The primary duty of a board of directors is to manage their association. While some duties are nondelegable, boards have the authority to delegate duties to a managing agent. Following are the forms of management commonly found in homeowner associations:
- Self-Management. Small associations frequently use self-management, i.e., the board directly manages the association without the assistance of professional management.
- Management Company. Small and medium-sized associations often employ a management company to handle day to day operations. This includes receiving assessments, paying bills, preparing monthly financial reports (Civ. Code § 5500), prepare and mailing the annual budget report and policy statement (Civ. Code § 5300 and § 5310), performing property inspections, soliciting bids for projects, handling correspondence, preparing board meeting packets, etc. See manager fees.
- Onsite Management. Large and high-end mid-sized associations will often employ a full-time onsite manager to handle operations. Sending monthly invoices bills and receiving assessments is either done in-house or is contracted with a management company. The onsite manager can be a direct employee of the association an employee of a management company. The arrangement provides the full service described above but with a higher level of service since management and staff are on site.
Managers. Individual managers can be classified into the following two categories:
Portfolio Managers. A portfolio manager is an individual who works for a management company and manages multiple associations. The manager works from the management company's office handling board and homeowner requests by telephone and email.
Onsite Managers. An onsite manager handles a single association account working from an office at the association. The manager can either be employed directly by the association or be on the payroll of a management company.
Management Companies. Management companies generally fall into four categories based on size. All will offer financial management services or full management.
Small. A small company has a handful of employees taking care of a small number of associations within a small region.
Medium. A medium company has a larger staff and a region that covers multiple counties.
Large. A large company may offer services throughout the entire state and include in-house maintenance services.
Mega. Mega-companies cover multiple states and may offer management services in adjacent countries. They might provide in-house insurance and banking services, as well as maintenance services.
Finding Good Management. When contracting for management services, you want to ask the following questions:
- Are their managers all certified (or working on certification) through CAI or CACM? You will be in better hands a management company a mangement company that places a premium on training their managers. (See Designations and Certifications.)
- Ask how long they've been in business, since nothing can match the wisdom that comes with years of experience.
- Ask about insurance — what do they have and at what limits?
- Take a look at the financial statements they generate for their associations. It's really important that you can read and understand them. Otherwise, they have no value to you.
- Ask if they maintain separate bank accounts for each association. Under no circumstances should the management company co-mingle client monies into a single account.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.