No matter the size, association boards need expert advice
As you walk around viewing people with cell phone ear pieces attached to their heads, or text messaging furiously, or even speaking in text-speak, you may think we are evolving into a different species. But electronic devices alone are not going to suffice as "how to" guides.
If we as humans need to have role models, advisers and coaches just to help us learn to cope and make the right decisions, how about that new condo board? Do you think they know how to prepare a budget, collect delinquent assessments, decide who pays for the leaky toilet, all on their own?
Not all new members have the time or inclination to attend seminars or read available materials to bring themselves up to speed, while at the same time, we are seeing a shocking increase in a new species of board member, the "know-it-all." These creatures are not only dangerous to themselves but their fellow board members and the association as well.
This is why a board of directors of an association, whether new or veterans, must develop a mentality of asking questions and seeking experienced, expert advice in all things involving any significance. This is where some board members either run afoul of their egos, or are trying to save the association money (penny-wise and dollar foolish, as the saying goes). I frequently suggest that ones' own instincts and good sense will get a board through most routine matters, but those with sizable dollar or legal exposure require dialing up the mentor.
As each of us should have a "mentor" to help us, teach us and guide us, so too must every board of an association, regardless of size.
In fact, a board should have a team of mentors in specific areas. There is nothing worse for an association that has elected a board that has not consulted with the proper experts, and tries to answer angry owner's questions, by winging it.
First, in the day-to-day operations of the association, a board must have a management mentor or consultant. That is not to say that every association must hire a management company as some do not feel their diminutive size warrants such an expense, while others, though professionally managed, may not take advantage of the appropriate resources. For the self-managed association, the board must have a relationship with someone they can look to even on a sporadic consulting basis to guide the board through the choppy waters of decision-making. There are times even five "wise and just men" may not have all the answers and the most dangerous thing is to make them up as you go along.
For the larger association with a professional management company, the account manager with three years experience may be adequate for the day-to-day operations, but for the major issues, like weathering a special assessment, it may require the savvy and experience of a CEO in advising the board how to proceed. The failure of a board to get the appropriate input will invariably lead to an owner's challenge to the board's authority and sometimes an insurrection to overthrow the board. It is best to have the knowledge first before acting.
Second, the aforestated can open the door to bigger problems, which is when the lawyer-mentor relationship may have to kick in. Some associations have their attorney on retainer, some call as needed, and some do not believe they need an attorney. However, if you have ever seen the title stated as attorney and counselor at law, you can appreciate that not everything a lawyer does involves a jury trial. A seasoned board of active or retired professionals can still get themselves in a pickle over a serious problem, just because they have never seen anything like a homeowners association in their business dealings, and so many things that a board does can have a legal impact.
One of the key things your counsel can do, either at the initial stages of a new board or even periodically for the veterans, is a seminar on the topic of risks and liabilities for board members and officers.
Even if you need to call the lawyer infrequently, these sessions alone make the job more risk free.
Third, with regard to major financial decisions, the diligent board must be mentored by an experienced financial professional on keeping books and records, allocating reserves, keeping everyone on the money collecting end honest, and how and when to file the appropriate forms and with whom. Even boards that have accountant-directors should know there has to be an independent mentor who does not have a financial interest in the outcome of any decision other than to make sure the association is acting in the best interests of its members.
Lastly, the board needs to establish a mentoring relationship on the issues of maintenance and upkeep. This may be the head custodian or president of a maintenance company, a long-used contractor or even a consultant, but boards need guidance in developing priorities, setting guidelines for individual and common maintenance problems, or just the routine maintenance. No one is quite equipped to be totally objective about these matters, since all decisions involving money come right out of the deciders pocket as well as the others.
There is a natural inclination to want to do everything yourself (with the exception of those few who can never make a decision and always have to be told what to do), but each director must be firm in adopting an attitude that the experts the board hires should be listened to when setting guidelines for a contract, new relationships or just plain routine maintenance.
In addition to assembling the right team to guide the board, with the "corporation as a fictional person" approach to mentoring, it will ultimately help each individual board member become a better director and one non-intended consequence may be that it carries over into one's professional life, as well. Instead of wallowing in self-pity or making wrongheaded decisions all of the time, the mentee can now focus on the more important issues since they have the tools to handle almost anything that comes their way.
• Condo talk appears alternate Saturdays in New Homes. Jordan Shifrin is an attorney with Kovitz Shifrin Nesbit in Buffalo Grove. Send questions for the column to him at jshifrin@ksnlaw.com. This column is not a substitute for consultation with legal counsel. Past columns can be read at www.ksnlaw.net.