13 questions hiring managers ask to test your personality

Questions like “If you were an animal, what would you be and why?” seem frivolous — but they have a purpose.

Employers today aren’t necessarily only looking for candidates with the right set of technical skills and years of experience under their belt.

They also want to hire those who also have something unique to offer — like a great personality 0r a strong set of soft skills.

“In fact, if they find a candidate who has less experience than their competition, but has stronger growth potential and seems to be a better cultural fit, the employer may feel encouraged to hire that person,” said Edward Fleischman, chief executive officer of Execu Search, a full-service recruitment, temporary staffing, and retained search firm.

In an effort to find new hires that are great cultural fits, employers are putting more emphasis on soft skills, like organization, communication, leadership, initiatives, and the ability to think your feet.

To figure out if candidates possess the soft skills or personality fit that they are looking for, employers will ask questions like the ones outlined below.

What was the last new task or skill you learned, and how did you go about it?

“Employers ask this question to evaluate how a candidate views their own professional development,” Fleischman said.

He recommended answering with details on how you learn new skills. Emphasize that you’re curious and continually learning new things about your profession.

Tell me about a time that you did more than what was required on the job

Your interviewer wants to make sure that you’re committed to excelling.

So, Fleischman said, “give an example of a time where you went above and beyond the call of duty. This will also help show that you care about the quality of your work.”

If your best friend was sitting here, what would they say is the best part about being your friend?

The purpose of this question is to bring out a sense of honesty and candor in a candidate.

Learning about what makes an applicant a good friend allows employers to get a better feel for whether or not they would fit in with the company culture,” Fleischman said.

If you could change one thing about the way you approach challenges, what would it be?

This question puts candidates on the spot, and allows hiring managers to evaluate a candidate’s self-awareness and ability to admit there are some aspects of their professional life they would like to improve, Fleischman said.

“Since humility is an important quality to many employers, a response to this question is something they listen closely to,” he added.

If you were an animal, what would you be and why?

This inquiry is a favorite amongst hiring managers because it allows them to not only evaluate how quickly someone can think on their feet, but it also requires candidates to exercise some degree of creativity in a relatively short amount of time, Fleischman said.

These are two skills that can be applied to solving almost any business challenge.

What has the most satisfying moment in your life been?

When employers ask this question, they are looking to see what motivates a candidate and whether or not their values fit into the company culture, Fleischman said.

How would your last supervisor describe you in three words?

“This inquiry gives the employer a glimpse into how others view a candidate’s professional value,” Fleischman said.

What drives you in your professional life?

Employers ask this question to gain insight into what motivates a candidate both in their career and as a potential employee.

“As cultural fit becomes more important to employers and their business as a whole, many look for candidates whose goals align with theirs, and asking this question allows them to assess what exactly a candidate’s goals are,” Fleischman said.

What drives you in your personal life?

On a similar note, this question aims to delve into a candidate’s personality and better assess their cultural fit.

“By developing a better understanding of a job seeker’s non-work life, and by learning about what drives them personally, an employer can get a better grasp of the type of personality they’d be bringing to the company,” Fleischman said.

And, painting a picture of a candidate’s personal goals can help an employer better understand how motivated they are in general.

What types of hobbies do you enjoy outside of work?

Just like learning about what drives someone in their personal life, discovering how someone spends their time outside of work and what specific activities they enjoy and invest in can give an interesting look into their personality, Fleischman said.

In addition, hobbies can translate into specific soft and hard skills that can be applicable to many jobs, and employers are often interested in learning what a candidate has to offer outside their resume’s “skills” section.

Can you take me through a scenario at work that was particularly stressful for you, and how you handled it?

This question shows not only the candidate’s ability to think on their feet, but also their ability to be diplomatic, Fleischman said.

For example, if the stressful situation was due to someone else’s errors, was the candidate able to speak about it in a professional, tactful way?

Or, if the stressful situation was due to their own error, it shows a great deal about a candidate if they can take responsibility for it in their explanation.

If you could meet a celebrity, who would it be and why?

