There is nothing more disruptive to the management of a property than having a board completely turn over. When there is no continuity between one group and the next, everything the previous board knew about the property gets lost in the transition. For this reason, staggered elections are essential for maintaining the health of a condominium, cooperative, or homeowners association.
A complete turnover can occur when all the seats come up for election at the same time. Therefore, staggered board terms are crucial because they preserve stability in the property's leadership. Without staggered terms, the potential for disruption always exists.
What might lead to all the board members stepping down at once - and what might motivate the owners to vote an entire board completely out of office?
Scenario 1. The board works hard at managing the property because its members do not have confidence in their management company. They try working with several different management firms without success. Eventually, they hire a professional management company. They begin to relax, letting go of their direct involvement in management. They feel so secure with competent management at the helm that they decide they no longer needed to serve. As a result, they all leave office.
What is likely to follow? All the new board members have no idea what it was like with prior managers, nor do they have a sense of how hard the former board worked to keep things going. Everything is reviewed without a sense of history. Instead, they keep reinventing the wheel. With staggered elections, the remaining board members would be able to put events in perspective for the new members.
Scenario 2. Some owners are dissatisfied with the board. They complain chronically, but are unwilling to do any work, wanting things to change only as long as someone else carries the full load. Other owners are dissatisfied but are willing to serve on the board even though they are not aware of what is involved. As far as they know, everything the board did was wrong and they are going to set it straight. They convince the owners to elect them.
This second scenario highlights the fact that, while a board faces many challenges, it is rarely complimented and it is frequently criticized. When the new board comes in, its members discover that there are no easy solutions to the challenges associated with directing and managing the property's business affairs. There will always be a contingent of owners who don't like whatever is decided. Staggered elections leave several board members in place who can at least provide information about what has been tried in the past, adding insights concerning what worked and what didn't work. Having continuity on the board can prevent the repetition of costly mistakes for which the owners end up paying.
Scenario 3: The board self-manages for many years. Its members are working late into the night and on weekends. They endure telephone calls from owners demanding service at night, on weekends, and even on holidays. Their other responsibilities include collecting common charges, sending their neighbors' accounts to attorneys for non-payment, and dealing with vendors and contractors, to name just a few. They are not getting paid, they are getting plenty of abuse, and they have finally had enough. They decide to hire management.
In this third scenario, if the board members made the right choice when selecting a management company, they brought in professional management. They breathed a sigh of relief when they were no longer managing the property. They became comfortable with their professional management company and all left the board. The problem is the new board hasn't suffered through the aches and pains of self-management. They begin to think they can save money by returning to self-management.
After all, they didn't experience being held prisoner by having to perform all the management functions - for example, signing payroll every week, funding the payroll account, and paying payroll taxes or facing stiff penalties. The new board ignores the fact that the professional management company saved them money on several budget line items, and they are not aware that these lines will inflate again when they return to self-management.
These are just three scenarios that describe the complications that are created when a board completely turns over. Staggered elections can ameliorate such problems by helping the board retain a sense of history, as well as a greater appreciation for the work of the board members who preceded them.
Alvin Wasserman is director of Fairfield Property Services.