.

Start With The Board
Finding or changing a condominium association manager takes several steps and the board takes the first step.

A board must decide exactly what requires managing. This means that in line with its legal duties to maintain, preserve and protect the real estate assets owned in common, the board must lead, plan, and execute its tasks according to the work that needs to be done.

Board members are most valuable to the association when they are knowledgeable, involved and know how to take action. Business expertise is especially valuable, since that experience offers patterns that boards can follow when establishing process, procedures and policies. Condominium board experience is also valuable, because service on a board helps members understand how to balance the business issues with the community issues. This balance, often, is our greatest challenge.

The age of the association is also a consideration. A twenty-five year old association where the same six or seven people serve as board members faces a different set of requirements for an association manager from an association still within or fresh out of the declarant control period. Most associations exist with ages in between.

No two condominium associations are exactly the same. Every association is unique in its locale, construction, amenities, community make-up, and governing documents.

It can be a challenge to 'get the right people on the bus' and 'get the right people off the bus'. Volunteer boards are made up of owners, some with agendas, some with no experience, agenda or investment in the work.

Before choosing a condominium association manager, it is imperative that a board understand its unique set of skills, tasks and budget. Once these resources are identified, the board can begin a search for a condominium association manager.

Seek Candidates with Condominium Expertise, Experience and Competency
In Whatcom County, a board can find many property managers with experience managing real estate. This means they know how to order services -- municipal and aesthetic -- and pay bills. They might understand that the source of condominium funds is owners who pay 'dues', 'fees', and occasionally, they use the proper term: 'assessments'. They can send you a monthly balance sheet showing how they spent your assessments against your budget. They can add a line item that includes reserves and reserves contributions. In my experience, none understand condominium finances. Or preventative maintenance. Or construction defects. Or community affairs. Or condominium law. Or governing documents. Or especially the business of managing an association which is a corporation.

Real estate property managers make money managing apartments, homes, and commercial properties. Unless these managers have educated themselves about condominiums and condominium association management, they cannot effectively partner with you as a condominium board.

My thirteen-year condominium experience lessons -- nine in Washington State -- include the mandate that a condominium association manager must be affiliated, certified and educated by the nation's industry-standard organization, Community Association Institute (CAI), with headquarters in Virginia and a chapter in Washington State.

CAI establishes best practices which effectively set the bar in several function-specific areas. For example, you can find (free) best practice reports on community harmony and spirit, community security, energy efficiency, financial operations, governance, green communities, reserve studies/management, strategic planning and transition on their Web site.

When a board reads best practice reports in order to educate themselves, then finds condominium association managers who can support these practices, the board has a high chance of success in their volunteer efforts, because you're both working on the same page.

Check References
From Better Business Bureau listings to other condominium boards with experience dealing with candidates, complete this step and share the results with the whole board. Be exhaustive.

Request a Proposal
Craft your informal RFP in such a way so that you cover your board's weaknesses and support your strengths. Give candidates a thumbnail sketch of the association, including such details as age and phase and number of units -- retail and residential, and type of corporation. At least categorize your requirements and cover business, governance, community and online services that you require.

Interview Candidates
When you choose a candidate, review the proposed contract. In fact, read it carefully, and compare your list of tasks to the terms of the agreement. This exercise affords you two benefits. You can:
Set expectations, so you can avoid surprises during the contract term.
Use the comparison as a basis for the interview you conduct with the candidate.

Tip: If you want to cherry-pick services, find a candidate that offers cherry-picking options. There is a wide chasm between full service and limited service.

Starting Out With a (New) Condominium Association Manager
A board's initial step here is to sit down with the departing management agent who knows the most about its association, and conduct an exit interview. During this session the board must understand:
  • Any incomplete or pending projects and their status
  • All footnote-level explanations of extraordinary entries in the financial statements
  • Any outstanding community issues or pending resolutions
  • All issues involving reserve studies, maintenance situations, insurance issues and so forth

Armed with this level of detail, then the board is ready to open a dialog with a new condominium association manager.

Sit Down with a (New) Condominium Association Manager
The first order of business is to agree on whatever process is necessary for both the board and the condominium association manager to set expectations for each other's participation and performance in this new partnership.

Caveat to the board: Throughout this process, listen to the ideas and suggestions of a new condominium association manager, because there could be tips, tricks and processes that can support, eliminate or reduce board work.

Based on the services you agree will be performed by the new association manager, you'll want to discuss at least these issues with them. Make a list and pass the list along to them, so there is no question about what you require.

