By Michael E. Chapnick / Published March 2016
Running any type of business is no easy feat, and that is especially true for businesses that are operated by volunteer leadership. Nonetheless, community association officers and board members should engage in certain businesslike approaches to help ensure that they are running their association successfully.
A vital yet often overlooked fact that association leaders must keep in mind is that their association is a corporation with officers and directors who are elected by their membership to govern and run their corporation effectively. Albeit categorized under the nonprofit sector, associations are still responsible for preserving the association’s budgets and bank accounts. They are also accountable for maintaining and hiring vendors, management, and staff; increasing (or at least preserving) property values; and sustaining the community’s quality of life.
Since the operation of a community association is the operation of a business, cultivating a business plan to help elected officers and directors run their “business” properly might serve a more useful purpose than most people think.
Elected officers and board members have a fiduciary duty to prudently serve their community, while always acting in the best interests of their organization. This means that however board members decide to act on behalf of their association, they must make sure they are doing so in good faith and with due care.
Ultimately, this means that whoever is elected to undertake this role must never place their personal wants and desires over those of the community as a whole. They must comprehend and uphold the association’s articles of incorporation, bylaws, declaration, and rules and regulations, and must always make sure they are acting within the scope of their authority.
This leads to the importance of customer service. In any business, the customer service department plays a pivotal role in the reputation of the corporation. While board members should always enforce their association’s rules and should abide by them as well, they also need to take care of their “customers.”
As such, consistency is the key. There should never be any inclination of “favoritism” when enforcing these rules. Initiatives, such as publishing newsletters, sending e-mails, and posting up policies around the community’s common areas can serve as friendly reminders for those residents who are new to the community, or for owners who may have simply forgotten the rules. The golden rule that every successful business follows is: Treat others as you would like to be treated. When enforcing restrictions, make sure to stay polite. It is, after all, business.
Like other diligent business executives, board members must also invest time in learning about legal, financial, and other community association-related topics that might help them evolve into effective leaders. Those that volunteer to serve should always engage in continuous learning—whether that means collecting newsletters, attending seminars, or participating in LinkedIn discussions. Board members should never stop seeking information that can assist them in doing their jobs properly.
Every business needs money to survive as does every association. Community associations should always be financially responsible and act within their means. Carrying the proper insurance policies is an extremely important factor for the financial well-being of any association.
Heavily researching contractors prior to commencing repair projects can also help associations to act correctly. This does not mean cutting corners. Research can prevent associations from overpaying for shoddy construction work and avert costly payments for low-quality materials.
All businesses, including community associations, must develop a system of checks and balances within their organization in an effort to protect their corporation from becoming victims of fraud. Community associations should work with their legal counsel and accountants to set up precautionary measures that will help keep the association’s money secure. Maintaining adequate reserves, accurately understanding the association’s expenses (i.e., staffing, landscaper fees, etc.), and knowing which incidentals are covered by the association versus those covered by the owners can also help in ensuring an association stays economically viable.
Establish relationships with quality vendors and professionals. Dependable vendors allow board members and association managers to focus their attention on time-sensitive matters, rather than having to micromanage every vendor that drives through their gates. Having a good rapport with CPAs, attorneys, management companies, and other qualified professionals who serve the community association industry can save board members when they need to turn to an expert for advice. Knowledgeable and dependable resources are assets every association should try to cultivate.
All successful businesses rely on business plans and models to keep their corporations targeted on their respective goals. Treat your association as the business that it is, and develop and follow systems and procedures for operating that business. You will find that your association will thrive, and your “customers” will be happier.
Michael E. Chapnick
Partner of Siegfried, Riviera, Hyman, Lerner, De La Torre, Mars & Sobel, P.A.
Michael E. Chapnick is a partner with the Coral Gables, FL-based law firm of Siegfried, Rivera, Hyman, Lerner, De La Torre, Mars & Sobel, P.A. who has focused on community association law since 1996. He is based at the firm’s office in West Palm Beach, and the firm focuses on community association law and represents more than 800 associations throughout Florida. For more information, visit www.srhl-law.com, www.FloridaHOALawyerBlog.com, e-mail firstname.lastname@example.org, or call (305) 442-3334.