2005 January

The Dysfunctional Community Association – A Manager’s Perspective

By Walt Williamsen, PCAM

From a Manager’s Perspective
Over the past several years I have had the unique opportunity to work with community associations as an advisor to boards and unit owners – in contrast to earlier years as an association manager.  In both roles, I have seen both well run and otherwise dysfunctional homeowner associations. 

Two characteristics of typical community associations can lead to entropy.  This is a term that scientists use to define a tendency for things to disintegrate. These characteristics are (1) volunteer governance that changes every few years; and (2) differences in abilities and motivations of the leadership.

 The resulting breaks in continuity and the comings and goings of people with varying abilities and skills can cause an otherwise well run association to go the other way within a relatively short period of time. 

When an association begins to slip into a state of dysfunction, it is often difficult to turn around because the consequences of ineffective management and administration in the past can have long term unfavorable results in the future that may be difficult or costly to correct.

From a manager’s viewpoint, there are telltale signs that a community association and property is not being operated in the best interests of the membership or that may be heading for major problems in the future.  Some of the more obvious tip-offs are listed below:

• Lack of competent board members willing to serve for 2 or 3 year terms.
• Weak and ineffective board leadership.
• Suspicions about an association’s financial dealings.
• Short view governance – preoccupations with urgencies.
• Passive and non-responsive management.
• Conflicting agendas on the part of board members.
• Frequent turnover of managers and management firms.
• Hostile cliques at membership meetings – private agendas.
• Insufficient capital reserves and lack of long term capital budget planning.
• Investors buying up blocks of units at distress prices.
• Unusually high legal expenses.
• Head-in-the-sand approach to environmental and health risk exposures.
• Ineffective financial controls and collection practices.
• Questionable bidding and contracting practices.
• Nepotism.

While this is not an exhaustive list of danger signs, if more than a few of them apply to a community association, it may be wise to investigate further.

Here’s how a poorly run or dysfunctional association can affect owners and residents:

• Maintenance, repairs, and replacements may be deferred or ignored altogether.
• Common fees may be raised more than necessary.
• Neighbor to neighbor relationships may be strained.
• Unit values may decline or not otherwise increase as they should.
• Lawsuits, fines, and insufficient capital reserves may lead to unexpected special assessments.
• Board activities may be conducted in secret, keeping the membership out of the loop.

CAI-CT has many useful resources that can provide information and guidelines for reviewing the basics and how-to’s for establishing and maintaining an effective community association.

Suggestions to resuscitate or maintain a well run community association will be discussed in a future issue of Common Interest.

Walt Williamsen has vast experience as a property manager.  He has been active with CAI-CT for many years, serving as President from 2001-2003.   He is currently a member of the CAI-CT Board of Directors and serves on the Publication Committee.  Walt is the owner of Condominium Consulting Services, LLC.