Who does what? Differences between Property Managers and Directors
Are you confused about who does what?
For most members of the condo community, the Property Manager is the face of the condo corporation or home owner’s association. They are responsible for day-to-day running of things– they look after the bank accounts, handle the checks, field correspondence, and interact with owners more frequently than the Board does.
Because of this, I find that people can be confused about the difference between the roles of the Property Manager and the Board of Directors.
Why can’t the property manager look after everything?
I’ve heard board members ask “Why can’t I just let my Property Manager look after everything?” and “Isn’t it their job to do this? I don’t have time to look after all of this stuff”. Owners also have trouble knowing who is responsible for what; when should they contact the Board and when should they contact the Property Manager?
In this post, I’ll answer these questions, and hopefully, the difference between the roles of the Property Manager and the Board of Directors will be clear by the end.
Understanding the different roles
To understand the different roles, I like to think of a condo like a coffee shop. The property management company is like the staff that keeps the shop running: baristas, managers, cleaners, etc.
They are the people that interact with everyone on a day-to-day basis and do everything to make sure that the coffee shop does everything a coffee shop should. While they have some flexibility to solve problems as they arise, they are not responsible for major decisions — financial or otherwise.
What does the board do?
The Board of Directors acts like the corporate executives at the head office. It’s up to them to set the prices, operating procedures, and make the decisions that shape the direction of the company. The success of the enterprise is their responsibility; the staff carry out their decisions.
It’s not the barista’s job to ensure the coffee shop is selling coffee for the optimal price or that the products are the best value. Similarly, the Property Manager isn’t responsible for making the best financial decisions for the condo corporation; they do not have a fiduciary responsibility.
What are difference between the roles of the Property Manager and the Board of Directors?
Property Management
- Manages
- Under contract to work as agent of condo corporation
- Work within constraints defined by contact with the board
- Provide options (e.g., quotes)
- Implement decisions
- Is not responsible for saving condo money
Board of Directors
- Governs
- Is a fiduciary to the condo corporation
- Reviews options and renders decisions
- Oversees the implementation of decisions
- Seeks cost savings (asks Property Manager to help)
The condo board has the responsibility to make the choices that are in the best interest of the condo corporation. This is why the property management company can’t simply be left to look after everything.
As an entity, the condo Board of Directors is responsible for making all the critical decisions regarding the maintenance of the building/grounds, condo’s finances, and must uphold the Condo Act (provincial legislation), the declaration, bylaws, and rules. It is up to the board to make sure that all the relevant documents are accessible by the owners.
A good Property Manager is a tremendous asset for any condo corporation. They can simplify the job of the board, but they cannot assume the responsibility for that job.
Who does what? Learn the differences between Property Managers and Directors
I volunteered as member of the Board of Directors of my condo, but after hearing that I will have to sign cheques (along with the other two members) for payment of bills such as snow removal, cleaning etc. I decided to withdraw my application for the board of Directors,
Is this a normal function for someone in the Board of Directors?
Thanks,
Claudia
Hi Claudia,
Signing cheques is a normal part of a director’s job. One of the most important responsibilities of directors is to oversee the condo’s finances. As such, directors review monthly financial statements, review and approve expenditures, and sign cheques. There is no way for a condo to pay its bills unless the directors sign the cheques. Multiple signatures are required – usually 2 directors (this varies a bit depending on the condo).
What was worrying you about signing these cheques?
It s easy to confuse a homeowners association (HOA) with property managers. They are both involved in the management of housing communities. It could be helpful to view a brief description of both HOAs and property managers to see how the functions of each are different. In most cases, they work together, but sometimes they may come into conflict. This information should be useful to property owners, property management companies, and tenants who live in a community that is governed by an HOA.
Should a Director on the Condo Board (that has a contract with a Property Manager) approach or seek out a Unit owner personally who is behind in their maintenance fees? Should the same question a Unit owner personally regarding repairs to his/ her unit on behalf of another unit? I am having difficulty with a board director of which I preside who insists on taking on the role of our Property Manager.
Hi Steve,
Thanks for your question. Directors should not be property managers. I don’t know why a director would approach a unit owner about arrears. If you have engaged a property manager, their accounting department would be tracking unpaid fees and would be placing a lien if the debt exceeds the prescribed number of days. I also don’t think that directors should even know the names of the owners who are in arrears. Privacy is a very important issue today and is even more important in condos because it seems that directors know a lot of personal information about their neighbours. The Privacy Act makes it very clear that personal information should be on a need to know basis. If I am on a condo board again, I would definitely like to see arrears information restricted to the property manager.
As far as the same director questioning a unit owner about repairs, again, this is the job of the property manager.
It can be very hard to rein in directors who go beyond their role in governing the corporation to micromanaging the property manager.
Hello,
I am a new condo owner and I asked the Property Management to give me the contact info for the Board of Directors in my building, because I have certain concerns and questions. The Property Management refused, and said that under the Privacy Act they cannot give me the contact info for the Board. Said to send all the concerns to Property Management and they will forward it to the Board. No direct contact, said, bringing up the Privacy Act.
Is this normal?
Thank you
Lia,
Thanks for your question. It is quite common that directors do not provide specific contact information to owners. Some boards have a board email account that owners can use to send questions. Other boards prefer to have owners send questions to them via the property manager. If you want to meet your board make sure that you attend the next Annual General Meeting. The agenda should include time for a general business discussion.
Pat
what regulates the board of directors authority to make significant financial decisions that could result in condo fee increases of 10 – 20 % or more?
Hi Robert,
Thanks for your question. Condos are required to follow provincial or state legislation and others such as privacy and human rights. The board of directors are able to make most financial decisions without seeking approval from the owners. I say most because there are specific occasions when the board must have approval by the owners. As far as increasing condo fees, the board is able to do so without owners approval.
