Condo Media - November 2010 - 27

authority granted by the board of trustees, the manager has certain duties imposed by common or statutory law. The law of agency requires loyalty, care, obedience, accounting and disclosure. These duties provide a basic framework for building the relationship. The duty of loyalty requires the managing agent to always put the board’s interests first, above his or her own interests. The duty of care requires that manager to exercise a reasonable degree of skill in all his or her actions on behalf of the board. The duty of obedience requires that the managing agent carry out, in good faith, the board’s directions. The duty of accounting requires the managing agent to accurately report on the status of all funds received or expended on behalf of the board. Disclosure requires the managing agent to keep the board fully informed of all material facts regarding the management of the property.

Managing Expectations
The board of trustees also has a fiduciary duty to its community. Each trustee is charged with the duties of loyalty, care, obedience, accounting and disclosure in handling association affairs for the beneficiaries who are the unit owners. As volunteers, trustees recognize their limitations and understand the importance of the guidance of a seasoned professional with comprehensive experience to serve as its association manager and consultant. Because today’s client is more informed and sophisticated, the competence of a manager should be seen as key to the success of the association. The board must understand its role is to govern the association and set policy. The board expects professional management to be responsive to the needs of the association and to have solid followthrough in the administrative and operational policies it is contracted to implement for the trustees. Most trustees do not want to spend their valuable time pressing the managing agent for results. This board under-

stands that it is the product of the individual manager’s enterprise and initiative that matters in getting the job done. But a manager’s performance can be undermined by several factors. A capable manager with a too-large portfolio may not be able to meet the needs of all his or her clients. Managing multiple priorities is part of every manager’s day, but when there are just too many priorities, something is likely to fall by the wayside. A junior manager may not have the depth to handle a large portfolio but may want the better salary it commands. Very few management contracts delve into the number of hours the manager will spend at the property or on association business. The financial statements and management report samples that are provided with the proposal and management contract provide some indication of the product supplied by the corporate back office, but the evidence of the manager’s industry are not generally included. Sometimes a very capable board and a very capable manager wind up at odds, because they have differing role and goal expectations. Often this imbalance happens when new trustees are elected, or when there is a change of manager. On occasion, the manager’s efforts can be undermined when trustees seek to micromanage the operation of the association rather than working to set and direct policy as an advisory board.

Of course, the trustees must agree that time spent in evaluating management options, clarifying goals, team building and strategic planning on both a short- and long-term basis are the essential building blocks to success. Clearly communicating these to the managing agent is critical in setting the bar for management services and providing accountability. This collaboration allows for professional management to do its job while allowing trustees to exercise due diligence in their planning and decisionmaking process.

Changing Management Companies
What if the board decides to fire the current agent and bring in someone new? Making a change in your property management company is one of the most challenging tasks a board can undertake. Finding the management professional who will be the best fit will require a clear understanding of your expectations and the needs of your association. Choosing a new company without first establishing the management plan may doom the new relationship to failure. The board must decide on the level of service required and clearly communicate this in the RFP (Request for Proposal) to the candidates. The board has a fiduciary responsibility to the community to make a determination of the best possible management solution and to implement it. Jumping from one bad arrangement to another is not an acceptable business decision. Although the board may have issues in the current management relationship that seem insurmountable, there is no legitimate excuse for failure to use due diligence in ensuring the problems are resolved with the new agent. As the saying goes, the devil that you know is better than the devil that you don’t know. Invariably, there will be tradeoffs when a management change is made. Some services will be better and some not as good. The board must recognize that

Management Plan
How can the board resolve these interpersonal and professional issues without hiring a new management company? Setting goals and objectives that will be consistent with the community’s mission statement and establishing a strategy that will lead to these goals provides the management plan for the community. It is the determination of these objectives and the goal-directed actions and the communication of these to the manager that will bring the desired results that today’s community wants.

CONDO MEDIA • NOVEMBER 2010

Condo Media - November 2010

Table of Contents for the Digital Edition of Condo Media - November 2010