Common areas of a community are vitally important. Not only do they ensure a better quality of life for residents, they also help the resale value of properties. So it makes sense that two of the most important duties of any community’s volunteer board of directors are to manage the affairs of the association and maintain the common areas. For some condominium and community associations, this also applies to the limited common elements. Since these areas are crucial, we have found that using professionals to assist boards in making the right decisions for property owners can guarantee that communities are run smoothly. Professionals bring experience, expertise and assistance.
We know that many boards struggle with using professionals (for example, insurance appraisers, engineers, reserve study specialists and others) as they want to save money on behalf of the association. While being financially responsible is smart, money saved in the short-term usually results in higher overall costs in the long run. Preventing emergencies and getting the work done correctly the first time can actually save an association significant dollars.
But there are other reasons why hiring professionals make sense.
When serving on a board, you have fiduciary tasks. These fiduciary responsibilities are outlined in the N.C. General Statutes and the board should depend on the experts who practice under these laws.
Within the statutes, boards are granted legal protection if they hire professionals. In the event that an expert is wrong, a board cannot be held legally responsible by any community member. In the eyes of the law, a board did its job by relying on an expert and using prudent business judgment.
Relying on an expert doesn’t mean you have to hire outside professionals. Within your community, there may be residents and association members who are considered experts in their professions and can volunteer their expertise and time. Check your roster and use the talent available to you.
However, if you are using member-experts in a condominium or community association, we recommend that the board appoint a committee to support the member-expert.
Other examples of when your board may decide to hire professionals include using an attorney to interpret documents and collect delinquent assessments, a CPA to perform an audit, and a reserve study professional to develop a long-term replacement study and financial plan for future capital projects and deferred maintenance programs.
For example, if you have a large capital project, have an architect or engineer provide specifications and drawings (referred to as “construction documents”) and prepare the bid specifications. The same architect/engineer could be used to assist the board in obtaining bid proposals and interviewing contractors to perform the work. But do your research, as many times a project manager can be engaged to do the same at a lower cost overall.
One important decision many boards are not prepared for is the transition from developer control to property-owner control. Boards are confused as to whether to hire a professional association management company.
Some boards don’t feel the demand to hire a professional management company, as they find they can rely on member volunteers or hire on-site staff. However, many boards find it is in their best interest to hire a professional management company.
Management professionals can guide a board on the transition and founding documents, handle day-to-day operations, perform all accounting and finance tasks, provide a neutral party to facilitate resolution of disputes, and monitor compliance with the legal documents. Board members are then free to focus on bigger projects for their communities.
A professional management company also provides continuity for an association, as board members may change every year. With a professional company, institutional knowledge, records and all procedures are maintained year-to-year, regardless of residents serving on the board.
We understand that hiring professionals can seem daunting and expensive to a board at first. But spend time doing your research. We have found in our years of service and work with diverse boards and communities that oftentimes calling in the experts saves time and money.
Please visit your Board Member Toolbox for access to a variety of resources that will aid you throughout your tenure on the board.