Verify, if it has not been verified before, that the copies of governing documents the board uses to manage the business of the association are valid, filed, current, and complete. Pass along a copy of this set to the new condominium association manager.

Understand what parts of the (non-profit) corporation law are currently employed by your board, and what aspects are available that might be useful.

Review financial details, including the finance chart of accounts, to insure that categories for your budget fit within the bookkeeping paradigm of the new manager. If you separate water use from sewer rates, and require special accounting attention otherwise, review these details with the new bookkeeping staff.

Establish expectations for the frequency and timing of all financial reporting, the by-when date each month when the previous month's financials will be delivered. Discuss the treasurer's review process and clarify any correction process, so errors can be correctly in a timely manner.

Establish banking venues, so that they mesh with expectations of the association.

Remove ex-managers' signatures from bank accounts and organize obtaining appropriate signature cards for the new association manager's authorized signatures on your operating accounts. (You may even be forced to close accounts and open new ones.)

Establish dates for the association's license renewal with the Secretary of State, the due date for your tax returns, business license renewals, if any, audit, reserve study update, budget planning cycle, and so forth.

Understand what the condominium management's administrative expenses will be that cover document storage, banking fees, copier and scanner fees, envelopes, postage, and so forth. Require detailed invoices for every penny charged to the association under the category of administrative expenses.

Craft letters to the membership announcing the management change, indicating processes required to alter auto-assessment deductions, new mailing addresses for assessment payments, adjustments in handy-man maintenance coverage/ processes/ forms, and other operational adjustments necessary based on the new management arrangement.

Inform the new manager of the strategic plan for the coming year, so as to enroll the manager in supporting the planned efforts of the board.

Share contracts that bind the association including landscape, preventative maintenance and so forth.

Discuss the informal 'RFP' process for gathering bids for services in the next year, and how the process is completed before the draft budget during the fourth quarter.

Review the insurance coverage for the association's assets and the current status of HO-6 policies carried by owners. Establish guidelines for proof of insurance, sharing master policy details and so forth.

Review preventative maintenance schedules, tasks, staff and so forth.

Engage the services of an independent attorney to serve the operational needs of the association, such as drafting or modifying collection resolutions, fine schedules and enforcement procedures. Always use an attorney to file liens, handle owner's bankruptcy issues, craft amendments and so forth.

Gain agreement that the agent assigned to your condominium has read or will read all your governing documents. These include CC&Rs, By-Laws, Resolutions, Amendments, Minutes and for new developments, the developer's Public Offering Statement.

Verify that the agent assigned to your condominium knows how to remain current on changes to Washington State law governing condominiums -- and understands its basics, and if appropriate, state construction defect law, and state non-profit law.

Review any special resolutions and amendments, so the new manager understands and can aid and guide the board in enforcing governing documents.

Review the look, feel and usefulness of the assessment coupon book that will be sent to owners.

Craft the auto-deduction letter to owners, so they can follow instructions and pay assessments automatically, if desired.

Review the due date for assessments, and establish the date upon which late fees are chargeable.

Draft a collection letter to collect unpaid assessments, and follow the governing documents where this process is outlined. Draft subsequent letters that the collection process might require.

Craft a violations letter for notifying owners of violations, and follow the governing documents where this process is outlined.

Establish a hearing process, so owners can petition the board for a hearing based on a violation.

Establish a hearing board, made up of owners and at least one board member.

Document the recusal process where a board member can avoid a conflict of interest in a hearing by appointing a substitute board member when necessary.

Verify that the management company can produce resale certificates, which are required when units change ownership. These certificates must be accurate, complete and include whatever new requirements are imposed by state law in a timely fashion.

Verify that the management company can authenticate current ownership records, so the board and the management company understands the authenticity of every unit owner.

Gain agreement about how to establish and keep current, a list of tenants and residents in the community.

Share the schedule for the annual meeting, the budget process, the budget approval process, note-taking at board meetings, board minutes' publishing schedule, owner notification standards and so forth.

Educate the managing agent about contact parameters for owners, tenants and the developer, if appropriate. A community telephone book or online contact sheet is ideal.

Discuss any community newsletters, online broadcast communications and so forth, in order to maintain the branded tone of board communications.

Review operational procedures including recycle guidelines, sprinkler schedules, landscape standards, window washing, snow removal requirements and so forth.

Share the contents of welcome packets, including additional or separate materials to be made available to either tenants or new owners.

