Owning a condo is not the same as opting for a single-family home.
That’s one of the first things to understand if you’re on the hunt for a place to call your own that is part of a homeowners association (HOA), local industry experts told Boston.com.
Whether you end up in an association that is professionally managed or self-managed — whether in a building with four units or 400 — there will be restrictions on what you can do both inside your unit and in the shared common areas. And the way the association — whether self- or professionally managed — is being run could affect not just your experience living in your new space, but the value of your home, the experts said.
Passive-aggressive neighbors, poor communication, high fees, and little to no accountability were just a few of the issues singled out when we asked Boston.com readers to share their experiences with homeowners associations. The majority of respondents told Boston.com they’d had negative experiences with their associations, both self- and professionally managed.
To break down more of what you should know, we talked with four Boston-area experts to learn more about the potential benefits and pitfalls of self-managed associations. Here’s what you should know before you buy a condo in the area:
Both self- and professionally managed associations are created and governed using the same kinds of documents.
Under a professionally managed association, a manager or management company is hired by the board of trustees to take on responsibilities for the day-to-day management and operation of the building. In a self-managed association, the burden of responsibility falls to the board to either take on the role of manager of the association, either together or individually.
“Most boards function in more of an advisory capacity, depending upon professionals to provide them with information and advice and to guide them as they are faced with decisions that are for the benefit of the association,” Pat Brawley, a consulting manager and property manager, told Boston.com. “In the case of a self-managed association, they don’t have that extra expertise working with them on a routine, daily basis.”
In general, most people don’t realize how much work a self-managed association entails until they join one, said Kimberly Bielan, a principal at Moriarty Troyer & Malloy LLC and member of the Real Estate Bar Association board of directors.
“We always say running a condominium is almost a mini-municipality, because it’s a separate entity, so it entails a lot of work,” Bielan said. “It’s almost like a second job because there are legal compliance issues, accounting compliance issues, and then just kind of the maintenance and upkeep of the property.”
The number of responsibilities can depend on the size of the association, Thomas Moriarty, president of the New England chapter of the Community Associations Institute and a partner at Moriarty Troyer & Malloy LLC, said.
If you’re on the board, you’re taking on responsibilities for the entire community, which in larger buildings could amount to millions of dollars worth of maintenance responsibility and management.
“It’s not exactly the vision of carefree living that people might have because they’re going to be responsible personally, certainly if they’re on the board,” Moriarty said. “Now, if they’re not on the board, if you’re just a unit owner in a self-managed association, it might not be as much of a burden. But you might find that the level of services that you would expect — the landscaping, the maintenance — it just doesn’t get performed to the same level as if you’d had professional management.”
The biggest benefit outlined by the experts for being part of a self-managed community is that it generally reduces the operating cost — and therefore a unit owner’s monthly HOA fee — since a manager is not being paid.
“If the board is very involved and if they have capabilities, skill sets, expertise, or prior experience, it can work out beneficially because theoretically, the board members are onsite for the most part,” Brawley said. “Oftentimes communities that choose to self-manage choose it because there is a very active onsite population of unit owners.”
Having invested or attentive residents onsite means problems could be taken care of sooner, with trustees making themselves accessible to unit owners raising problems or concerns, she said.
“Oftentimes folks who are retired are involved in this kind of a self-management situation and have hours to spend working on different aspects of the governance and operation and management of the property,” Brawley said.
A self-managed association might feel like a good fit for those looking for more autonomy or decision-making power, said Ali Manigat, an attorney at MAW Law who teaches classes on condo ownership at the Massachusetts Affordable Housing Alliance.
“When you have a professional manager, they are consulting, proposing things to the association,” he said. “With self-managed, there’s a little more control with no outside influence.”
There may also be a sense of community pride in self-managed associations in which the members have active board members or unit owners working toward the goal of a functioning community.
“I think it would build a sense of community,” Bielan said.
With those possible positives, there are also potential downsides.
A self-managed community doesn’t automatically mean it will be more economically operated or that there will be lower costs, Moriarty said.
“Managers have buying power because they represent multiple associations, so they might be better positioned to sign a snow-plowing contract, a landscaping contract, or better positioned for an insurance agent or an account,” he said. “So there are efficiencies that could potentially be lost by being self-managed.”
In self-managed associations, unit owners bear more responsibility for the management and operation of the building. That work can be complicated by having stakeholders at odds with differing visions or expectations for how the association should be operated.
It all depends on what kind of board you have, the experts agreed.
You may have someone who has the experience and the time to dedicate to the running of the association. But if that kind of expertise and effort is not in place, it can lead to sloppy management and problems not being addressed in a timely manner, Manigat said.
In smaller associations, there is also the risk of being in the minority if there’s a voting block, Moriarty said. In those situations, a unit owner could find themselves disenfranchised if at odds with the controlling interests of the board.
“One of the things to figure out is whether or not there is a mechanism that is available that protects either the minority owner — let’s say it’s a three-unit association or if it’s a two-unit association — whether or not there’s some kind of dispute resolution provision,” Moriarty said. “Because in a two-unit association, if there’s a split, you’re kind of stuck. The association really can’t act if there’s no majority.”
One case shared by Bielan highlighted how control of the board can dramatically affect the rest of the owners in a community.
The case, which was decided by a jury, involved two couples who owned condos on Commonwealth Avenue. One of the couples wanted to buy all five units and merge them into one home. They allegedly cooked up sham HOA votes to authorize hundreds of thousands of dollars in work in the building, bullying other tenants into selling them their units when they couldn’t afford to pay for the work.
