Group living – whether in a condo or co-op building or home community – often involves delegating responsibility to a board. Under ideal conditions, members take their leadership seriously and oversee the physical and financial safety of the structure and people living in it within – during routine and emergency time – and the well-being of their shared common areas.
While no single template works, there are certain issues board members should consider to be diligent and prepared in advance. Here are seven key tips:
Insure the Board
To protect board members from legal challenges, be sure to have directors’ and officers’ insurance, which the building or HOA should purchase, says Michael M. Silverman of Gloron Agency, an insurance brokerage in New York.
Get Lawyer-Drafted Bylaws
Most boards and HOAs have authority to react and spend funds within certain guidelines when time is a factor. Matt Zifrony, a real estate attorney with Tripp Scott in Fort Lauderdale, Fla., who’s also president of his HOA, agrees, noting that in his own community of 3,000 homes, he has authority as president to spend money to save lives and prevent health and safety disasters. But it’s important, he says, that rules are legal for the state, as statutes vary. Also important are meetings with the building’s attorney, accountant, and real estate appraiser, so adequate insurance is carried and appropriate reserves set aside.
Board members need to be familiar with the building or association’s operating expenses, insurance coverage for shared areas, and reserves, so the latter are adequate for routine repairs and maintenance and emergencies, which helps avoid levying special assessments. Some buildings like to keep 3 percent to 5 percent of the budget in a cash reserve, says Zifrony.
Have a Bank in Your Corner
Most buildings and HOAs deal with significant operating and reserve funds, but it’s smart to have a bank line of credit for an emergency, says Alan S. Chesler, founder of Alan James Insurance, a brokerage in Sunrise, Fla.
Consider a Property Manager
Many buildings and communities have enough of a financial net worth and also are large enough that they want someone more skilled than those on their board to manage the goings-on of the building. The solution: Hire a professional manager.Find certified managers from the National Board of Certification for Community Association Managers at www.nbccam.org. Board members also can glean information from the Community Associations Institute, an organization that provides resources to volunteer homeowners, at www.cairf.org.
Have a Natural Disaster Plan
Advance planning is best to avoid delaying getting help, since the problem may worsen and materials and work crews might not be available, says Chesler. “This is very different from when a roof may need repair, and members can shop around for bids,” he says. An evacuation plan also needs to be firmed up and disseminated to homeowners.
Keep Owners In the Know
Besides having an annual meeting to update owners about the state of their building or homes, shared finances, and upcoming needs, the board should have a well-thought out way to keep everyone informed throughout the year.
A property manager or board member may send out regular notices and post them in a central spot, and they may institute a phone tree for emergencies. “It’s easy these days to keep in touch via texting and Twitter, but email addresses and phone numbers should be gathered in advance,” says Zifrony.