Many people admire certain celebrities and public figures. Learning about who a candidate would be most excited to meet offers another interesting viewpoint into their personality and their values — two important factors of cultural fit.

Have you ever played on a sports team?

The answer to this question can reveal personality traits that are important to certain companies, depending on the nature of their business.

“For example, a former athlete could be a great team player or, depending on the sport or position they played, may thrive best while working on their own,” Fleischman said.

Athletes often have a competitive nature, which can be good or bad.

 

By RACHEL PREMACK, Jacquelyn Smith contributed to a previous version of this article which first appeared on Business Insider.

Can Short-Term Rentals Be Stopped?

One of the most frequently asked questions from our association clients over the last year or two is “What can we do about all of the short-term rentals in our community?” In a typical lawyerly fashion, we often respond with “it depends”. Unfortunately, the answer to this common question really does depend almost entirely on the language found, or not found, in your association’s CC&Rs. To further complicate the issue, the law was changed a few years ago making it more difficult for associations to regulate rentals and it does not appear that the state legislators will be reversing this trend any time soon. So, if your association is experiencing this problem, what can you do?

Start by reviewing your CC&Rs. According to current Arizona law, owners in an association are allowed to use their property as a rental property unless prohibited by the CC&Rs and owners are required to use their property in accordance with any rental time period restrictions found in the CC&Rs.[1] Therefore, in order to limit or restrict short-term rentals, you will need to search the CC&Rs for any applicable language. Common language, which is typically found in the “Use Restriction” section of the CC&Rs, will either prohibit rentals all together or will require a lease agreement be in writing for a certain minimum term. The association will be limited by whatever language currently exists in the CC&Rs. Please also understand that any language restricting rentals found in a governing document other than the CC&Rs (i.e. Bylaws, Articles of Incorporation, etc.) is not enforceable.

Assuming you find language in the CC&Rs you can rely on, a violation of said language should be treated as any other violation of a restriction or rule in your community. Depending on the documents of your association, this may include sending notices of violation, imposing fines, suspending certain rights of the owner, or filing a lawsuit if the violation persists. If you are experiencing short-term rental violations in your community, you will need to document the violations as best as you can. You should look for and save the rental ad from websites such as Airbnb or VRBO. You can document the frequent turnover of tenants on the property. You should also save any and all communications with the owner regarding the violation. Hopefully, these violations can be resolved without having to resort to litigation as these types of lawsuits can be difficult to win and are expensive for the Association.

What if your association’s CC&Rs does not adequately address the issue of short-term rentals? The association does have other options it may consider. First, Arizona law allows the association to demand certain information from the owners renting their property. The owner can be asked to disclose the name and contact information of the adults occupying the property, the time period of the lease, including the start end dates, and a description and license plate numbers of the tenants’ vehicles. In age-restricted communities, the age of the tenant can also be verified. Realistically, with short-term rentals this may not be feasible and may not be helpful. Nevertheless, the association should enact this policy for all rental properties in the community.

The association may also consider amending its CC&Rs. This option is more realistic for planned communities than condominiums as a condominium association will likely need the approval of 100% of its owners to insert or amend rental restriction language in its CC&Rs.[2] Amending the CC&Rs can be a very difficult proposition due to the approval requirements, but if the problem with short-term rentals in your community is big enough, the option may be worth at least considering.

The association can also look to other restrictions in the CC&Rs that the owner and his or her tenants may be violating. It is very common with short-term rentals to experience problems involving traffic, parking, trash, noise, and other nuisances. Chances are your CC&Rs contains use restrictions that govern and or prohibit these issues. Associations can also look to see if an owner has registered the property as a rental with the county assessor. Failing to do so is a violation of Arizona law and may trigger language in the CC&Rs that requires owners to abide by the law. While enforcing these violations may not reduce the number of short-term rentals in your community, it may help with the negative repercussions of the underlying issue.

The current law certainly favors owners being able to freely use their property as a rental, despite the harmful impact short-term rentals can have on a community. Efforts can be made to try and change the law regarding rentals or change the law making it easier for associations to amend the CC&Rs. Residents of a community impacted by this problem can and should get involved in the legislative process. You can contact your local representative and make your concerns known. There is power in numbers.

