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, it’s likely 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 to make decisions and take actions on behalf of the community. Some of these board members may have professional experience or previous association experience, while others may have little or no training in community association governance.
Property management companies are professional organizations with expertise in managing community associations – working to carry out the boards' decisions and running the community's day-to-day operations. 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.
Board Member Responsibilities
The board of directors' primary role is to serve as stewards of the condominium or community association. Board members act as the officers of the association, making business decisions on behalf of the entire membership. The board is responsible for setting policies while overseeing the proper maintenance of the physical structures and the community's common areas, such as the gym, swimming pool, clubhouse and other shared spaces, to ensure that all common areas function 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 serves in a different role; the president, vice president, treasurer, and secretary all have a unique set of responsibilities. 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.
Board members have fiduciary duties. These fiduciary duties include a duty of care, a duty of honesty, and a duty of loyalty to the association's members. In essence, board members are responsible for always acting in the community's best interests and in good faith.
“A healthy functioning board should be committed to understanding and maintaining its fiduciary duty,” said Danny Ellis, president at FirstService Residential. “Boards that are objective, honest, and trustworthy are more effective and are better positioned to achieve their goals."
Because board members have heavy loads, they often need assistance with ongoing community issues. That’s where advisory committees come in. The board's committees can assist in areas such as association governance, repairs and maintenance, social programming and landscaping.
Is your board working to its fullest potential? Read: 7 Key Functions of an Effective Community Association Board
Property Management Company Responsibilities
Property management companies are responsible for implementing and enforcing the board's policies and rules. The property management company serves as a partner to the board. They are the trusted advisors and subject matter experts who do the heavy lifting. The property management company is responsible for reviewing your association documents, rules, and policies and communicating them to residents while ensuring they are enforced. This is sometimes a source of confusion for homeowners, who believe that the management company sets the agenda for community rules and determines penalties for non-compliance. But, in fact, the association makes the rules and decides the penalties for violations. They then hire the management company to administer them.
A professional property management company fully attends to the business of managing the community, enforcing rules and restrictions to alleviate the load for a volunteer board that often doesn’t have the time or the experience required. Policy enforcement can challenge any community, and no one wants to be the bad guy. Your property management company is there to help residents understand and follow the rules, which is necessary 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, helping to make the community an enjoyable place to live.”
Property management companies execute the day-to-day operation. Good property management companies employ skilled experts who are well-versed in everything from maintaining the grounds to handling resident communication. They implement procedures to deal with maintenance issues and create plans for managing unforeseen circumstances that may arise. They have staff with expertise in community finances, governance, and rule and policy compliance who will maintain and repair the community's common areas, equipment, and systems and perform other related tasks. Their other day-to-day responsibilities include 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.
“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 Ellis. “Whether it’s hiring 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.”
A good property management company will improve the overall day-to-day operation of your community. It will provide the best service by proactively sharing recommendations, advice, and cost-saving solutions with 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 your community the best deals. It will have in-depth knowledge of the local market and insights necessary to help your association navigate the challenges specific to your area. The best property management company will have knowledgeable staff familiar with your neighborhood – they will know the best local vendors and be versed in local laws that affect your association.
The property management company and the board work together to protect the association's and the homeowners' assets. The right property management company will partner with your board to maximize property values and ensure harmonious living environments for residents working together to create a beautiful and thriving community.