Discuss town hall meetings where occupants -- strong suggestion that you include tenants -- can express their concerns, ideas, thoughts, considerations and so forth. Include the frequency, action methods, agendas, etc.

Review updates and upgrades to community communication that the new association manager may offer.

Understand the online options offered by the new association manager, including items in all three areas above.

At a minimum, look for opportunities to save member assessment dollars, management fees, and everybody's time.

Sunday, July 19, 2009

Preventative Maintenance

Behind fiscal responsibility, this is the task wise condominium boards want most from management companies.

RCW 64.34.328 Upkeep of Condominium states:
"...the association is responsible for maintenance, repair, and replacement of the common elements, including the limited common elements,..."

Regardless of the size of your community, there are basic documents you'll want in order to determine the tasks involved in a comprehensive preventative maintenance (PM) program.

This is a partial list -- yours might be longer:
  • Site plans
  • Site specifications
  • Architectural drawings and specifications
  • Building plans and specifications
  • Envelope studies (or other checklists) required and filed with local government permits
  • Certificate of Occupancy and attendant documents
  • Public Offering Statement (from the developer), which should include a preliminary list
This is the time to develop a comprehensive glossary, so that anyone who uses the lists or the logs knows exactly what's being referenced. In addition, a glossary can aid a poster in constructing accurate logs.

Completing the task of understanding these documents is not for the faint of heart or the impatient. However, when complete, a significant institutional knowledge base can be passed along to the association which will become a truly valuable asset.

(Most property management companies inherit existing lists when they take over managing existing condominiums. An excellent management company will complete homework, as above, and bring experience to a new property and thereby be able to fine tune, update and otherwise adjust the preventative maintenance list.)

Newly constructed communities must develop these lists. Ideally, as part of the developer's responsibility, the developer will assist in crafting the PM list, making all construction details available to the new board. (Note: We don't live in an ideal world, so ask and keep asking for the data you need.)

Once you've constructed a list, it's a good idea to request that owners take note of items in need of repair that are observable by occupants of a unit. For example, the top-floor owners may experience roof leaks first. First floor owners may detect water intrusion from inefficient rain gutters first.

When you hire a PM vendor, walk the property with the regular maintenance person. That person may have additional experience that can help a community repair and maintain its assets, by paying attention to elements that are not listed, but of which this person is knowledgeable.

Once the PM tasks are complete, log them in a calendar. Using a calendar to document work helps future vendors and boards schedule and perform regular work. These records are useful during budget periods.

You may also want to keep a detailed list of PM tasks completed by unit. For example, if/when you check/ replace hoses and plumbing connections, clean dryer vents, check hot water heaters, fire/ smoke and carbon monoxide alarms, you can list these tasks -- whether completed or not completed, by unit number.

You can keep the detailed list in a spreadsheet-type log, listing the tasks as row labels and the dates as the column labels. (We keep a master list for all common elements and page lists for each building address, where we list unit numbers as row labels and events or months as column labels.)

Key to keeping logs will be how people might want to access the log data in future. A board member must be involved in PM at the detail level, as a matter of responsibility.

Preventative maintenance is a moving target, so expect to tune and update your tasks and logs over time.

Monday, July 6, 2009

Success in the Long Run

A good friend and I spent hours talking about condominium communities and what it takes for them to be successful.

Of course, successful is a variable -- with every person involved having their own definition.

Here's my definition of a successful condominium community:
A financially viable community of like-minded owners and tenants who live together in proximity, that exists and operates under a set of governing documents, where every occupant behaves in ways that respects the community. The community is served by a board of volunteer resident owners who run the affairs of the association in a fair, accessible and consistent way.

Sure, this is ideal. And you'll never find such a community. Why? Because of life. Unit owners/ tenants/ board members/ property managers/ local governments: all are variable, all change, all adjust, all work to tug the condominium community and the association in one direction or another.

Apathy is our worst enemy: owners, tenants and board members who are not really involved in the business workings of the association. People who expect that 'everything will be taken care of' without really understand how 'anything' works in this regard; people who buy or occupy condominium units who don't either understand or appreciate the condominium situation in which they find themselves.

Our only option -- as committed condominium owners/ dwellers -- is to keep volunteering, keep working and keep doing our best.

Okay, I'm over it.

Sunday, June 28, 2009

Dish Antennas - an Update

Satellite dish antennas are a little like starlings -- or cockroaches. Where you see one, you're likely to see more.

That's exactly what happened to us.