The issue of short-term rental properties is plaguing many associations and meaningful solutions may not exist. However, if you are a member of your board of directors and your community is struggling with this issue, I would recommend you meet as a board and talk to your community manager and the association’s legal counsel to explore your options and see if the problem can be remedied.

 Quinten T. Cupps is a partner at Vial Fotheringham, LLP whose practice focuses on representing homeowner and condominium associations throughout the state of Arizona as general counsel and in the areas of enforcement, collections, and civil litigation.

[1] A.R.S. §33-1806.01 & §33-1260.01

[2] A.R.S. §33-1227(D)

Maintaining High Ethical Standards

CMCAs’ Commitment to Following Strict Standards of Professional Conduct

An important – yet often overlooked – component of CAMICB’s Credentialing Program
requires a Certified Manager of Community Associations (CMCA) to adhere to a high standard of ethical conduct. This means Certificants must comply with the 10 CMCA Standards of Professional Conduct, which govern their professional activities.

StandardsFlowChart

Standards Flow Chart

These Standards of Professional Conduct, detailed at http://www.camicb.org/standards, range from understanding laws applicable to community association management, to being knowledgeable on association policies and procedures, to carrying out fiduciary responsibilities, and participating in continuing education coursework. A violation of any of these Standards of Professional Conduct may be grounds for administrative action and possible revocation of the CMCA certification by CAMICB. Abiding by these Standards of Professional Conduct help protect consumers and associations that hire or contract with community association managers.

“When a community association manager earns the CMCA, they’re pledging to uphold a strict code of professional conduct which is critical to the profession,” said Ron Perl, Esq., a Partner at Hill Wallack LLP, who leads the firm’s community association practice group. “This is more than understanding the many facets of community association management and troubleshooting challenging situations, it brings about accountability, responsibility and trust to the individuals the profession serves.” Read more …

The Community Association Management Industry Gets Stronger When Employers Offer Managers Support For Professional Development And Continuing Education

By John Ganoe, CAE, CAMICB Executive Director

Many employers offer some type of support for their CMCAs to earn the continuing education necessary to maintain their credential or the study time and preparation for non-CMCAs to successfully sit for the CMCA exam. While it may not be the first question that comes to mind when interviewing for a job – it’s important to ask what kinds of support system and benefits are in place.  Employees should also be sure to review the Employee Handbook as most employers will reimburse managers for successful completion of a professional management development program.

According to Robert Felix, CMCA, LSM, PCAM, RS, owner of the Felix Reserve Group, an Industry Consulting/Reserve Study business, and President of Verity Property Management, “I believe we get to negotiate two things: compensation – including education – and time.  Nothing speaks greater to a company’s support of their management team then allowing them to prepare for success. Permitting an employee to attend a preparatory class so they can pass the CMCA exam is a simple yet effective way to encourage professional development.”

Sandra Denton, CMCA, LSM, PCAM, General Manager for Sienna Associations agrees.  “Giving employees paid time off to take a course and prepare for the CMCA exam puts them on a career path that benefits both the employee and the company.  And, research shows that managers with certifications and designations ultimately earn more money than non-credentialed managers.”

At Sienna Associations, Denton notes that encouraging and supporting education for the staff is critical to the company’s success. “The more they know about the industry, the better able they are to serve our customers and reduce our risks, while taking pride in their work. Every year we budget for at least one educational course per staff member and we pay for many industry related credentials and designations/certifications. Further, when they earn them, we provide a special bonus.”

From an employer standpoint, Felix notes it’s a competitive marketplace and companies want their employees to stay, which they will do when they know the company is investing in them. “One only has to look at the number of companies seeking qualified managers to understand that you need an edge to attract good managers. Offering a program that costs less than $1,000 plus some continuing education allows a company to market its professional edge over its competitors.”

Felix also notes the important distinction between a job and a career. “Education allows employees to decide whether they’re in a job or a career. I ask that of my employees before starting them on an education track and making sure they understand the difference. A career involves commitment, energy, focus and desire.  I want to see all of these in an individual before I invest in them.  And, once invested, I follow along and continue to mentor them on their professional path. Leaving a clear thumbprint of support and opportunity for those who have the desire and drive is one of my greatest pleasures.”

