August 2008

On July 1, Virginia began requiring that professional community association managers be certified by the National Board of Certification for Community Association Managers, which is affiliated with the Community Associations Institute in Alexandria, Va. By Jan. 1, 2009, it will also require that management companies be licensed by the commonwealth of Virginia.

The law is intended to ensure that homeowners associations, condo associations, and co-ops receive a minimum level of service and professionalism when they hire a management company. The law requires no training or certification of board members in self-managed associations.

Virginia's action, however, begs the question many associations are facing—whether to be professionally managed in the first place. Often, when associations are self-managed, board members find that they spend so much time on association business that it seems to be take over their lives. Other associations that have hired management companies question whether the company provides enough value to justify the cost. Whatever your association's status, it may be time to evaluate the pros and cons of hiring a management company.

The pros of professional management are easy to list.

1) Quality of life. The most obvious benefit is that management companies can improve board members' quality of life. When a management company handles the stressful work of fielding calls and complaints from owners and following up on unpaid assessments, board members' lives become much less stressful. In addition, if you're in the unfortunate position of being unable to find owners willing to volunteer for association management, an outside company can relieve your burden.

2) Industry expertise. If you've contracted with a reputable company, you gain expertise that your board members probably don't have. For instance, if you need to file a lien for unpaid assessments against an owner, your management company is much more likely to know how to make that process error-free than individual board members—and if it doesn't, it can usually refer you to an attorney who does. You'll also gain access to contractors whose services and costs the management company has determined are reasonable and reliable, which can be a huge time and cost saver.

There are, however, cons to hiring a management company.

1) Lack of oversight. In some cases, board members feel all too comfortable letting professional managers handle every task involved in running their association. That can lead to problems, including bloated budgets created by managers who assume their clients want luxury services when less-expensive options would work just as well. It can also permit fraud to occur. Unchecked management companies have more opportunity to siphon off association funds than companies whose budgets and expenditures are diligently reviewed by active board members.

2) Added cost. Let's face it. Management companies don't come cheap. Costs vary throughout the country, but companies typically charge a monthly fee that depends on the range of services you ask it to provide. Whatever your cost, you have to decide based on the pros and cons particular to your association whether it's worth paying. Before you make that decision, however, ask for bids from several companies and try to negotiate price discounts. That's especially important if you've had a long-time manager—it's always smart to remind your current company that it must continue to earn your business.