Board members are the key decision makers for community associations such as condos, townhomes and homeowner associations. They are the people that volunteer and take the time to oversee the day to day operations and long term planning of the community. They are the ones that are supposed to look out for the community with a selfless attitude. Serving on the board is a fairly large time commitment and it also requires specialized knowledge to handle things correctly and cost efficiently. If an association is self-managed (because of the lack of funds or to save money or because the board/owners feel it is unnecessary), the homeowners are entrusting the board to have that specialized knowledge and financial controls in place.
If the association has a management company, the board can rely on the management company to provide the specialized knowledge to handle things correctly and to address issues in a cost effective manner. Unfortunately, even when an association has a management company that provides those necessary services in a high quality fashion, things don’t necessarily go smoothly. Now you immediately think “How can that be true?” Well that is because ultimately the board makes the decisions and board members are humans and humans make mistakes. So given that introductory background, what are the biggest board member blunders:
- Putting their personal needs ahead of the needs of the entire community. In this scenario, the board member serves on the board to get their needs met first and foremost. I need to get my front entrance door repainted even though the other entrance door needs to be replaced because it is completely warped and rotted. I need to get the pet fee removed from the rules and regulations because I’m sick and tired of paying 3 pet fees every year for my 3 dogs. It’s all about ME. ME. ME. They can care less about the long-term viability of the association.
- Firing a management company for all the wrong reasons. In this scenario, people get on the board with a BIG AX to grind. They are fuming from some incident about 2 years ago that was the management company’s fault. Or they noticed that a few tasks completed recently were done “incorrectly”. Of course the fact that the previous 1,000 services were performed well is irrelevant. They are going to get on the board simply because they want to say “YOU’RE FIRED!’. This makes them feel really import. I mean seriously. Would you fire a baseball player that had a batting average of .999 just because he struck out the last 3 out of 5 times. The reality is that it is not very easy to find a really productive and effective condo management company. This is especially true if the board does not have much experience working with management companies, knowing the right questions to ask when vetting new companies and if they don’t have a really good understanding of what it takes to effectively run an association. They just know that it’s time to make a change. Kind of like the husband who has a midlife crises and decides it is time to get a divorce because that is going to change his life.
- Blaming management and not having accountability. In this scenario, the board member is really good at always finding fault with the management company. You didn’t follow up fast enough. You didn’t handle that project correctly. You didn’t read my mind correctly. You didn’t anticipate me forgetting to send in my assessment mailing with a reminder 10 days in advance of the due date. You are just at fault for EVERYTHING. And I have no responsibility for anything that goes wrong. I don’t read the financial statements. I come completely unprepared to the board meetings. I don’t care about any process that the management company employees to make things work smoothly. And I find nothing wrong with my attitude. Bottom line. I’m always RIGHT and you are always WRONG.
- Avoiding long term capital projects. In this scenario, the board is unwilling to plan any large scale improvements more than a few months out. They don’t have the guts. They don’t have the stomach to plan anything longer term. They are weak at the knees. They are chickens. They are afraid that a homeowner is going to be upset if they raise the assessments to pay for upcoming capital projects. Or the board member doesn’t have the extra money so they do everything to resist longer term planning. Besides, I’m selling over the next 6 months so I don’t want to fund anything that won’t directly benefit me.
- Not understanding their duties. In this scenario, the board member doesn’t take time to learn about best board member practices. They simply want to serve on the board to have a say. They can care less about the duties of the Treasurer. They show up at a board meeting and say they can’t read a financial statement. I mean. Seriously. How can someone sleep at night and know that they volunteered to serve as the Treasure and have no ability to read the simplistic condo association financials of a 20 unit condo building.
- Not reading or understanding the terms of the management agreement. This scenario goes something like this: It doesn’t matter what the management contract stipulates. Who has the time to read that mumbo jumbo. You never mentioned it. You never said that would be an extra fee. There is a XX!!! fee for project support? WHAT? That is RIDICULOUS. All the baloney comments from a board member who wants to blame someone else. These are usually comments from a board member that applies ZERO common sense or business logic before making accusations and false statements.
- Avoiding raising assessments. We haven’t raised assessments in 10 years. We have done a great job at keeping expenses LOW. We haven’t had the need to raise assessments for the last 8 years. I like to keep assessments low so we can sell our units more easily. We don’t need to save too much money in the reserve account because I am planning on selling next year. All the excuses that a really caring board member can come up with while looking out for the best interest of the association.
- Saving money at the expense of maintaining the association. Look at all the money we have saved. The carpeting might be 10 years old, smell like cat urine and have stains galore but we have skimped by on a low cost budget. I love living with a really tight budget belt. Who wants to live in a well maintained community? I certainly don’t deserve it and no other homeowner deserves anything more than I deserve. I plan on staying here until I die. Who needs curb appeal if you are not selling?
- Having completely unrealistic expectations of the management company and vendors. I expect all emails, phone calls and 11pm text messages responded to in less than 2 hours. That is why we are paying you the BIG $$$$. You charge a startup fee even though you are going to spend 20 hours during the on-boarding process? No other management company charges a startup fee. The other management companies work for free. You need to negotiate down with this vendor. Even though they are the lowest cost, that is still way too much money. We can’t afford to maintain the building. Remember, we haven’t raised the assessments in 10 years. Don’t these vendors understand that we don’t pay high assessments?
- Serving on the board when they have absolutely no business serving on the board. There is no State of IL requirements for people to serve on the board. You don’t need to be smart. You don’t need to have any business sense. You don’t have to have manners. You don’t have to work well with a team. You don’t even need any common sense. You just need to be a
human that owns a condo in the association. You can even be the biggest jerk of the community. And given that most people don’t want to serve on the board, the minimum human requirement is usually sufficient to get elected onto the board.
So what does this all mean. Well it means that if you live in a condo, townhome or homeowner association, you need to pay close attention to who you elect to serve on the board. Of course, this is assuming that your community has elections.