For more information on CMCA exam prep and continuing education resources, go to www.camicb.org.

 

 

Understanding the Important Distinction Between Community Association Managers and Property Managers

By John Ganoe, CAE, CAMICB Executive Director

A common mistake in state legislatures considering community association manager licensing – and among the general public – is to lump community association managers and property managers into the same bucket. While both are very important roles, they are distinctly different professions with functions, skill sets and responsibilities specific to each.

A community association manager can manage every type of community: condominium associations, homeowner associations, resort communities and commercial tenant associations.  A community association manager works directly with prcommunity-property-managementoperty owners and homeowners.

Property managers oversee individual rental units or a group of rental units, such as an apartment complex. They’re responsible for managing the entire property while community association managers are responsible for common areas – not individually owned properties.

“From a legislative standpoint, this incorrect categorization occurs because state legislators misunderstand the nature of community association management,” said Matthew Green, CAMICB’s Director of Credentialing Services. “They believe that community association management skills are identical to those of a property manager without recognizing the vastly different responsibilities of these two positions.”

This misunderstanding of the two professions often bleeds into more general conversations occurring in this space. Compounding this is the reality that there’s a slight overlap in a couple of the duties performed. For example, both property managers and community association managers supervise certain maintenance activities, such as swimming pool upkeep and trash removal. But it’s important to understand that community association managers oversee and direct all aspects of running the business operation. This means, they authorize payment for association services; develop budgets and present association financial reports to Board members; direct the enforcement of restrictive covenants; perform site inspections; solicit, evaluate and assist in insurance purchases; and, even supervise the design and delivery of association recreational programs.

Property managers are responsible for managing the actual property and therefore handle the physical assets of the unit at the owner’s request. Property managers generally oversee rental units and leases. Their responsibilities might include finding or evicting tenants, collecting rent and responding to tenant complaints or specific requests. If a property manager is responsible for a vacation or second home, he or she may arrange for services such as house sitting or local sub-contracting necessary to maintain that property.  Alternatively, an owner may opt to delegate specific tasks to a property manager and choose to handle other duties directly.

Stephanie Durner, CMCA, AMS, who is the Director of Community Management at River Landing, a private gated golf course community in Wallace, NC, views the distinction this way,

“While property managers are generally charged with overseeing physical structures that are used by people who are not the owners of the property, association managers represent the property owners themselves and are involved in just about every aspect of the overall community. For instance, if a garage door is broken at a rental house, the tenant would call a property manager or owner/landlord. But if there’s a pothole that needs repair or if a neighbor’s dog is running loose through the neighborhood, that’s a task for the community association manager who both maintains the common areas and upholds the governing rules. To me, community association management is a more holistic approach that contributes to the overall quality of life for all the owners in a community.”

Green emphasized, “While some job responsibilities are similar, community association managers have additional functions. It’s critical that community association management be recognized as distinct from property management, because association management requires a wider variety of knowledge and skills.”

“Because of this, the Community Association Managers International Certification Board (CAMICB) offers and maintains the Certified Manager of Community Associations (CMCA) credential, the only international certification program designed exclusively for managers of homeowner and condominium associations and cooperatives,” added Green. “Earning the CMCA credential means an individual has taken and passed the rigorous CMCA examination, proving they have a solid understanding of the business operations involved in being a community association manager.”

For community association managers, the bottom line is they understand and are experienced and knowledgeable in the many facets of running a business operation, assuring they provide the best possible service to the associations for which they are responsible.

CAMICB was established in 1995 to develop and administer the CMCA program. CAMICB insists on high ethical standards for community association managers because it not only strengthens the CMCA program, but protects consumers and associations that hire community association managers.

