Condo Media - January 2012 - 26

ASKED & ANSWERED

The Association Manager
Hiring a Resident Owner

Q A

QUESTION: Our community association is planning to hire a manager, and the board is considering selecting a current homeowner to fill that position. Would this create a conflict of interest, about which we should be concerned? ANSWER: Hiring an owner wouldn’t raise the same potential conflict of interest concerns that would exist if you selected a board member, but there are many reasons industry experts would discourage this choice, starting with the possibility that some owners might suspect a conflict of some kind, even if none exists. Perceptions are powerful, and suspicions that this owner may have been hired for reasons other than competence would almost certainly impede their ability to function effectively in the manager’s role. That isn’t necessarily a reason for the board to reject this individual out-of-hand, but it is certainly cause for concern. The board has decided to hire a manager, presumably because it has concluded that the association needs professional management. That means the board should be looking for a company that specializes in community association management, or for individuals with experience managing community associations and (preferably) for people who have professional designations, indicating specific training in the field. “The problem with hiring non-professionals,” says Daniel Polvere, a partner in the Massachusetts law firm MPD Law, LLC, “is the likelihood that they will encounter issues they haven’t addressed before and aren’t wellequipped to handle, even though they may be quite intelligent and have good basic management skills.”

Professional managers and management companies have “systems, protocols and structures in place” that they have used successfully in other communities, and can reasonably expect will work equally well in yours, Polvere notes. A non-professional won’t have the same toolbox on which to draw. The board should also be aware that

there. Ill will is probably unavoidable. It would not be surprising if this exmanager and owners who support them are hypercritical of the manager who replaces them—and of the managers after that one. That is not a pretty scenario. Nor is it inevitable. The problems posed by hiring an owner are real and

The board should hire the manager it thinks will provide the services the association needs, and the quality of service owners expect.
most lenders won’t approve a loan for a community association that is not professionally managed, Polvere cautions— another potential disadvantage you should consider. These concerns are reduced significantly and may be eliminated entirely if the owner that the board is considering is, in fact, a professional manager who has successfully managed other community associations. But there are other potential problems. For example, what happens if owners aren’t happy with the owner/manager’s performance and complain about their work? Can board members review this employee’s performance objectively? What if the manager seeks a raise? Will owners be more likely to support it for a neighbor, or more likely to resent it for that reason? And what happens if the board decides to fire them? Dismissing a management company can be difficult and unpleasant enough when dealing with a third party. It can be awkward if the manager the board fires is also an owner who lives in the community and will continue living significant, but they aren’t insurmountable. And there are some potential benefits, among them the knowledge that the owner/manager will have a personal, as well as a professional, interest in doing a very good job. The board should hire the manager or management company it thinks will provide the services the association needs, and the quality of service owners expect. This probably won’t be the manager charging the lowest fee, but it may well be the resident owner the board is considering. If, after considering all the risks, the board decides this is the right choice, Polvere suggests, it should negotiate a contract with them, as it would with any non-resident manager or management company. Both the board and the owner should have their respective (different) attorneys review the terms. The board should also make sure its selection and decision-making process are transparent to owners. As long as the board explains its choice to owners and owners are comfortable with it, Polvere says, “this arrangement can work.” CM

CONDO MEDIA • JANUARY 2012

Condo Media - January 2012

Table of Contents for the Digital Edition of Condo Media - January 2012