One of the first questions a new board of directors faces is whether to self-manage their homeowners or condominium association, or hire professional management.  To make this decision, the board needs to take into account the cost of professional management, the time and work involved in self-management, and the management experience and expertise of the board members.  In most larger associations, the scale will tip in favor of hiring professional management.  The time commitment is often simply too great for board members, who typically have work and family responsibilities as well.  In a smaller association, the board may desire to undertake management responsibilities themselves to save money.  While self-management can be successful as well as save the association money, the board must not be penny wise and pound foolish.  The board needs to recognize potential trouble areas before they get out of hand, and hire the appropriate professional (such as an attorney or accountant) to help them.  Sometimes there is just no substitute for experienced, professional management.  In fact, a recent survey found that 76% of community association residents said that professional managers provide value and support to residents and the association.

If the board decides to hire professional management, how should it proceed?  In a new association, the developer may have already hired a management company for the association.  If so, the board should evaluate that company’s cost and performance and decide whether it should be retained as the association transitions to owner control.  The board can solicit one or more management proposals from other management companies to determine if lower costs or better services are available.  In Florida, community association managers are required to be licensed, but in Ohio they are not.  Thus, it’s essential that the board perform due diligence before hiring a manager.  A good way to start that process is to contact the boards of nearby associations when possible, as they may have experience with the management companies under consideration.  Also, check whether the manager is certified by the Community Associations Institute.  Though certification is not required, it does indicate that the manager has undergone education and training and subscribed to a code of ethics.  In an upcoming post, I’ll discuss what should be included in your management contract once the board has selected a manager.