The trend of condominium communities
transitioning from self-management to third-party
professional management has increased over the last two
decades and even more so recently. By definition, a
self-managed community is one that does not hire a
third-party Managing Agent on behalf of the Association but
rather handles the day-to-day operations internally with
added operational involvement from a volunteer Board of
Directors. Contributing to this trend is the increasing
amount of time required by volunteer boards, changing
resident demographics skewing younger and still working full
time, and the level of education and experience needed to
effectively operate the property. After the tragedy in
Surfside, more boards of self-managed communities are making
the change, handing over association responsibilities to a
professional management company.
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Above: The Four Seasons Hotel Miami’s seventh-floor terrace and pool can be seen in this aerial shot of Brickell. |
Management companies charge a negotiated fee to the association based on several factors, including the number of units, number of employees, activities to be managed, accounting services, the need for bank loans, existing code compliance and violations, etc. The addition of a third-party manager frees up the board members’ time allowing them to concentrate on strategic decisions and long-term planning. The services of a professional management company come at a cost which may be offset by savings realized through economies of scale and independent, competitive bidding on services, supplies, insurance, etc. In addition, because of their scale, management companies are able to monitor new legislation, insurance changes and compliance requirements of all local and state ordinances, all of which are aimed at building safety. Condo boards today are also turning to their third-party managers for guidance on adequate Directors & Officers liability insurance. Understanding that our society has become more litigious, some associations are looking to increase the limits on these policies. While the decision to transition to professional management should not be kicked down the road, board members, the condominium association and trusted professionals are encouraged to spend sufficient time reviewing the benefits and risks of self-managing their individual community operations versus third-party management.