Get Up to Speed on Managing a Master Association
At first glance, an association’s structure and management seem straightforward. A planned community or condominium building typically has a set of governing documents, a board of directors who make sure that the rules and regulations in those documents are followed, and a manager who, with her staff, oversees maintenance, compliance, and organizational aspects of the community. But that’s not always the structure. Some communities have more than one association that oversees them, or some portions of a community but not others might have two associations. These setups will affect your management style and the practicalities of your job. But as long as you’re aware of this, you should be able to manage them in a way that’s best for the board of directors, members, and your staff.
One of the most important aspects of managing a master association is handling legal issues as they arise. As with any association, legal issues could arise and complicate the management of a master association, as well. So how can you and the board of directors—or multiple managers and boards of directors—handle them? And what is the association’s attorney’s role here?
If a manager is working for both the master and the sub-association, a conflict of interest could arise if there is a dispute between the two. Also, when both associations have the authority to assess, lien, and foreclose, the issue of priority of lien arises. It is important for the manager to maintain a strictly professional relationship with both association boards, and to know when to step out of the way if it looks like there is going to be a dispute. The manager may feel awkward, but sticking to the managerial duties and staying out of the politics will help.
There is a solution for lien priority. The lien priority may be set forth in the state law, or in the governing documents. But, if not, the two associations can enter into a subordination agreement, in which one or the other of the associations will proceed with the collection and foreclosure, and then share recovery money with the other association. The association’s attorney would draft any agreements, and interpret the documents and the law to determine the proper procedures.
For more ways to make your master association community the best it can be, see “Appreciate Differences When Managing Master Associations,” available to subscribers here.