Professional Managers Are Not a Substitute for Action by the Board of Directors

A homeowners association’s retention of outside, professional management should not be viewed as a substitute for proper management by the association’s board of directors or an abdication of responsibility by the board of directors. An association’s governing documents and applicable state laws may authorize an HOA’s board to delegate much of the association’s management activities to a professional management company, but that authority does not relieve the association’s board of directors of their responsibility for the management of the association and oversight of those to whom responsibilities have been delegated. The activities and affairs of the association must be managed, and all powers of the association exercised, under the ultimate direction of the board of directors.

One area in which association board’s frequently rely heavily on their retained property managers is the maintenance of the association’s common areas. State laws and/or governing documents impose duties on a homeowners association, acting through its board of directors, to maintain the association’s common areas. In addition, court case decisions have imposed a duty on an association’s board of directors to maintain the association’s common areas in a reasonable manner to prevent injury to third persons. While day-to-day maintenance responsibilities may be delegated to retained managers, an association’s board should have policies and practices relative to making routine maintenance checks of the common areas and for responding in a timely manner to member reports or complaints about conditions that may require maintenance or repair. The association’s board of directors must periodically check to confirm that the management company is performing its maintenance responsibilities as the ultimate responsibility rests with the board.

Another area in which association’s rely heavily on property managers is in connection with the receipt and collection of funds due to the association and in the payment of the association’s bills. For obvious reasons, an association’s board of directors must have policies and practices in place for performing regular financial checks to confirm that the association’s funds are not being mismanaged and/or misappropriated.

A decision by an association’s board of directors to extend considerable managerial authority and discretion to non-directors should not be viewed as relieving the board of its responsibilities for the activities being undertaken by the manager. All grants of authority by an association’s board of directors should be carefully considered and appropriately documented in minutes of meetings of the board of directors. Before a professional manager is retained, the association’s board of directors should investigate the credentials of the proposed manager, confirm licensing and insurance requirements, and run a criminal background and credit check on the individuals who will have access to the association’s property and funds. A good property manager will understand the need for such investigation before retention and will willingly cooperate in providing the necessary information. A prospective property manager that is not forthcoming with the information that is necessary to evaluate his or her suitability for the job is sending a message that should not be overlooked. Remember, in the final analysis, the board of directors is responsible to the association’s members for the oversight of those to whom it elects to delegate management activities.