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March 19, 2008 11:00 AM

Condo board considers hiring members to manage association

Posted by Elizabeth Rhodes

Q: My small condo complex is reluctant to hire professional management because of the cost, yet our complex is just big enough that being on the board is quite time consuming. There's not a lot of community involvement, which adds to the burden on board members. The board is now proposing that a couple of its members be paid for their services. This wouldn't violate our governing documents. What are the pros and cons of doing this?

A: It's understandable that board members would want relief from feeling overburdened, especially when their neighbors fail in their obligation to help keep a self-run condo functioning. (And make no mistake; there is no free lunch in condo ownership. Besides paying their dues, all members have an obligation to take part in the functioning of their association -- and that's true even when there's professional management.)

But is what your board considering the solution to the problem? Mercer Island attorney Kris Sundberg says no because the downside of hiring board members outweighs the benefit (it's probably cheaper than hiring a pro).

In Sundberg's view, a considerable amount of human energy is required to successfully manage a large real-estate investment, and that's what a condominum complex is. It's also a big-dollar business of sorts that requires business acumen to run successfully. Absent that, a property can deteriorate and its values decline.

"There's a fundamental level of work that needs to be done regardless of the size of the association," he says. "You still have to go out and find an insurance policy, get the bills paid, hire people to do services."
And that's nowhere near the sum of it.

There's a potential conflict of interest when you have board members voting on paying themselves, Sundberg notes. Once they're hired, they "have stopped being just board members. They've started acting as employees. So you've lost some of the independence and objectivity that board members are supposed to have," he says.

There are several additional issues from the association's point of view. How do you measure performance? What happens if the association doesn't like the paid board member's work? What's the mechanism for getting that person to improve or step down?

And it's also problematic from the paid member's perspective. Once they're being paid, have they opened a Pandora's box of expectations from the owners? How will they deal with neighbors' critiques of their decisions and work? How will they limit the expectations upon them?

Unpaid board members can always tell critics -- and they exist in almost every association -- that they're working for free and give them the "if you don't like it, you do it," option. But once a board member is paid, that response no longer flies.

Bottom line: Even though your association is small, Sundberg says you should revisit the idea of hiring professional management. Lots of small associations go that route.

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Posted by ceepdublu

11:38 AM, Mar 19, 2008

I completely concur with this -- I was president of a board in a small complex (45 units), and couldn't imagine also doing the management work. The work the management company does is well worth the $1000/month or so it costs.

Posted by Edmonds

9:55 AM, Mar 22, 2008

I agree also, however, our complex of 27 units (plus a guest room) had a very negative experience with a management company during a one year contract. It would be nice to have access to a list of companies who service smaller associations and the ability to check out their past and present performance to insure the money is well spent.

Posted by GLRules

9:43 AM, Apr 02, 2008

The "property manager" of my condo complex is basically a shill for the property owners, and has never done one thing to improve, address, or correct any wrongs called out by the condo owners, including mold in areas of the units that the mgmt company concurs they are responsible for. they "noted" the concern, and never got back to anybody on fixing the situation. All talk, no action. We fixed it ourselves, found a solution, and they continued their silence. That is Reeder Management in Pierce County, btw. Fact.
But we do get to pay over $300 a month to have somebody blow leaves off the driveways, have the gutters cleaned now and then, maybe get a stairway replaced...

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