One couple, in their 80s living on the fourth floor with medical problems, resisted. The “aspirational couple,” who was in control of the condo board, placed a lien on the elderly couple’s property for not paying for repairs and then unilaterally hired a contractor to replace the building’s elevator, taking it out of service for several months. A jury found in favor of the elderly couple, and an appeals court affirmed that the board members violated the unit owners’ civil rights. The court also found there was sufficient evidence that the board owners engaged in abuse of process and conspired to force unit owners from their unit.
It’s not just ill-intent to be wary of, the experts said.
With self-managed associations, if you have people on the board who are not up-to-speed on the ordinances or laws they are responsible for following, there can be missteps that cost the community as a whole.
As an example, Bielan recalled a case in which a self-managed association didn’t know they were required to inspect fire sprinkler systems every six months. When they failed to do so, they were fined.
If association leadership is indifferent to thinking about long-term repairs and maintenance, it could affect you as a unit owner, the resale value of your unit, or the condition of the property and common areas, Brawley said.
For example, the board may allow the pavement in the parking area to fall into disrepair because they don’t want the burden of an expensive project. Instead, they may do small patching repairs instead.
“The type of board that is in place can adversely affect the conditions of the property and can cause there to be deferred maintenance … there can be a concern about the board not living up to its responsibilities with respect to caring for the property,” she said.
While a professional management company doesn’t necessarily ensure that won’t happen, a manager can bring problems to the board’s attention and encourage them to take action. Managers can also sometimes serve as a buffer between unit owners and the board, particularly when it comes to conveying bad news about increasing fees or costs.
“That puts an extra burden on the self-managed board,” Brawley said. “They are more subject to the concerns of their neighbors, but again, that can be an advantage. It can also be a disadvantage in terms of being directly accosted for a decision that they made as opposed to channeling complaints through a management company.”
The headaches for what you may have to deal with running a self-managed association are “manyfold,” Moriarty said. The board has to be the eyes and ears of the association if you don’t have a professional manager — tracking vendor contracts, running board meetings, accounting, communicating with unit owners, and maintaining the common areas.
It can be a huge learning curve, and all the required responsibility and time can prompt associations to switch over to having a professional manager, according to Bielan.
“If somebody was retired or something like that and they had more time and energy to devote to the day-to-day affairs of the condo, they might bear a disproportionate burden to let’s say a young professional who’s living at the condo but just doesn’t have the bandwidth to devote to the management,” she said.
Before you buy a condo, there are a number of steps you and your attorney can take to make sure it is the right fit for you, the experts agreed.
First and foremost: Do your due diligence.
With a lawyer’s help, familiarize yourself with the condo documents, including the master deed, the declaration of trust, and the bylaws. Make sure you understand how voting on the board of trustees works and what the rules are outlining common areas. Check for a breakdown of what the condo fee covers. Find out what the obligations and rights are with regard to parking, which Moriarty said can become a frequent point of dispute.
For example, in a fight over a parking spot in Belmont, a condo owner argued he had validly amended the master deed to give him the rights to 2.5 parking spots, which another owner contested. A judge found he did not, and the ruling was affirmed on appeal.
Manigat recommended looking at the association’s budget to check whether there are reserves and whether there is good record keeping in place.
“The budget will tell you: Are there reserves, meaning has the association done a good job putting money aside every month to address major repairs if needed along the way?” he said. “Because a lack of reserves means that any major improvement or project would have to be passed along to the unit owners in the form of an increase in the HOA fee or a special assessment that could then cover that project.”
Look at the association’s reserve study, and if there isn’t one available, ask why not, Brawley said.
“They should read the minutes of the board meetings. They should, if possible, speak with some of the people in the community to get a sense of what the community is all about,” Brawley said of potential buyers. “How are they managing the most important asset they have, which is everyone’s home?”
With small associations, Manigat said, it is not uncommon to find that operations are done more informally and the community might not have a sizable paper trail. In those situations, he said, it is still important to work with a lawyer and determine whether the community is a good fit.
If it’s a small association, Bielan recommended speaking with members of the board and unit owners to get a sense of how things are run. Paying attention to the condition of the property can also tell you a lot about how it’s managed, she pointed out.
The experts urged seeking out resources, such as from the New England Chapter of the Community Associations Institute, that provide educational materials and opportunities on the responsibilities of being part of a self-managed association.
Doing your due diligence and educating yourself is like “personal protective equipment,” Brawley said.
“That’s the best way to protect yourself,” she said. “And you may have to step up to the plate and say: ‘Listen, I’m going to take care of paying the bills, I’m going to take care of collecting the fees. But you have to follow these rules.’ That’s the big downside of the small associations. It’s like a group of siblings trying to figure out how to manage Christmas.”
Both Bielan and Moriarty agreed that in particular for smaller associations, it is important to remember you might have to make compromises. It’s not like buying a single-family home in the woods somewhere where you get to do whatever you want. Common sense, common courtesies, and manners will be important, Moriarty said.
“Understand that you’re going to be impacted by your neighbors,” he said. “Your neighbors are going to be impacted by you, and you can draft the documents as good as they can possibly be drafted, but unless folks are tolerant of one another, act reasonably, act with common courtesy and politeness, those associations are going to be very difficult to operate and live in regardless of what legal language is incorporated into their governing documents.”