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Letter to the editor

Condos: There are two management options

By Richard White, Special to the Times
Published December 29, 2007

Q: We recently had our condo's roofs cleaned by our management company's maintenance crew. They were the low bidder. Is this proper? Is there a conflict of interest here?

A: Management companies typically operate in one of two ways. In the "vertical management" approach, the management has no subsidiaries and helps the board obtain bids and quotes from outside vendors for products and services. In the other, called "horizontal management," the management has subsidiary companies that provide the services a condo association bids out. Horizontal management may charge lower fees, but makes it up in the subsidiary services: pool and landscape service, tree and street light high-lifters, plumbing, electrical, and so on.

There is nothing illegal about horizontal management, and there is no conflict of interest as long as the management fully discloses its connections with the subsidiaries. Horizontal management may make it easier for the board by reducing the research and the work involved in seeking and evaluating bids. There are cost savings, but there may be limited options. Vertical companies allow more choice and more controls by the directors, but also require more work.

Her useful perspective

Q. The manager of our homeowners association is a resident of the community. Can she serve as a voting member of a committee?

A: Yes, she can. In fact, it may be useful to have her there as the manager because she can speak to the issues from the viewpoint of management and bring helpful information to the committee. Committees don't make final decisions; they research, discuss and recommend to the board.

Too many volunteers?

Q: How much may a unit owner volunteer? One owner offered to paint our pool bathrooms and to replace outdoor fans. A second volunteered to paint the pool deck. Another owner is objecting because these volunteers are not licensed as painter or electrician.

A: I acknowledge the importance of giving back for unit owners and their need to participate in the life of the community. That said, there's more to this situation than just licensing. You face a liability issue if the volunteers are injured on the job, or if their work is substandard and others are injured. Suppose that amateur electrician, for example, hooks up a fan incorrectly and someone is electrocuted, or a fire starts. Talk to your insurance agent about what kind of coverage you need in these situations.

A second consideration is what you'll do if the work is substandard. It can be very hard to go back to a well-meaning, enthusiastic volunteer and say, "Look, this is just not done right."

A third consideration is that volunteer work gives your association a distorted view of what it really costs to run the place. A professional painter might charge you $500 to paint the bathrooms, including paint. If a volunteer charges you only $100 for the paint, your budget inaccurately reflects the cost of the work.

At an association I managed, we created a log to record volunteer jobs and the time worked. Then we calculated the actual cost and entered it into the expense statement, offset by the volunteer hours. It's a paper transfer, not a cash transfer, but your financial statements will more accurately reflect the value of the work. When the day comes that you have to hire a professional to do the work formerly done by a volunteer, you won't be shocked by the cost, and your budget will be ready for it.

Richard White is a licensed community associations manager. Write to him c/o Community Living, St. Petersburg Times, P.O. Box 1121, St. Petersburg, FL 33731. Sorry, he can't take phone calls or provide personal replies by mail, but you can e-mail him at CAMquestions@cfl.rr.com. Please include your name and city. Online: talkwithcam.com.

[Last modified December 28, 2007, 16:18:33]