A tenant moved into an owner's unit and ordered a high-definition (HD) satellite dish antenna. Toward the end of the day, the installer arrived, and casually asked the tenant if he had permission to install the dish.

"Yes," replied the tenant, having obtained verbal approval from the owner (who had not read the CC&Rs).

Soon, a second installer arrived, and in order to help them both finish up their day, assisted. Situating the antenna isn't something that the tenant or owner had considered, so the installers solved the problem by installing the dish on the limited common area that belongs to the neighbor upstairs.

"When you turn everybody in the building on to HD, we won't have to install another dish," promoted the installer.

When informed about the illegal installation, the tenant pointed to a (standard TV -- non HD -- satellite) dish attached to another building. (The standard TV device mounts in a linear fashion that could be accommodated on the wood trim of the building.)

"We saw that antenna and thought it was okay to install one," came the tenant's explanation.

The board sent a formal Notice of Violation to the owner, who acknowledged not having read that permission from the board was required in order to install such a device.

Upon receipt of the owner's petition, the board decided that we would allow the installation, but in a spot that was away from the center of the "beauty shot," center-of-attention, aesthetically, for the complex, and on the common area of the building. We agreed on an elevated installation at the back corner of the building, away from the street and more or less out of sight. We also asked for a damage deposit sufficient to cover the cost of repairing our building when the device was removed.

When the new installer came to move the device, we discussed the installation options for reception and for aesthetics. Bottom line: the triangular-shaped installation footprint required could only be accommodated by drilling through the side of the building, thus compromising its waterproof membrane.

As well, there was no area within the limited common area deck available to the tenant where this extraordinary footprint could be accommodated.

The FCC rule allowing dish antenna devices states that the device must fit within the one-meter-in-diameter limit, but makes no mention of the installation footprint. (This device required an 'L'-shaped footprint about 35" along the base of the 'L' and about 20" up the leg.)

We burned up nearly three week's time for the board; the tenant and owner produced an untold amount of consternation.

Our resolution was to deny the petition based on there being no place in the common area where the HD dish antenna's installation footprint could be accommodated.

Given the FCC ruling that a board cannot deny anyone's ability to consume satellite TV signals, we asked the owner to petition the board for installation within the confines of their limited common area, a deck. We required an installation plan that covered the installation process: either drilling into the floor of the deck or installation using a tripod.

In the final analysis, the owner and the tenant decided not to offer another petition, based on the increased damage deposit required should they choose to drill into the floor of the deck, and the liability involved in mounting the device on a tripod, which subjected it potentially to the vagaries of wind and weather, and the damage it could cause should it become loose.

(The owner paid the cancellation fee.)

Governing Tips:
  • Review your governing documents in light of the FCC rule, and verify that you can manage device installation within your physical community. HD dishes are larger than standard TV dishes, although still within the one-meter-in-diameter size limit, but their installation footprint is significantly different.
  • Require a complete description of the device in your petitions for installation, including its installation footprint. Ask for photos and dimensions of the installation hardware and the weight of the device.
  • Require a damage deposit sufficient to cover any repairs when the dish is removed.

Here's an FCC link you may find helpful.

Practical Tip: If you know that dish antenna installation requires board approval and you notice that an installation about to happen, run, don't walk, out to the installer and ask to see the written permission from the board to install the device. If none can be produced, ask the installer for written confirmation that s/he is about to install a device without permission. Your board will thank you!

Punch Line: The satellite vendor doesn't want the dish. When cancelling the contract, the customer is required to return the 'boxes' from inside the home. Removing and disposing of the dish is the customer's responsibility.

Tuesday, June 16, 2009

Condominium Board Branding - A Tutorial

Branding? Egads, isn't that a Madison Avenue thing? And what's branding go to do with condominium boards?

Your membership, the owners, perceive you in some way. That is your brand. Here, then, an opportunity to investigate and change your brand, if such action would improve the tenor of your community.

Brand your communication. Whether you use a newsletter, board meeting minutes, e-mails or a community social Web site, such as, the way you communicate and the effort you put into communicating with your membership can close the gap between what is expected of a board and what you can deliver.

Start Here

If you start with the Wikipedia entry on Branding, you'll read extensively about the notion. You can use that site to learn what you need to know about branding. As you read, focus on your condominium board as the entity to be branded.

Here's an applicable quote, though, that explains the point with precision:
"People engaged in branding seek to develop or align the expectations behind the brand experience, creating the impression that a brand associated with a product or service has certain qualities or characteristics that make it special or unique."

