Board of Directors or Property Management Company: Who Does What?
If you own property in a high-rise, condo, townhome development, or single-family home community, there’s a good chance that your community is governed by an association. Community associations are led by a board of directors – a group of volunteer homeowners who are elected or appointed to make decisions and take actions on behalf of the community. Some board members may have professional experience or previous experience working with community associations, while others may have little or no training in community association governance.
Property management companies are professional organizations that specialize in managing community associations – carrying out the policies outlined in the association’s governing documents and decisions of the boards, and running the day-to-day operations of the community. And although boards and property management companies share the same goals – to do what is in the best interest of the members and the association – their responsibilities differ. Here’s how.
Property Management Company Responsibilities
Property management companies are responsible for implementing and enforcing the board's policies and rules. The property management company is a partner to the board. They are the trusted advisors and subject matter experts who relieve the board of the heavy lifting. Property management companies are responsible for reviewing your association documents, rules, and policies while communicating with residents to ensure they are effectively and equally enforced. Some homeowners believe that the management company sets the rules for the community and determines the penalties for noncompliance. But, in fact, the association sets the rules and decides the penalties for violations.
Enforcing policies can be challenging for any community, and no one wants to be the bad guy. Property management companies help residents understand and follow the rules, which is essential for their safety and well-being.
“We are here to help make things easier for board members,” said Maureen Connolly, vice president at FirstService Residential. “Rule enforcement can be time-consuming and difficult to handle, and it’s our job to assist in the most efficient way possible, allowing the board to focus on community oversight and setting policy, helping to make the community an enjoyable place to live.”
Property management companies execute the day-to-day operation. Good property management companies hire skilled professionals who are well-versed in everything from maintaining the grounds to communicating with residents. They implement procedures for dealing with maintenance issues and create plans to manage any unforeseen circumstances that may arise. Among their daily responsibilities are managing property improvements and administering capital improvement projects, managing the budget, planning community events and administering amenity programs, all while providing dedicated service and care to its residents. A solid property management company also employs professionals with expertise in finance, lifestyle management, technology, energy management, governance and compliance.
“FirstService understands its role as a management partner – to work together with the board and the association to ensure that they have access to the resources and tools needed to make informed decisions,” said Danny Ellis, president of FirstService. “Whether it’s sourcing a vendor or negotiating a contract, our depth of experience and access to experts allow us to support boards in making the best decisions for the community.”
Your community will operate more smoothly with the help of a good property management company. The company will provide the best service, providing recommendations, advice, and cost-saving solutions to the board. It will actively audit your vendors, negotiate your existing contracts to your association’s advantage and use its collective buying power to get the best deals for your community. Your association will benefit from the management company's knowledge of the local market and the insights necessary for navigating the challenges specific to your area. The right property management company will have knowledgeable staff familiar with your neighborhood – they will know the best local vendors and be knowledgeable about the local laws that affect your association.
Board Member Responsibilities
The board of directors' primary responsibility is to serve as stewards of the condominium or community association. The board of directors acts as the association's officers, making business decisions on behalf of the entire membership. Board members set policies and oversee the proper maintenance of the community's physical structures and common areas, such as the gym, swimming pool, clubhouse, and other shared spaces, to ensure that all common areas operate smoothly. The board is also responsible for making sound financial decisions, developing and approving the association's annual budget and establishing fiscal policy.
Each board member has a unique set of responsibilities; the president, vice president, treasurer, and secretary all have their own duties. Still, they work together to enforce the association’s governing documents – the rules and policies designed to protect the community’s property values, enhance the quality of life of its residents and make the community a desirable place to live.
Find out if your board is working to its fullest potential. Read: Is Your Board as Effective and Healthy as It Can Be?
Board members have fiduciary duties. The fiduciary duties include a duty of care, a duty of honesty, and a duty of loyalty to the association's members. In essence, members of the board are responsible for acting in good faith and in the community's best interests. “A healthy functioning board should be committed to understanding and maintaining its fiduciary duty,” said Ellis. “Boards that are objective, honest, and trustworthy are more effective and are better positioned to achieve their goals."
Board members often need assistance with ongoing community issues due to their heavy workloads. In these instances, the board can appoint advisory committees. Committees can assist in areas such as association governance, repairs and maintenance, social programming and landscaping.
In summary, the board of directors and property managers each have their own responsibilities, but they work together to protect the assets of the association and homeowners. The right property management company will work with your board to maximize property values and ensure a harmonious living environment for residents, working together to create a beautiful and thriving community.