Management by definition is a process; a series of ongoing systems and controls put in place with a specific outcome in mind. The management needs and requirements of HOAs, co-ops and condominiums have helped define the overall property management industry.

Most condominium, co-op, and HOA properties have a management company handling their day-to-day operations; regardless of size, most buildings have many similar overall management needs and requirements. Systems like operations, maintenance, finance, accounting, billing, collections, insurance, landscaping, contract negotiations, vendor selection and compliance with federal, state, and local laws, remains consistent regardless of a property’s size. With all the moving parts requiring 24/7 awareness, knowledge and experience why would any HOA, condo, or co-op even consider self-management? 

Building a Self-Management Team

The reasons to choose self-management may vary, but property size and budget will likely be key factors affecting any decision to transition into self-management.

Mary Ann Rothman, executive director of the Council of New York Cooperatives & Condominiums (CNYC) believes many small buildings simply cannot afford a professional property management firm. 

Herb Rose, president of Herb Rose Consulting in New York City agrees that self-management can be more budget friendly, but only after a lot of sweat equity. “Successful self-management can result in substantial economy after a great deal of effort, he says.” 

“The job of self-management will fall to the few individuals who must be eager to work together and put in the time,” says Rothman. Identifying and selecting those committed individuals is an important first step towards self-managing. “Everyone has to do their part,” she says. “There has to be commitment and a clear understanding of duties.” Identifying and delegating responsibilities for an all-volunteer self-managing board of directors may seem like a daunting task as a whole. Breaking down the jobs into categories and areas of expertise can help. 

Dean M. Roberts, Esq., a member of the law firm of Norris McLaughlin & Marcus. P.A.,  in New York City, recommends surveying unit owners to identify those with the time, talents, and the mindset to help with the transition to self-management. Most board members have had careers in the private sector, and possess a level of knowledge and skills that provides a solid foundation to build on.  

The right skill set coupled with the time and the desire to make a difference is necessary for every member of the board in order to have a viable self-management team. Rose stresses the need for commitment on everyone’s part to share the workload, and successfully get everything accomplished.

 “The hardest thing about managing your own building is that your neighbors view you as an employee, says Rothman. Self-management isn’t simple, and it is a 24/7 job. However, no one else will ever give your building the level of care and concern a self-management team will.”

Roberts believes one advantage to self-management can be loyalty and friendship, “After all, a co-op is supposed to cooperative,” he says. 

Preparing for Self-Management

Once a decision has been made to transition to self-management, Rose recommends seeking accurate advice in every situation. “Make sure you and your board is ready, and all your systems have been reviewed,” say Rothman. She suggested a working relationship with an attorney who is knowledgeable in condo law; allow enough time for him or her to be fully familiarized with your situation before the transition. “Most contracts can be cancelled with 60 days’ notice, but be sure your team is ready before you alert anyone,” says Rothman. 

Roberts suggests moving slowly using both good manners and legal counsel. “It is not good business to simply say ‘You’re gone in 60 days,’” he says. Roberts cautions that some contracts are self-renewing, and there may be legally binding ramifications. He cites an occasion where a decision to change management firms was made without legal counsel. He was called when the old contract self-renewed after the new contract had been signed. At that point and time a costly buy-out was the only solution. “All agreements have provisions,” he states, “so know what you need.”

A board transitioning into self-management should also review the current emergency plan, and be sure it is revised as needed. Emergencies and natural disasters can require intensive action in order to save lives and protect property. 

Moving into Position

When the board of directors has reached a decision to achieve self-management, Rose identifies additional key players necessary for a smooth transition. “Besides a dedicated, honest, intelligent board that are energetic and willing to learn, an accurate reliable bookkeeping staff or system is necessary.” Rose also recommends a competent CPA with a practical understanding of co-ops and condominiums take in and pay out systems, and an attorney with an understanding of co-op and condo law. 

A board of directors will want to be sure all important documents and records are readily available for the self-management team, before formally and legally assuming control. ‘This is part of the process, say Rothman. Be sure all physical building systems have been reviewed. Be sure you have the rent rolls and two bank accounts, one for operations and one for reserves.” 

During the reviewing process, a board should also proactively review all vendors and contractors currently providing services to the property. 

Todd M. Ross, the managing director of One Point Brokerage, LLC, an insurance firm, finds many boards have a natural tendency to focus on price as the sole determining factor when deciding on vendors. He points out that it is important to examine all aspects of a vendor relationship. “Look for the depth of experience the current service providers may have brought to the co-op, condo or HOA. If you are getting quality services at a fair price, don’t make saving money the highest priority,” he says.

“There is no reason why a positive vendor relationship shouldn’t survive the transition into self-management,” says Rothman. “This is a job for the transition team; they have the freedom to keep or change the current vendors. If the board is not pleased with a vendor, go out for a new bid, but if they are pleased, ask to continue,” she says. Rothman further recommends paying the vendors on time to help cement the new relationship. Roberts agrees with Rothman on the probability of maintaining existing vendors, “Vendors are not usually loyal to management, and do not want to give up an account,” he says.

Gaining the Necessary Skills

 “Lack of regular professional advice, counsel and expertise in all the management disciplines is a disadvantage for self-managed boards,” says Ross. “A transition to self-management means that a board loses the ability to ask questions from property managers that have experience with many other similarly-managed properties, hence the ability for the board to focus on qualitative factors is diminished greatly,” he says. Ross recommends board members exercise care if and when “a friend of a friend” offers services or advice. Be sure the individual has relevant experience, and/or is the proper person to provide the service your community requires.

Fortunately there are ways to overcome the lack of expertise, and to obtain the pertinent knowledge required to self-manage a community. “The Council of New York Cooperatives & Condominiums (CNYC) offers classes for anyone seeking to learn self-management, and/or those who have already made the transition,” says Rothman.

Self Management 101 is divided into three (3) segments covering basic responsibilities, physical plant, and finances. The two (2) hour classes are schedule with a month between segments so participants can apply the information, and make note of any questions or concerns before the next class. CNYC also holds a conference with workshops annually. The all-day event is scheduled for Sunday, November 23, 2016. (Visit www.cnyc.com for specific information.) The Cooperator also holds an annual expo for co-ops and condos with vendors, workshops, industry experts and a full day of education sessions and networking. The 2017 event is scheduled for Wednesday, April 26.

With a committed team of board members working together for the common good, a self- managed community can safeguard property values, and offer the residents a pleasant and secure environment to call home. Rose suggests it will take an unusual amount of team dedication, but experts agree it is worth the effort for peace of mind, community pride, and protected property values. Any property considering the transition should take advantage of the classes at CNYC, and take the time to become completely familiar with all aspects and systems of their property.

Successful self-management is possible with a dedicated team willing to put in the time, effort, and knowledge required on a day to day basis.                                          

Anne Childers is a freelance writer and a frequent contributor to The Cooperator.