Whether your association is established or just starting up, when the board pays attention to its brand through communication, the community can become more harmonious and perceived as well-run.

In particular, this entry focuses on 'attitude branding': the "...choice to represent a larger feeling." Cultural brands that represent this idea include Starbucks, The Body Shop and Apple. In fact, Schultz (Starbucks' leader) proposes that "[attitude branding]...adds a greater sense of purpose to the experience."

In truth, condominium boards embody the democratic governance of a community of homes and the owners involved, according to its governing documents. Branding in this context means communicating the work of the board in a way that reflects its efforts to lead effectively, and to preserve the strong sense of community that can develop among neighbors -- its 'larger feeling'.

The board effects its brand through every piece of communication and through every behaviour it exhibits. This means that a board can build and enhance its brand, or destroy one so its brand becomes distasteful or pejorative.

An Exercise

What comes to mind as you close your eyes and envision the name of your board?

How did that happen? What events, communications, happenings developed into your image of your board?

This entry explores ways you can maintain the brand you have or migrate your brand to the brand you want for your condominium board.

How To Define Your Board's Brand

First, you already know your audience/ market. It's the people who own units in your condominium community. It's also prospective buyers and real estate agents who will help buy and sell units.

Second, every communication from the board represents an opportunity to affect your brand.

Third, board behaviour also effects your brand, whether by example, in board meetings and sometimes, even in private conversations.

Here's Your Homework

Pick Words That Describe Your Brand. With your board in dialog, define the qualities of the work you perform. Use descriptive words that apply. Examples are 'thorough', 'thoughtful', 'timely', 'fair', 'informative', 'knowledgeably', 'inclusive', 'helpful', and so forth. Be exhaustive. Develop a long list. Then pick the top few words and deliver your volunteer service accordingly.

(Your job as a board member is to 'preserve, enhance and maintain' the value of the commercial real estate that the community owns in common: use these terms, too.)

In choosing the top few words, discuss ways in which your 'brand attitude' interacts with your owners. (Remember, brand attitude is the 'larger feeling'.) We're saddled in our work with 'home', and that generates a larger feeling for many owners.

Define What Owners Want From the Board. With your board in dialog, list what owners expect from the board. Use complete sentences, so that as you work through this list, your expectations are clearly stated. You may need to poll your membership to discover these expectations.

Define the Current Impression of Your Board from Your Owners' Point of View. With your board in dialog, answer the questions:
  • What do owners think of/ feel about the board today?
  • What do we, the board, want owners to think of/ feel about the board in the future?
  • Which tools can we use to move our brand in the direction we want?
List the Problems That Owners Expect the Board to Solve and Discuss Ways You can Anticipate Them. With your board in dialog, answer these questions:
  • What problems and issues to owners expect us to address/ fix/ solve?
  • How much education do owners need in order to balance our ability to solve problems with our ability to meet owners' expectations?
  • How can we anticipate problems and issues and address them before they become too time-consuming?
Now That You can Communicate and Focus as a Board, List Tasks for Each Board Member. With your board in dialog, develop lists, calendars, resources, time limits, budgets and so forth, that you require in order to communicate to your ownership the good work your board completes.

Tips --
  • Choose a type face and a colour that you use consistently in your written communication. Use a professionally designed template where ever possible, so that your text is readable, with easy access to important points.
  • Use a style guide to help the writer use capital letters, emphasis type styles, quote marks and generally show uniformity in written communications. (I like the Wired Style Guide and don't use it consistently, because it doesn't always answer the style questions I ask. I always aim for consistency.)
  • In writing, it's a good idea to use the present tense (where possible) and to write so that the reader -- owners and prospective owners -- sense that you are 'at their elbow'. Read the difference between --
Your account has been credited accordingly.
We will credit your account with your payment.

or the difference between --

Our CC&Rs dictate where you can park.
You can find your assigned parking stall(s) in the CC&Rs,
under the section titled Limited Common Elements.

  • When the board acts on behalf of owners, say so: write it that way. Make the board the pro-active, first-person voice in your communication. When guiding and 'educating' owners, address them as 'you'. Avoid sounding superior or authoritarian.
  • If necessary, "...get the right people on the bus. And get the right people off the bus."
    -- Jim Collins in "Good to Great."


When a board understands its ability to brand its work, and does so with purpose and direction, the board crafts and employs its own tools -- its own communication tools -- that can deliver a branded experience to owners. Whether the board uses newsletters, board meeting minutes, Web sites, social networking sites, or other forms of communication, it can brand every representation of its work.

