HD3 - The Adequacy of Training and Disclosure of Financial Information to Consumers by Financially Compensated Professional Managers of Condominium Associations, Property Owners' Associations and Other Similar Common Interest Communities


Executive Summary:
House Joint Resolution 686 requested the Real Estate Board (the Board) to review the study conducted by Old Dominion University in 2004 and to conduct its own review of professionally compensated managers of community associations.

The Board sought public comment and conducted public hearings in Fairfax, Chesapeake, Roanoke and Richmond. The Board also conducted a survey of individuals living in and having an interest in common interest communities. In addition, sample management contracts used by various management companies were reviewed and the companies were queried regarding the level of training of their employees.

From the surveys returned to the Board, the overwhelming majority were completed by unit/lot owners and board members/officers of medium sized community associations. Of the 1,967 surveys returned, 62 percent indicated that the most important problem facing their association was either the lack of participation by members in their community meetings/events or the lack of volunteers to serve on their boards and committees. The general consensus from the survey was a general satisfaction in their communities and with their management.

Most of the management contracts reviewed indicated that management company employees who handle association moneys were bonded or insured. Representatives of management companies who spoke at the public hearings said that their employees receive training in the management of community associations. However, it should be noted that only 65 percent of the people responding to the survey indicated that their communities employed a management company or an individual professional manager.

Individuals giving oral comments at the four public hearings appeared to concur with the survey results and were generally satisfied with their community's management. The majority of the speakers indicated that association board members needed education/training in their roles and responsibilities. It was pointed out that real estate agents were not sufficiently informed and did not inform their buyers regarding the nature of living in common interest communities. The general consensus was that association board members and real estate agents needed to be better informed and that no further legislation was needed.

It was found that the Old Dominion University study did not address the adequacy of training of professional managers or the disclosure of financial information to consumers. For the purposes of the current study, the Old Dominion University study did not provide any useful information.

In summary, community associations who employ reputable management companies are generally satisfied with their management personnel who seem to receive adequate training. The focus of problems facing community associations appear to be with inadequate training of association board members and the associations' ability to employ a management company that meets acceptable standards and acquiring adequate management contracts.