Avoid “Committee Anarchy”

Tips for Keeping Committees On Track

By Raymond Dickey
Publisher, AssociationHelpNow

Many associations have committees. These committees work on behalf of the board of directors. Social committee, architectural committee, newsletter committee —regardless of the type of committee, it’s function is to assist the board in gathering and reviewing information and planning and executing events and projects. However, one thing all committees should have in common is that they must work at the board’s discretion.

Committees encourage resident participation, provide a wide range of advice and viewpoints and free the usually overtaxed board members to concentrate on their dozens of responsibilities. But if a board is not careful, an out-of-control committee can become a major distraction. Many times this starts with one person, usually a committee chair, who doesn’t understand they serve to assist under the board’s guidelines, and not their own. The board has a fiduciary responsibility to the community, so keeping committees in check is an important part of safeguarding the association. A committee that’s gone rogue doesn’t just wreak havoc with the board and residents, they could create liabilities for the association.

The fear of committees running amok leads many boards to resist utilizing them — but that’s a mistake which hurts both the board and the community. Having unit owners involved in what’s going on creates support for the board as well as a harmonious community atmosphere. So how can boards enjoy the benefits of committees without the fear of “committee anarchy”? The first step is, of course, not to allow any committee to swerve out of control. So how is this done? Here are a few simple guidelines:

  • The board should clearly define, on paper, the goals and objectives of each committee.
  • Establish a board liaison for each committee. The board liaison should attend each of that committee’s meetings.
  • Have clear rules about how often and when each committee needs to meet and submit official reports to the board.
  • If applicable, make sure there is a budget for each committee, and confirm they adhere to it.

These simple steps can set an association’s committees on the path toward productivity and harmony. Any board with good committees should be proud of itself for establishing them as well. I always tell people, don’t discount the community aspect of community living. Communities aren’t just made of houses, roads and sidewalks. It’s the atmosphere — friendliness, fun and a sense of camaraderie — that make a community not just nice or good, but great.

Tell us about your experiences working with volunteer committees. What works for you? And, what doesn’t? Share your insights here.

The Community Association Management Industry Gets Stronger When Employers Offer Managers Support For Professional Development And Continuing Education

By John Ganoe, CAE, CAMICB Executive Director

Many employers offer some type of support for their CMCAs to earn the continuing education necessary to maintain their credential or the study time and preparation for non-CMCAs to successfully sit for the CMCA exam. While it may not be the first question that comes to mind when interviewing for a job – it’s important to ask what kinds of support system and benefits are in place.  Employees should also be sure to review the Employee Handbook as most employers will reimburse managers for successful completion of a professional management development program.

According to Robert Felix, CMCA, LSM, PCAM, RS, owner of the Felix Reserve Group, an Industry Consulting/Reserve Study business, and President of Verity Property Management, “I believe we get to negotiate two things: compensation – including education – and time.  Nothing speaks greater to a company’s support of their management team then allowing them to prepare for success. Permitting an employee to attend a preparatory class so they can pass the CMCA exam is a simple yet effective way to encourage professional development.”

Sandra Denton, CMCA, LSM, PCAM, General Manager for Sienna Associations agrees.  “Giving employees paid time off to take a course and prepare for the CMCA exam puts them on a career path that benefits both the employee and the company.  And, research shows that managers with certifications and designations ultimately earn more money than non-credentialed managers.”

At Sienna Associations, Denton notes that encouraging and supporting education for the staff is critical to the company’s success. “The more they know about the industry, the better able they are to serve our customers and reduce our risks, while taking pride in their work. Every year we budget for at least one educational course per staff member and we pay for many industry related credentials and designations/certifications. Further, when they earn them, we provide a special bonus.”

From an employer standpoint, Felix notes it’s a competitive marketplace and companies want their employees to stay, which they will do when they know the company is investing in them. “One only has to look at the number of companies seeking qualified managers to understand that you need an edge to attract good managers. Offering a program that costs less than $1,000 plus some continuing education allows a company to market its professional edge over its competitors.”

Felix also notes the important distinction between a job and a career. “Education allows employees to decide whether they’re in a job or a career. I ask that of my employees before starting them on an education track and making sure they understand the difference. A career involves commitment, energy, focus and desire.  I want to see all of these in an individual before I invest in them.  And, once invested, I follow along and continue to mentor them on their professional path. Leaving a clear thumbprint of support and opportunity for those who have the desire and drive is one of my greatest pleasures.”