The board should provide the owners with explanations for increases (and decreases) in budget line items. If you are not satisfied, you could request a special meeting to discuss the budget or wait for the AGM to ask questions of the board. Some condos organize budget meetings a few months before the start of the fiscal year. This gives the owners an opportunity to discuss the budget.
This incorrectly states that the board can make financial decisions without seeking approval by the board when it should state without seeking approval from all owners. The board should carefully review, bids or options, discuss, vote, and record financial decisions in minutes.
Hi Carol,
Thanks for finding the error in my answer to a previous comment. I have corrected it.
You are correct – the board can make financial decisions without seeking approval from the owners. And should most definitely document decisions in the minutes.
Is it considered a conflict of interest when the property manager is also on the Board of Directors?
Hi Alex,
Thanks for the question.
Unless you are talking about a self-managed condo or HOA, it is most definitely a conflict of interest for the property manager to be a member of the board.
Pat
Is it considered a conflict of interest when the property manager is also the husband of the President of the Board of Directors?
Is the property management company responsible for reviewing and approving/denying exterior changes (standard changes that other residents have already made, I.e. storm door, deck) until board members are elected?
Justice,
Your question is a bit hard to answer without knowing further details. When you say – until board members are elected – are you referring to a condo before the turnover meeting has been held? If that is the case, then it could be possible that the property manager is approving exterior changes. This seems unlikely to be the situation if the property is new and has exterior changes that have already been made. In any case, the property manager should only be approving changes within the scope of the existing governing documents for the corporation. Things like exterior items are usually clearly identified in these documents. He can not be making up rules on the fly.
Does condo managers have the authority to impose rules outside of the by laws?
Thank you for answering all the previous questions I learned a lot.
Here is our situation, our board of director is asking us ( home owners ) to purchase an insurance to cover $50.000 to water damage to the building , sewer water …. The $ 50.000 is the deductible of the main policy .
So basically , we are buying and insurance to cover the deductible of the main policy. They passed this without consulting with us the owners or seeking their approval. Can they do that.
My question as an owner can I refuse to buy the insurance. What majors can the board of director take against me , in this case? .
How to fight it. Because they already obliged us two years ago to buy a fire damage deductible of $ 10.000. Taking into consideration that the condo fees we pay, include the insurance.
Thank you in advance for answering my questions.
Tina,
You are getting into a lot of specifics on insurance that I can’t answer. I would suggest you check with your provincial or state legislation.
Pat
Does a Property Manager owe a greater allegiance to the Board of Directors then to the unit owners? To be more specific, should a Property Manager council owners on how to oppose positions adopted by the Board? Should the Property Manager engage in sharing information regarding projects which are under consideration by the Board? Finally should there be any type of expectation of a Property Manager to ask owners to refrain from offensive behaviour or from making rude comments at an Information or Annual General Meeting? Many thanks for any guidance you can provide – we enjoy the site – very informative!
Leigh;
Thank you for you question about property managers. Property managers are usually engaged by the board of directors and work under the direction of the board of directors. The situation that you describe is not an appropriate role for the PM. They should never be sharing information under discussion with the board before it has been approved and ready to be shared. When information is shared, it must be shared with all the owners at the same time. It should be the responsibility for everyone – directors, owners and managers to prevent any rude behaviour from taking place at any time on the property or at an AGM.
Hey! Thanks for sharing this informative article. My last experience with my property manager was terrible. We paid him so much but they were so many things he didn’t take care of and we did most of the work ourselves.
What is the difference between an administrator and the property manager and the HOA. And does the HOA have to be voted on to be put into place
Hi Steve,
Thanks for your question. I’m not sure what the difference is between an administrator and the property manager. Is the administrator part of the property management company or do they work for the HOA? Generally, the HOA does not need to put forward a vote to the owners in order to hire a property management company. This could be different if the governing documents require otherwise.
can the property management company or the condo board be sued for neglect of the condo space
Hi Steve,
In general yes, it is possible, to sue but without knowing any of the context or geographic location or governing documents of the condo I caution against taking this step before pursuing all other possible steps to resolve the problem.
How many Board of Directors do you have to have ? And what happens if you don’t have anyone willing to be a board of director when going to a property manager ?
Hi Cathie,
The number of directors on a board – and I’m assuming that you are referring to a condo or HOA board is usually set in the declaration or bylaws of the corporation. There is usually a minimum number of 3 required under the legislation. I commonly see 5 or 7 directors.
If you don’t have enough volunteers will to serve as directors then you are going to have difficulty. Decisions made by the board require a quorum. Quorum is a simple majority of the legislated number of directors required on a board. In other words, if you must have 7 directors you must have at least 4 directors serving and attending board meetings and they would have to be in agreement in order to pass any business or agree on any actions.
Is a Property Manager also considered the Executive Director of the Association?
Hi Pauline,
Thanks for your question. I am assuming that you are talking about a condo or HOA? In my experience, a property manager should never be the ED for the association. Property managers are engaged by the association to act on their behalf, but not to be in a decision-making capacity or governance role for the association.
Pat
Is it legal for the Property manager to be appointed on the Board of directors when no other volunteers are willing to run? What could the consequences And complications be? Why would a Property manager even suggest doing this?
Hi Ann,
Thanks for your question. I’m not sure of the specific legal situation in California. Some condos allow anyone to become a director. That means that they don’t have to be an owner. This will depend on the rules in your state and the specific rules of your condo or HOA. Having said that, it would be a very bad idea to appoint a PM to the board. It would be a conflict of interest as the PM works for the board.
Why would a PM suggest this? I’ve no idea – maybe he/she is trying to be helpful.