Duties, obligations and standard operating procedures for condo and homeowner association board members.
We, Sara and Don the authors, strongly believe that Escaping Condo Jail should be required reading for board members of condominium and homeowner associations. As lifelong real estate professionals, we’ve already seen a lot, but the more people we talk to, the more stories we hear that break our hearts. Yes, these are the exceptions. Otherwise, the 55-year old history of the idea of “condominium” ownership would have faded into the sunset instead of representing the 4 out of 5 real estate sales it does today.
Ignorance and apathy are not options.
If you’re reading this, we hope it is because you own property in a well-run condo or homeowner association. To us that is one that encourages… and maybe even mandates… participation of the owners in running the association’s business no matter what your professional background may be or whether you have fancy degrees.
You’ve either been asked to join the board and you’ve accepted. Or you’re thinking that you’d like to get more involved, and you want to be smart about your contribution and maybe even offer some solid new ideas. If you only read one book on the subject, we believe Escaping Condo Jail should be it.
A survival guide for condo and homeowner association board members.
Currently, there’s precious little legislation at either the state or federal level that reins in the operations and policies of property associations. What we, and both our futures, depend on is the initiative of what is largely volunteer-run organizations to do the right thing and commit to some basic policies. Two that we’ve defined as directly linked to the success of the association and its ability to sustain and even build value for its members are participation and transparency.
Think transparency for every activity of the board.
We’ve already spoken about participation. And we do hope that is why you are here, because you are or want to participate in the micro-government that is a condo or homeowner association.
Transparency starts with a commitment to communicate to all owners and keep them on top of the board’s issues and decisions.
Transparency means operating as if the association might have a surprise audit at any time so that proper documentation is kept and maintained and shared with any owner who wishes to see it at any reasonable time.
Transparency means that the actions of the board are unassailable, because the directors and officers have signed codes of ethics and conflict of interest on file and they hold themselves to that standard.
Achieving a bulletproof condo or
It boils down to this. How money is handled is the most important aspect of transparency. If you have agreed to take on the role of Treasurer for your association, so much depends on following what’s considered standard operating procedures today.
We have dedicated an appendix to this topic in Escaping Condo Jail. But as we’ve said elsewhere, we’re sharing key portions of our book in hopes of promoting a better life and more secure financial future for owners.
Whether you’re the Treasurer, or not, we invite you to spend time with the “Financial Procedures Checklist.” This is the partial list, but you’ll find the whole list in our Resources section along with other key documents for condo board members such as example documents for minutes of a condo board meeting. You’ll also find examples of a code of ethics and a conflict of interest policy and disclosure.
Don’t let your reaction be “But we don’t really need to do all this.” You do. And your owners and your own real estate valuation will thank you for it.
Financial Procedures Checklist (from Escaping Condo Jail p. 533)
The following is an excerpt of Appendix A in Escaping Condo Jail. See the Resources section for the full version.
1. Open new accounts.
2. Update bank signature cards.
3. Obtain a transition statement.
4. Destroy all old checks.
5. Keep new checks locked.
6. Report any theft to police.
Guarding and Vigilance
7. Keep board officers’ deeds and state-issued IDs on file.
8. Perform credit and background checks on employees.
9. Have monthly bank statements sent to two different people.
10. Require fidelity insurance and bond money handlers.
12. Require board members to review bank statements
within 10 days.
13. Never allow the management company to access
14. Never rely on computer-generated reports instead of
15. Require budgets to conform to GAAP.
16. Require use of established financial software.
17. Require two signatures minimum on each check,
with amounts over $2,500 requiring three signatures.
18. Never allow credit or debit cards.
19. Require invoices before paying bills.
20 through 35…See our Resources section.
10 Hallmarks of a Healthy Association (from Escaping Condo Jail p. 454)
1. Well-educated board members.
2. 100 percent transparent communication.
3. Open records.
4. Proactive member owners.
5. Experienced support team.
6. Strong reserve balances.
7. High owner-occupancy ratio.
8. No special assessments.
9. No lawsuits.
10. Well-maintained common elements.