For more information on CMCA exam prep and continuing education resources, go to www.camicb.org.

 

 

CAMICB Awards And Recognizes CMCA #20,000

CAMICB reached an important milestone awarding CMCA #20,000! Since awarding the first CMCA credential in 1996, the community association management field has grown a tremendous amount and CAMCB has established itself as an integral component of the profession. The more than 73.5 million people in the United States who live in covenant-protected communities rely largely on CMCA certification as proof of ethical, knowledgeable, professional community association management.  It’s an exciting time for the profession and CAMICB sat down with one of its newest credential holders: CMCA #20,000 Christina Parker, PCM, CMCA from Reno, NV, who passed the CMCA exam in October.

 Excerpts from a conversation with Christina Parker, PCM, CMCA

“Before I entered the world of community association management, I was a supervisor in a call center where I was head of the data entry department. I’d advanced as far as I possibly could in that company and field, but I really wanted more. I saw an ad for a Concierge position at FirstService Residential, which really caught my eye. After researching FirstService Residential, I applied for the position. I spoke with an executive in the Human Resources department who told me more about the services they provide and the job responsibilities: customer service, record keeping and planning and executing fun events, to name a few. She also talked about the opportunity for growth and the importance of continuing education and how critical professional development is to FirstService. I started off as a Concierge at Regency at Presidio in Damonte Ranch – an active adult community with more than 500 single-family homes – and from that moment on, I was sold on the diversity of the industry.

“Later, FirstService Residential was looking for associates to take the state licensing class and my team there encouraged me to sign up in the summer of 2018. I received my Provisional Nevada Community Manager’s License and continued to find the industry fascinating and challenging. I was then promoted to Compliance Director at the Somersett Owners Association. I’ve learned so much working at a large on-site property with a wonderful supportive team. There are so many moving parts in community management and I really like that it keeps me on my toes!

“Being a Compliance Director for a community with over 3,100 homes is busy! I really enjoy traversing the neighborhood to make sure the community is in line with the wide range of governing documents and architectural requirements. In the process, I get to see the neighborhood come to life; homeowners walking their dogs or picking up their kids from the bus stops, with the beautiful landscaping as the backdrop. At many associations, the compliance role is a small part of a manager’s job duties.  I love that, for me, this is my number one priority – helping to uphold community values. It allows me to thoroughly understand the rules and their importance, as well as the uniqueness of this property.

“Earning the CMCA credential was a great personal accomplishment. In addition to taking the M-100 course which was terrific, I studied really hard for the exam and was ecstatic when I passed. Studying – and sitting for the CMCA exam – has helped me become much more well-rounded in my knowledge of community association management. Now that I have my CMCA and am a more accomplished community association manager, I can’t wait to take on more challenges and to eventually grow my career into managing a property of my own. I believe the CMCA demonstrates to homeowners and colleagues in the field that I take this industry seriously – and with a great deal of pride.”

Christina_Parker_CMCA20K.jpg

Preparing Your Manager For the CMCA

Hiring a new manager is a big investment for a management company. Giving your new manager time to adjust as he or she adapts to your company culture, gets to know your clients, and navigates the inevitable learning curve takes time and money. But often overlooked in the early part of this process is professional development. What can you do to help your manager succeed in your business and with your clients?

It’s widely known that the community association manager’s scope of responsibility is vast. A manager needs to understand contracting, property maintenance, reserves, and much more to properly manage a community association. That’s why the Certified Manager of Community Associations (CMCA) credential is designed to verify a community manager’s knowledge of industry best practices in these critical areas.

Many management companies have seen the value in the CMCA program and require their new hires to pass the exam as a hiring contingency. Certifying new managers as CMCAs will help them gain a valuable qualification not only to further their careers but their success for the company as well.

While certifying new managers as CMCAs is an excellent idea, many new managers may have either limited or no previous knowledge of the many facets of their position.

