Board members at every community association have myriad responsibilities, but board members at self-managed associations have more. They’ve got to figure out what needs to be done, do it and make sure it was done right.
“When there is no management company, there are greater inherent risks that the board is taking with their association,” said John Matranga, an independent property manager. “There is greater concern that things will fall between the cracks.”
Self-managed associations fall into two basic categories, volunteer and independently managed, he explained.
The volunteer category is where the board and residents perform the bulk of the work. These associations tend to be small, usually 30 units or fewer. They may have found professional management too expensive or been turned down by management companies because of their size.
The second self-management category is where the board hires an independent manager, like Matranga, who is not employed by a management company.
All self-managed association boards must be especially vigilant in four key areas of operation: governance, accounting, insurance and maintenance:
Governance. Board members should familiarize themselves with their governing documents and make note of requirements and deadlines, said association attorney Kerry Walsh, of Chicago.
If your declaration and bylaws conflict with the Illinois Condominium Property Act, the state law will override, she said.
Boards are required to collect assessments, which can be more difficult in self-managed associations, she said.
“Properties that are run by volunteers feel like a community of neighbors,” she said. “But you are neighbors who have a responsibility to each other to pay assessments. When people stop paying their assessments, the shortfall has to be made up by the rest of the owners.”
Accounting. One security measure provided by a management company is the segregation of financial duties. The same person rarely approves invoices, writes checks and signs them. In self-managed associations, a board member or independent manager sometimes handles all the money matters.
Self-managed boards have greater oversight responsibility than managed associations, said certified public accountant Brad Schneider, president of CondoCPA in Elmhurst.
“My rule of thumb is at least two people must be involved with every transaction,” he said. “If you have a manager, the manager can approve the invoice, and a board member signs the check. If there’s no manager, two board members sign. But don’t just sign. Sign with backup detail.”
Insurance. Your association’s governing documents and state law dictate broad insurance requirements, but buy only what you need. Matranga recommends hiring an appraiser to calculate your property’s worth. Also, work with an insurance broker who specializes in community associations.
“It might be tempting to tap a neighbor who sells auto insurance, but there are real experts out there who know how to review your declaration and bylaws before going out to bid,” he said. “You don’t want to overinsure yourself, but you want to be protected.”
Maintenance. Boards must maintain, repair and replace the common elements as needed. They also must comply with local codes and ordinances, said architect and consultant Delph Gustitus, of Environ Building Technology Services in Chicago.
As examples, Chicago high-rises must undergo periodic facade inspections. In some suburbs, new pavement or landscaping must be preapproved because of stormwater issues.
“Each municipality is a little different,” he said. “It’s up to the board to find out what the requirements are.”
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