Condo Media - August 2010 - (Page 30)

FEATURE by Nena Groskind When Good Community Associations Make Bad Moves e talk often and at length about “best practices” for community associations. We also know that boards don’t always embrace these suggested practices enthusiastically — or at all. So we asked a few industry executives what boards do, or fail to do, that is most likely to get them and their communities into trouble. The response: “Let us count the ways.” So we asked them to pick the top two or three worst mistakes boards make. Here’s what they said. W Joel Meskin, vice president in charge of community association products for McGowan & Company Inc. The “absolute No. 1” insurance mistake community associations make, Meskin says, is, “they let price drive the insurance purchasing decision” instead of focusing on the quality and scope of the coverage they are buying. “Boards shouldn’t ever think about the price until they are sure they have identified the best coverage available. Then they can evaluate what they can and can’t afford.” In considering affordability, he says, boards often make another crucial mistake: “They don’t consider the cost of uninsured losses.” As a result, the “penny-wise” coverage they think they are purchasing can turn into “a pound of nightmare” when they discover that a loss they’ve incurred isn’t covered and their claim is denied. Second on Meskin’s “worst insurance mistakes” list: Boards don’t do the hard work of evaluating and comparing coverage options. “They use the excuse that the coverage is too complicated and they can’t understand it.” Boards should seek the advice of insurance professionals who specialize in community association coverage, Meskin says. “If their broker isn’t able to educate the board and explain the coverage in ways board members can understand,” he adds, “then they should find someone who can.” Michael Keane, CPA, principal in the Massachusetts accounting firm Keane Chiuve & Co. Keane has no trouble identifying his nominee for worst association governance mistake: “Most associations fail to keep good minutes, especially on financial matters.” What do they omit? “Just about everything they ought to include,” Keane says. One example: The board approves a painting contract, but fails to record either the vote approving the contract or the contract details. “Two months later, when the manager presents the first invoice, the board says: ‘We never voted for this.’ The manager replies: ‘Yes, you did. It’s in my notes.’ But it isn’t in the minutes.” Keeping good minutes is essential, Keane says. “It protects everyone.” Just behind first place on Keane’s list, if not tied for it: The handling of special assessments. “Boards offer too many payment options,” Keane says. He thinks boards should offer owners two or three payment options at 30 CONDO MEDIA • AUGUST 2010

Table of Contents for the Digital Edition of Condo Media - August 2010

Condo Media - August 2010
From the CED’s Desk
Editorial Board
CAI News
CAI Regional News
Asked & Answered
Homeowner’s Corner
Sue & Be Sued
Vendor Spotlight
Industry Perspective
Volunteer Spotlight
Advertisers Index
Classified Service Directory

Condo Media - August 2010