Board Management Jurisdiction Maintaining the Balance

Board Management Jurisdiction

For a car to run, all the parts (most of them, anyway) need to be in working order. The engine has to be well oiled, the tires must be inflated properly, and sometimes the brakes need adjusting. The major components of the machine must be fully functional in order to get anywhere.

In a lot of ways, an HOA or condo community is a lot like a car. Without proper maintenance of an HOA's main components, (i.e., the board, the managing company and the residents/tenants themselves) the machine stops. Not only should each one of these parts be separately maintained within their own parameters, the relationships between all the parts must be in full working order, too— a car's engine can't run well for very long if the gas tank has a leak.

Keep it Running Right

The relationship between your association's board and your managing company is one of the most crucial in the proper functioning of the "machine" that is your community. With proper communication, and by fostering mutual respect and cooperation, any association can set goals and achieve them. When there is strife between your manager and board, however, or when there is confusion about who's responsible for what and when, the "car" is sure to break down. Developing— and maintaining—a fair, balanced and open relationship between your board and management company is one of the most important tasks a community association will take on.

"Because there are so many tasks to perform, and so few set boundaries, it's often hard to tell where the board's role ends and the managing agent's begins," says Sylvia Shapiro, author of The Co-op Bible,recently re-released by St. Martin's Press.

But Connie Bittle, senior property manager with Smithfield-based Diversified Property Management, says the duties of the board, the manager and their relationship is, in theory, pretty straightforward.

"The building's manager takes direction from the board and can also sometimes help to guide a board in the right direction," says Bittle. "And the board looks to the manager for suggestions and solutions to problems that they can then accept or reject."

A Two-Way Street

Sometimes, however, one (or two) of the parties aren't holding up their end of the bargain. How can one important entity tell if the other isn't doing their job effectively, and how can the issue be addressed? If your board, for example, wants to assess whether or not your managing company is doing a good job, Bittle says "the best barometer is a series of questions," beginning with a very simple one.

"Ask yourselves, 'Is the job getting done?'" says Bittle, "And more specifically, 'Are we getting bids? Are we getting resolutions to problems, and are those resolutions coming in a timely manner?'" Bittle says that if you've got a lemon of a management company on your hands, there are some clear indications.

"If there's been a decline in maintenance, or if the response times to complaints or requests are slow, that's a sign of poor management," she says, noting that money trouble is a scary one, too. "Especially if there are already funding problems you don't know about."

On the other hand, if a board is floundering or not living up to their expectations, it's awfully hard for the management company to do its job. Bittle says that there are specific duties the board must fulfill, too.

"The board has fiduciary responsibilities to protect the shareholder or resident's investment and safeguard the funds of the association and also make sure that the maintenance gets done," says Bittle.

But how easy is it for one lone manager, for example, to pipe up against a big board when things aren't going well? In Bittle's opinion, it's not a difficult responsibility to have and is actually part of the manager's job description. "If the board is being irresponsible or too stingy with funds, the manager should say something— it shouldn't be that tough of a subject to broach."

For that to be the case, having an open line of communication is essential. If a give-and-take pattern in your relationship with your manager is established early on, both parties begin to understand the other's job a little more and learn to trust the other.

Whom Do You Trust?

Larry Silverman, president of Atlantic Management in Union City, says that mutual trust is paramount in the board/manager relationship.

"Management is in charge of things like the association's funds, and getting all the vendors and contractors for various projects," says Silverman. "The board has to have trust in the management that, for example, when they deal with those vendors and contractors, they're doing so in good faith."

Silverman says that when a manager gets three quotes on work from three contractors that happen to be in his close circle of friends, that manager is doing something unethical. Establishing trust is something that Silverman says is important to do from the start. "If we are working with a board that already has vendors and contractors that they like, we stay with them," he says, an act that lays the foundation for a positive relationship. "If the condo board trusts that management is acting in good faith, then they're doing their job."

Silverman also notes that part of that trust is based on the board being understanding about the duties of the manager or management company.

"The management company is responsible for taking care of the building," he says. "They collect the funds and deal with complaints, they collect dues and aggressively pursue dues that haven't been paid, and they maintain the upkeep of the building." But understanding the process of responding to resident concerns and problems is necessary, too.

"Sometimes [the management company] can't take care of things immediately— but they should respond in a timely manner," says Silverman. "Take, for example, a small leak in the roof. If it rains for three straight days and the contractors your building works with have three jobs ahead of you, it may take a week or so to fix the problem, but that's acceptable, considering the circumstances." In situations like this, the mutual trust that has hopefully been fostered between the management and the board ensures that minor problems get dealt with and don't escalate into major crises.

"While it is the board's job to always be looking over the management's shoulder, with a good management company, they really shouldn't have to," says Silverman.

Drawing the Line

Some duties, however, aren't part of the managerial role and often, knowing what isn't expected of each party is as important as knowing what is. Silverman notes that if a board wants to make cosmetic improvements— like landscaping changes, for instance— or embark on a big redecoration project, that's outside the management's jurisdiction.

"The board may decide they want to change the façade of the building, and it's the board that would initiate that work— the management company just carries it out," he says, but adds that the manager has a responsibility to step in if an idea simply isn't practical, or more importantly, isn't safe. "Not long ago, a board wanted to install a marble floor in an elevator that would've put the car over a safe weight limit. In situations like that, it's up to the manager to step in and advise."

The board also relies on the management company to be a valuable third party in times of conflict. When residents have problems, sometimes the management company has a keener perspective on the issue, since they are often less emotionally invested in the situation than the board members might be.

"The board's relationship to the residents is more personal, more emotional," says Bittle. "They usually live in the building and have to face owners on a daily basis. The manager's role is more of a third-party one— they bring a business perspective, rather than an emotional perspective."

Bittle says managers often come in and help solve problems when board members become too personally involved or have a conflict of interest. This is certainly not to suggest that managers are unfeeling or unsympathetic— but when tensions run high, the levelheaded voice is often the one that comes from the side of the management.

Silverman agrees, though he points out that it's important for a management company to not get too deeply involved in conflicts that are "social."

"A lot of times, with issues like noise complaints or other disturbances, that's ultimately a social problem. Managers can assist in situations like these, if both parties are willing to talk. But above all, management companies should be careful of getting involved in issues outside the condo association. In extreme cases, those conflicts could lead to litigation."

If a manager or board has questions about whose responsibility it is to deal with certain resident problems, the association's bylaws should be consulted.

In fact, when there are concerns about the responsibilities of both the management company and the board, the association's bylaws are the best place to start. In most cases, the duties and expectations are outlined in these documents and can clear up the confusion. In addition to reviewing your association's bylaws, copies of the management company's contract should always be readily available for review as well. If the bylaws or contracts aren't clear, steps must be taken to illuminate them. If a mutual trust has been fostered already, changes shouldn't be too hard to propose and eventually implement.

"An association board and their management company is a partnership," says Silverman, and compares it to a lawyer/client relationship. "You're essentially working together for mutual success— you want synchronicity. If a management company does their job successfully, they have the pride of their work, they'll in turn get more business, and the condo community itself will thrive."

When a management company and the board they report to can achieve this kind of "synchronicity," they keep the parts of machine running smoothly. If everyone knows their job description and does their job to the best of their ability, the building and its tenants benefit— the "car" not only runs— it purrs.

Mary Fons is a freelance writer and frequent contributor to The New Jersey Cooperator.

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