The homework will aid in establishing healthy communication patterns among board members and between the board and owners. This kind of communication offers an opportunity to build the habit of employing unfaltering and dedicated efforts to focus on the work at hand. It can help you weed out emotional, platform-grand-standers who can effectively derail board work and community harmony.

(If you haven't read it already, please study the post that covers board meeting minutes. Board behaviour in open board meetings and action as documented in the minutes may be the key branding tools of any board.)

Be consistent. Over time your brand will become known and predictable.

Sunday, May 31, 2009

A Solid, Stable Condominium
Community is Attractive to Buyers

Based on today's article in the New York Times about buying nearly new as opposed to buying new, this entry highlights the notion that a well-run condominium community can position a unit purchase as either a great idea or a buyer's worst nightmare.

I'm fully aware that Whatcom county in Washington State is not New York City -- by any stretch -- but in the not-too-distant future, I'm convinced that the logic of the article will ring true in this geography. A prospective buyer of any condominium unit, regardless of the locale, is advised to complete minimal due diligence by reading all the minutes and all the financials available for that association before closing the sale.

(Owners, as well, are entitled to copies of minutes and financials, so as to better understand the status of the community. More importantly, owners are entitled to information regarding the maintenance, preservation and enhancement of their real estate investment on an ongoing and up-to-date basis. It's also up to the board to conduct the business of the association in such a way so as to deliver results that can reflect a solid state of the condominium community.)

A cursory Internet exploration of 'condominium financials', for example, brings up search results heavy with sad, unhappy and poor experiences of people who bought condominiums who either didn't explore the association's minutes and financials or ignored what they read. A few of the 'surprises' include assessments to repair unresolved infrastructure elements, unfunded reserve accounts, and mid-year assessment increases based on poor budgetary planning.

In Whatcom county, many condominium developments are relatively new, except perhaps in places like Birch Bay (where condominium ownership appears to represent mostly primo rental-investment opportunities, and has done for years).

That early period when a condominium project is newly occupied, called the declarant control period, is a tender time for the financial business of a real estate community. Opposing interests and agendas will cause friction insofar as keeping assessments low enough to sell units while assessing sufficient monies to pay the bills. In addition, how the assessment dollars are spent can also cause friction: does the landscape look like a spec development or a lived-in community? Are units sold (sold!) primarily as investments or as primary residences? What ratios of owner-occupied vs. rental units are required by lenders?

In an ideal world, developers work closely with fully qualified, experienced condominium property managers to operate, manage, guide, advise and otherwise help establish a solid footing for a stable condominium community.

In order to implement this strong recommendation, developers must understand that although a condominium development is a real estate project, a condominium association is not like any other kind of spec real estate development project. When the governing documents are written, the crafting attorney can state the name of the qualified management company and optionally terminate the relationship together with all the other 'sunset events' that occur at the end of the declarant control period.

It is especially difficult to assume the officer-ship of an association when the association has been poorly managed, poorly funded, and otherwise left by a developer to struggle with all the issues involved in managing and financing a condominium association.

However and whenever the owner-centric board assumes responsibility for the business of the association, in sum, a well-run, cohesive community can be attractive to prospective buyers, whether first-time condominium unit owners or seasoned condominium dwellers. It's up do a developer to establish the 'brand' of the association from the beginning.

Please read the Branding Tutorial if you're a board member and want to adjust your brand.

Thursday, May 14, 2009

Condominium Management Styles/ Board Management Tips

The leader sets the tenor of a community.

I just made that up. 

And if you look at any corporation, you can learn more about how the organization functions based on its leadership and its branding. This is also true in a non-profit corporation called a condominium community. 

Styles of Management
Condominium communities have options when deciding how to manage the real estate assets they all own in common. Without covering the pros and cons of each style, here are a few options:
  • Hire management by a professional condominium management company. Choose one with condominium -- not landlord/ rental  -- expertise, so that the board is supported with knowledgeable best practices that come out of un-erring practical application of RCW 64.34, Condominium Association Institute (CAI) best practices and a full understanding of your governing documents.
  • Manage the condominium association yourself. This style implies that board members have working expertise in leadership, writing and editing, finance, envelope maintenance, landscape upkeep, insurance, legal issues and so forth. A heavy dose of trust is involved in this style, as is a degree of potential liability. 
  • Employ people onsite who can collect assessments, pay bills and maintain the property. Again, trust and liability are issues that must be resolved before taking on this style.
  • Employ part-time staff who perform the tasks required to operate and manage the condominium assets. As well, trust and liability are both issues to consider in this case.
Whichever style of management you choose, it's up to the board to govern the business of the condominium association. Yours is a multi-million dollar corporation, and as such, it requires competent leadership, abilities, expertise and stamina to perform this volunteer work on behalf of your community.

