3 Most Common Condo Board of Director Errors
“Most board members at community associations are well-intended homeowners who want to do a good job. But few have expertise In property management, much less the legal and financial nuances of their decisions. Mistakes frequently occur”.
This is the lead paragraph in an article written by Pamela Dittmer McKuen for the Chicago Tribune. I was quoted in that article which appeared November 9, 2014 in the Real Estate section. I came across the article recently and I thought I would put together my list of errors based on all the condo board volunteers I’ve worked with over the last 30 years. There have been some great volunteers that have made a real positive impact on their associations.
- A board president of a 496 unit condominium in Old Town spearheaded a massive upgrade of the association common areas which included new sliding glass balcony doors, replacement of the air conditioning and heating system with more energy efficient systems, lobby and hallway decorating, expanded pool deck ,new parking lot lights and a garage concrete restoration , and more.
- A board president at a 200 unit building on Lake Shore Drive had in depth knowledge of the utility gas industry. He piloted a program that allowed his association to bypass Peoples Gas (the only game in town at the time) and avoid paying the utility tax. My management company learned how to do this from this board president and we were the first management company in Chicago to dramatically reduce gas cost by circumventing the only utility provider Peoples Gas. The concept of using utility brokers for gas and electric is commonplace today but it began with an idea from a Lake Shore Drive Board President.
- Two board presidents at separate 400 plus unit associations in Old Town were creative and passionate enough 20 years ago to think that waste recycling was important. They wanted their associations to set an example of contributing to create a safer environment. They willing accepted the challenge to search out creative solutions which included applying for grants from the state of Illinois. Both associations earned grants that allowed their associations to install technology that was at the fore front of high rise recycling.
These are only three of hundreds of examples of the fine work done by hardworking dedicated board members but even these boards almost universally make these three mistakes.
Boards Fail to Communicate Effectively -The famous line spoken by the prison warden played by Strother Martin to Luke played by Paul Newman in the movie Cool Hand Luke was “What we’ve got here is failure to communicate”. Communicate everything as often as possible in the most formats that are available. Communication can replace gossip and rumors when the communication is timely , accurate and clear. As a board member your fiduciary responsibilities are more than showing up at a board meeting once a month or once a quarter. Other unit owners have put their faith in you to act in their best interests and that includes telling them what is going on in the association. Communication is more than posting minutes and expecting all the unit owners to read the minutes. A good board will test out the methods of communicating to understand what works the most with associations owners so the most residents are informed.
Boards Do Not Delegate Enough To Committees – “Delegation is the assignment of responsibility or authority to another person (normally from a manager to a subordinate) to carry out specific activities. It is one of the core concepts of management leadership. However, the person who delegated the work remains accountable for the outcome of the delegated work” as defined in wikepedia.
According to the Holden Leadership Center “Delegation is the key to a successful organization. Sharing responsibilities keeps members interested and enthusiastic about the group. You may be reluctant to delegate because you want to make sure the job is done right (your way). They might take longer to accomplish the task than you doing it yourself. It will also help your health while improving the quality of the end project. But you can make members feel unimportant and become apathetic if you don’t share the responsibility of making the organization a success”.
This quotation couldn’t be more applicable to condominium associations. The committee structure can slow projects down but the upside is more owners are involved therefore improved communication, less we they situations between the board and unit owners and finally involved committee members are the best trained to become board members
The best board members are those that regard their positions as temporary stewardsghip.
Boards Are Uncomfortable Running Condo Association Meetings As Business Meetings – Some boards are not even aware that their board meetings are not to be town hall meetings. I think many board members think that owners have a right to be heard at any time just because they are unit owners. The unit owner’s power comes from their right to elect board members.
A few things to remember:
- Each unit owner can choose to run for the boards most don’t want the responsibility.
- Each board member’s time is as valuable as any other unit owners time
- Board meetings cease being productive after 2 hours
Unit owners attend board meetings as observers of a business meeting.
An agenda clearly setting out the meeting plan is a critical in preparing everyone for the “2 hour”board meeting.
Finally don’t address unplanned items off the agenda unless they are emergencies.