Q: My Board is currently working on its budget for next year. I am not happy with how much we are paying some of our vendors, including our property manager. In an effort to save money, is it possible to do away with an actual property manager and just self-manager? It would be a huge savings for us.
– R.L., Vero Beach
A: Associations offer residents great benefits, but with those benefits come added expense to live in a community. One of the biggest expenses, as you point out is that the association needs be managed by someone. The question then becomes should a community pay to be managed by a professional management company or should they be self-managed? Well, as every community is different, with different issues and needs, it depends.
Property management companies, and there are plenty of them out there, work under the direction of the board of directors of the association. Property management companies are paid a fee based upon services they contract to perform for the association. The scope of those contracts can vary in regard to the types of services the company will provide. Such services can include recommending, hiring and reviewing contracts for outside vendors, monitoring maintenance work and landscaping, as well as working as a liaison with the residents to take care of issues that might normally fall on the Board to deal with. They also function to collect association fees and prepare monthly and annual financial statements, as well as assist the Board in preparing annual budgets. The larger management companies will often have relationships with outside vendors, allowing them to negotiate better pricing than an association might be able to get on their own.
Regardless of the benefits that comes with having a professional property management company manage your community, due to the expense, some associations still choose to self-manage. As alluded to above, as with anything, there are pros and cons related to self-managing. The biggest benefit is obviously going to be financial savings related to the cost of management fees. Another benefit is that a self-managed association may be able to streamline its decision-making, allowing it to operate more efficiently.
The counter to that is that by not having a management company, much more pressure is going to be placed on a Board, which can already be an extremely time-consuming, stressful job. To make matters worse, most Board members generally lack the experience and industry contacts to do a proper job and follow by Florida law, which can be a daunting task. Not to mention the issues related to Board turnover that can occur every year when there is an election. This is a huge issue, even under the best of circumstances, as ongoing projects and daily decision-making can change year-to-year. A huge risk is also, that by taking on this role, there is more risk to the Board members for the decisions that they make should they do things that fall outside of Florida law. This can open Board members up to potential legal exposure.
Something else to keep in mind is that whether you have a full-time property management company or are self-managed, all associations need to have an attorney experienced in Florida condominium and homeowner’s association law. You should discuss your thoughts with your current association attorney to see what they recommend in regard to your particular association and its needs.
Harris B. Katz, Esq., is Managing Partner, Boca Raton of the Law Firm Goede, Adamczyk, DeBoest & Cross, PLLC. To ask questions about your issues for future columns, send your inquiry to: email@example.com. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.