Whomever you choose as operational partners are just that: partners. You remain the leaders. You exude the management style. You are responsible for the tenor of the community.

Here then, are a few thoughts about condominium boards and how you might organize yourselves in order to maximize your efficacy.

There are several variables to consider: each member of the board and the leadership expertise of each one, the management company's influence on the style of leadership, and of course, the participation and attitude of each individual owner.

As a board member, consider the issues that you vote on and publish to the membership -- and how you conduct your board meetings. Both reflect the board management's style. 

Some board meetings may be fractious. These differences-- just like in for-profit companies -- should not become visible to the membership. Working board meetings are recommended, to give all board members an opportunity to remain on the same page during board meetings where the board votes.

The Business At Hand
However frequently you hold board meetings, as time passes, items present themselves that require attention. Maybe an owner is seriously overdue in paying assessments. Perhaps a landscape worker has damaged a landscape asset. Possibly preventative maintenance lacks clear direction from the board. Maybe the association needs a master policy update. All these items at least require board attention, discussion, presentation of options, evaluation and often a vote.

Every board needs a process in order to articulate, evaluate alternatives to cure and implement fixes to issues or items that come before it. Solid common sense becomes useful, as does experience in business processes. If you ignore it, it will not go away. 

Open vs. Closed Board Meetings
According to your governing documents, there are guidelines that cover the board meeting notice period, agenda publication, notice procedure and so forth. Generally, it's a good idea to hold open board meetings, meaning that any member may attend. Publish a notice and include an agenda.

It's up to the board leader to establish the tone for board meetings, and generally decide whether or not members can contribute, speak, participate in discussions and so forth. Remember board meetings are board meetings, not member meetings. The annual meeting is the exception. Members are expected to voice opinions, propose adjustments to the community, and to vote.

It's a good idea to request that members who want to add items to any meeting agenda, do so in writing. This gives the board the option of handling the item at the meeting, or taking it under advisement for a decision at a future meeting.

The best advice passed along to me is this: conduct your meetings according to Roberts Rules of Order. Please employ the rules at whatever level that makes attendees comfortable. Basically, the rules enable the board to maintain control of the meeting and a level of civility appropriate for the community.

Closed board meetings are best reserved for discussing confidential matters, such as employee situations, specific owner delinquencies and other sensitive subjects. When there is a vote in a closed board meeting, it's a good idea to publish the wording of the motion and the vote -- while never compromising anything that is strictly confidential, such as an owner's name. Consult with your counsel about guidelines that apply in your particular situation.

Working Board Meetings
There are times when the board simply needs to clear the air, gain a perspective, educate itself and so forth. Working board meetings are useful for these times. What distinguishes them from other board meetings, is that there are no votes taken, no minutes documented, and often no members present. 

To-do lists come out of working board meetings -- for each board member. This is a good way to keep the business items moving through whatever process is necessary to get each handled and retired.

Minutes As History
Whenever a board meets and votes, the board is compelled to publish minutes covering the work. A new buyer can request up to three years' history in minutes and financials, in order to understand the 'state' of the association where a purchase is contemplated. A potential buyer -- and every current owner -- benefits from understanding the work of the board and its decisions. 

Minutes are also an excellent resource when preparing welcome packets for new owners and new tenants. Rules (violations), guidelines (for avoiding violations), and consequences (of violations) are available for condensation into single-page documents.

Preparing an agenda and then preparing minutes in advance can help a board stay on track during a board meeting.

