Among many other obligations, an Association, acting through its Board of Directors has the absolute duty to manage, operate, maintain and repair all common areas and to keep them in a safe, attractive and desirable condition for the use and enjoyment of its owners. In fulfilling this obligation the Board of Directors also has the duty to prepare a budget and establish assessments for the Association adequate to meet the financial requirements necessary to maintain the common areas.

Our management firm was recently awarded the management contract for a large 25-year old condominium community that appeared to suffer from many years of deferred maintenance. The siding was literally falling off the buildings, as were bricks and handrails in several areas. The landscaping (if you could call it that) had not been touched in months, irrigation system not functioning, the access gate broken, carports damaged throughout, one pool was empty while the other was green, and I truly believe my car is terminally out of alignment from driving through the potholes in the parking lot. This community could easily spend $500,000 just to address the obvious deficiencies. And, of course, their reserves are $0.

During the proposal and introductory period we learned that an out-of-state investor owned a majority of the units in the community, and the same management firm that managed his individual units was also providing the management services for the condominium association. This investor's management firm was the third management firm that he had used in the past year, had no experience in association management, and clearly wanted nothing to do with managing a condominium association. We were also informed that this investor had purchased the units from a bank that had foreclosed on the prior investor, and that the prior ownership of this block of rental units had included a series of out of state investors. The reasons were becoming abundantly clear why the community had deteriorated to its current condition, but we were assured that the new Board of Directors was committed to doing whatever was necessary to address the many needs of the Association.

I know what you're thinking…tremendous opportunity for the management firm and the new Board of Directors to make a real impact on this community and to dramatically improve the property values of the unit owners. That's exactly what we believed as well. Unfortunately the easiest and very first step in beginning to clean up this community, the landscaping, still hasn't been addressed because the Board is trying to get the contractor to reduce his quote for an initial cleanup of the entire property from $900 to $750, a whopping savings of $150. Also, the Board now indicates that they only want to replace the very worst of the decayed siding even though we've pointed out that this “band aid” approach will ultimately cost the owners substantially more in the long run. And that broken access gate and damaged carports really aren't that bad, maybe we can get to those in a couple of years. According to the Board we just need to keep any special assessment to minimum, and be careful about proposing any increase in the monthly dues even though they haven't been adjusted in years. Is it any wonder why this property is in its present condition, and what exactly is the likelihood that we'll be able to convince this Board to properly address their many needs?

A Board of Directors has a fiduciary duty to always act in the best interests of its members. Unfortunately many Board members make decisions based on their personal situations, and sometimes forget that service on the Board carries with it the obligation to represent the interests of all the owners in the community. Failure to meet this duty will often result in decreased property values, dissention among the owners, and quite possibly lawsuits against the Association and its Board members. Defense of these types of claims against the Board of Directors can be both costly and time consuming, and typically compounds the already existing animosity between the owners and the Board of Directors.

We still have hopes that we'll be able to better educate the Board members of the community mentioned above. Unfortunately, while our efforts could be directed at returning this community to a well-maintained and desirable place to own and live, we'll first have to devote a substantial amount of time to changing this Board's philosophy. Hopefully we can do that before they have the opportunity to test out that new Directors & Officers Liability policy.