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January 9, 2008
The Perils of the Uneducated Manager
Sorry, I have been away the last week in Hawaii. I needed to get out of the raging California weather (relatives in the midwest, ignore this!).
A reader asked me if I would write about the perils of the uneducated homeowner as manager. This person noted that the association needs a competent manager who can help the Board!
Not necessarily as easily said as done, at least for the small associations. I do not know how large an association this person was writing about, but imagine that it probably is a smaller association. The thing that is harder for the smaller associations is twofold (1) harder to bear the expense and (2) harder to find willing managers to serve the smaller associations. But nothing is impossible, so keep looking until you find the right people. If you cannot afford full service management, look for companies that offer "menu" services, or people that are willing to "train on the job". Just beware that someone who does not know what they are doing can create legal liability and put large sums of money at risk so make sure to ask the right questions. I believe that CAI (Community Associations Institute) - the National organization in Alexandria, Virginia, offers a publication that assists HOAs in asking the right questions of a management applicant. I am in the process of putting together a publication as well. Watch my publications page at http://www.californiacondoguru.com
Any HOA can run into considerable problems if operating with an uneducated board or manager. By uneducated, I mean in the ways of running an HOA, not seeking higher education such as Phd or Masters material. Although it's not rocket science, it involves running a non-profit business that is taking people's money and investing it in their future. A home in California is the number one investment for many people. One can only hope (or take a more assertive step and make sure) it is being invested wisely. An HOA is also like a city, with elected officials making decisions for spending the HOA members' money to get important services. So some expertise in these areas is helpful, of course. Anyone who has served (successfully) in a leadership position in a volunteer organization will also have something to bring to the table. If you find volunteers, or paid managers, with all of the above qualities and experience, give yoursel a pat on the back. If you don't, seek out the right kind of person to run your "ranch".
I could say the same for managers and boards. Training in the area of HOA management and operations is critical. Homeowner associations are a different "animal" than apartments or other forms of property managed real estate. There are a host of legal requirements and a lot of "fiduciary" responsibility involved in doing things properly. And having some "people skills" (such as mastering active listening) all help to form good leadership.
Those wishing to manage HOAs in California can take classes through CACM (go to cacm.org) and CAI (go to caionline.org), and through providers like myself (a handful maybe, in the State). There are no state sponsored classes at this time that I know of, although there probably should be. In order to call themselves a "Certified Common Interest Development Manager" in California, there are educational requirements and some of the management designations are "grandfathered" in the law.
To be an educated board, there are more options. In addition to the above, there is ECHO - EXECUTIVE COUNCIL OF HOMEOWNERS (go to echo-ca.org or call information in San Jose if you want to speak with someone about offerings). there are attorney firms that put on classes and some management companies have board orientation programs.
Above all, whomever is chosen to lead or manage the association must stay abreast of the changing legal requirements for disclosures, owner rights, board obligations and everything else in the Davis Stirling Act. One does not need to know the law inside and out (that is for the attorneys who serve HOAs) but it is important to understand that laws exist in many areas and seek out help in setting up association rules, policies, procedures, accounting and finances from those who understand what is required.
Don't put an ad in the local newspaper if you are looking for a manager. Go to the organizations that can help you find trained people. And if you are using local resources, send them to the industry classes that are offered and get them the education they need. By 2009, there may be legal requirements for board training. Get the jump on it. Check with the above and also watch my website at http://www.californiacondoguru.com) and get on my newsletter and class email lists to keep up with offerings.
Posted by Beth Grimm at January 9, 2008 1:56 PM