Since minutes do represent history, it's a good idea to include these elements in your minutes:
  • A statement of the problem or situation or issue.
  • A description of 'how to do it' according to your governing documents.
  • The exact wording of a resolution and its vote.
For example:
  • An owner parks seven vehicles in parking slots assigned to unsold units.
  • In Exhibit "D" of our By-Laws, each parking slot is assigned to a unit number. Visitor parking is on the curb, which is also the place where owners can park surplus vehicles.
  • Resolved: Vehicles parked illegally will subject owners to fines according to our fine schedule. After two occurrences, illegally parked vehicles will be towed at owner's expense. The motion passed unanimously. 
Bare-bones Agenda
However you choose to format your agenda, you can include these entries:
  • Welcome - list time and place for the meeting
  • Old Business - include items that require a vote or an update
  • New Business - include items brought to the attention of the board since the last meeting
Bare-bones Minutes
You can prepare draft minutes in advance that follow the agenda you publish. This document then becomes the basis for notes that can be used to construct the final version of the minutes. Using the agenda, above, your draft minutes might look like this:
  • Draft Minutes for the Board of [Our] Condominium Association
  • Date
  • Location
  • Welcome - leave a blank for the name of the person who opens the meeting; the time; note that a quorum is present.
  • Present  - list the names of all attendees.
  • Old Business/ New Business - pre-word item descriptions, options and include motions using 'Resolved: ...' and note the final vote. 
  • Time of adjournment.
  • Date and location of the next meeting.
Using the draft minutes as a guide for conducting the meeting helps board members keep the conversation on track. Prior to a motion, a board member might state a problem, present options, discuss the analysis of options, and, if appropriate and desired, solicit comments from both board and non-board members. These details can be written into the draft and amended in real time, depending on what takes place during the meeting.

It's unnecessary to detail the discussions, and most effective to simply state 'after discussion'. However, a statement of the problem, options considered and the analysis if appropriate, can illuminate the motion and the vote.

The secretary can publish minutes and label them 'draft', including minutes from the annual meeting, as soon as the board agrees on them. Approving minutes from the last meeting is an agenda item that is included in draft minutes, together with any edits or corrections necessary.

Board Management Branding
On a final note, just as a for-profit corporation relies on its branding -- for which it may pay handsomely -- a board can effectively create and maintain its 'brand.' For example, for the board where I currently serve, our president has established that his board will be 'fair, responsive and kind'. 

All communication from the board, therefore, requires a writing 'voice' that fits its branding. 

Some board communication can be 'draconian', an easy definition of communication that comes directly from some counsel, and not a brand a board wants attached to its work. Another brand might be 'officious', again reflecting a tenor that might not be desireable

Wherever possible, employ the volunteer talents of someone with writing and editing expertise. This should be someone who can effectively communicate the brand of the board, to explain items in easily accessible language and someone with an overarching view of the impact and influence of written communication.

Imagine your writer as your own advertising agency or PR firm -- the results are similar.

Managing Agent
Most condominium associations hire a vendor that performs at least their financial work for them -- taking in assessments and paying the association's bills -- and that may also perform operational duties. It's important to remember that the managing agent is a vendor, paid to perform contracted duties for the board. 

There will be times when the board can benefit from charging the vendor with presenting an issue, such as a Fannie Mae, Freddie Mac, FHA or other lender limit that the board needs to cure in order to qualify its units for loans to potential buyers. There may be meetings when its advantageous to charge the vendor with completing certain tasks, such as owner sign-in and counting votes at the annual meeting.

As any good board does, manage your managing agent. Solicit all the condominium-centric guidance you can from them, and remember that they are vendors.

Emotional Banking
On a final note....
Unfortunately, too many board meetings become 'banks' (platforms/ situations/ arenas) where individuals choose to express their emotions in an effort to drive an agenda forward: hence the term 'emotional banking'. Maybe it's the agenda item; maybe it's the emotional payoff of stirring up the group.

These situations also arise in for-profit companies. It's human behaviour. 

(It also happens in social clubs. Since you don't always have the freedom of simply resigning from a condominium community like you might a social club, remember that your board isn't running a social club. Members interested in doing so should work on the social committee.)

The job of the board is to operate the business of the community according to the governing documents. Competent board members champion agenda items, and some do it with passion. Usually, this is a good thing. Sometimes, however, when the agenda item is not in the best interest of the community, it is not a good thing. 

Some board members, and often some members -- even vendors, choose to behave in ways not usually seen in business meetings. Sometimes, there is screaming, tantrum throwing and swearing. Whatever extreme emotional behaviour you want to list can occur.

It's up to the board to curtail this extreme behaviour -- unless its entertainment value is worth sitting through.

Determine your board management style and find a way to express the brand of the board. Review all communication from the board -- and from the managing agent -- to verify that it follows and enhances the board's brand. Conduct board meetings so as to further your brand -- in actual practice.

Review each of these areas with your collective board, and decide how to handle each area. Then you'll be ready to hold productive board meetings, document them and effectively handle the business of the condominium where you serve.