To set your manager up for success, it’s important to give them the time and resources they will need to fully absorb all the different aspects of the profession. Encourage your manager to visit the www.camicb.org website for resources designed to help prepare new managers to successfully pass their CMCA Exam the first time:


Encourage your new manager to enroll in The Community Associations Institute (CAI)’s M-100: The Essentials of Community Associations course, which also fulfills the educational prerequisite.
This course is designed as an overview of the community association management profession as a whole and will give your new manager the foundation of knowledge they will need to build on.

Give your managers time to review and study the exam prep materials available on the www.camicb.org website.
A list of all preparatory materials is available on www.camicb.org by selecting Get Certified >> Exam Preparation. From games and puzzles to glossaries and definitions, these study materials cater to a variety of learning styles.

Emphasize to your manager the importance of learning standardized test-taking strategies
Because the CMCA exam is designed to evaluate a community manager’s knowledge of industry best practices, more than one multiple choice answer may, on an initial reading, seem correct. From an industry best practices perspective, however, there is only one correct answer.

Develop study sessions for new managers that include experienced staff.
With so much information to take in, your manager will likely have many questions while studying for their exam. Consider pairing the new manager with other CMCAs in your office to give them the opportunity to ask specific questions and learn important skills they will need to apply their knowledge.

Offer the new manager up to a year to study and gain experience for the exam
The CMCA Exam tests both the manager’s knowledge and the manager’s understanding of the application of best practices.  That understanding will best be gained from hands-on experience.Giving the manager enough time to understand and apply knowledge in practice will dramatically
increase their chance of success on the exam

If your management company already has in place an avenue for managers to earn professional credentials, like the CMCA, tell us how you do it! Share your insights; what works and what doesn’t work to help other new managers find success.

Adequate Reserves – (FINALLY!) Defined

Robert M. Nordlund, PE, RS is the CEO/Founder of Association ReservesAssociationReservesLogo.

Many, if not most Governing Documents require the Board to set aside “adequate Reserves” to care for the common areas. But what exactly are “adequate Reserves”?

I was recently challenged to define the concept of adequate Reserves by a number of attorneys and D&O carriers. The attorneys wanted to know how to give liability exposure counsel to Boards to help them avoid claims of “inadequate Reserves”. The D&O carriers wish to understand what is and isn’t responsible behavior, as it affects their loss exposure from claims levied by disgruntled homeowners. So I enlisted a number of Reserve Study providers from other esteemed Reserve Study firms across the country (among them Mitch Frumkin from Kipcon, John Poehlmann and Ted Salgado from Reserve Advisors, Peter Miller from Miller Dodson Associates, and Bob Browning from Browning Reserve Group) to join me in crafting a long-needed definition. It is not yet endorsed by any governing body, but I’m excited to share our results with you:

“Adequate Replacement Reserves” is defined as a Replacement Reserve Fund and stable and equitable multi-yr Funding Plan that together provide for the timely execution of the association’s major repair and replacement expenses as defined by National Reserve Study Standards, without reliance on additional supplemental funding.”

This definition combines two concepts:

  1. The size of the Reserve Fund (measured by cash or Percent Funded); and
  2. A responsible multi-yr Funding Plan

It takes both for an association to claim they have adequate Reserves. A small Reserve fund which requires crippling high Reserve contributions may pencil out as “cash positive”, but one would not describe their situation as “adequate”. On the other hand, an impressively large Reserve fund in an association that is recklessly making inadequate contributions is also not “adequate”, as such a Reserve fund will soon require supplemental funds in the form of a loan or special assessment. In addition, our expectation is that the component expenses will be all reasonably foreseeable projects that meet the standard National Reserve Study Standards four-part test, not just a few carefully selected components in the next X years, or a short list of required components that barely meets a local statutory requirement.

So “adequacy” is not defined as a particular cash balance, Percent Funded, Funding Methodology, or Funding Goal. Adequacy it also is not defined by the type (or date!) of your most recent Reserve Study update. So I present to you the above definition of “Adequate Reserves”. Now Boards and industry professionals know what that means!

What are your thoughts? Leave your comments and thoughts on this topic.