Q. What a relief! It has taken a lot of time, but we have finally “thrown the rascals out”, and I am a member of a brand new elected Board of Directors. Our campaign pledge – which we intend to honor – is to make our community a great place to live. One of our major issues has been our current property manager and management company. All of us newly elected Board members want to sweep the association clean, and replace both our manager and our attorney. We want to hire a new management company, and then retain new legal counsel. What criteria should we use in selecting a management firm? What services should the company perform? Should we have a written contract and if so, for how long? What is the appropriate interaction between the Board, the management company and its employees?

A. Before answering your specific question, I have a suggestion. If you plan to hire new legal counsel for your association, I strongly recommend that this be your first priority. Your new attorney will have to review any management contract presented by the company you select, and it would be better to have the new attorney on board first.

To a large extent, the success of any community association rests with its management. While some condominium associations prefer to be "self-managed," in my opinion this is not the way to go. Even if a self-managed board has a full-time, paid manager, the members of the Board of Directors still have to get involved in the day-to-day operations -- and often these Boards of Directors do not have the time (nor the skills) to handle the task.

Whether your association consists of 20 units or 2,000 units, it is -- or should be conducted as -- a business. The Board of Directors has the responsibility to act reasonably and properly. The Board has to make good business judgements. And one of these judgments is to avoid getting involved in every single detail of the association. Too often, I have heard property managers complain that the President (or other Board members) is trying to “micro-manage” the association.

A well-run Association should hire a management company and delegate major responsibilities to it. In many instances, however, the Board over-delegates -- but under-supervises -- and the results turn out to be unsatisfactory for the owners as well as the management company.

How do you select a management company? Contact four to six management companies and ask them to send you a bid proposal. These proposals should list the names of other community associations they currently manage so you can check references. You should be able to obtain a list of managers from the Community Association Institute (CAI) at 703 750 3644, or on their web site at www.caidc.org.

The Board should appoint a management selection committee. It is important that a committee member contact the President or Vice President of those other condominium associations used as references, to determine whether they are satisfied with their management company. Keep in mind, however, that most people generally only give the names of favorable references.

Price alone should not be the determining factor on whether to hire a particular management company. If the cost is low but the quality and quantity of services are equally low, you will only "get what you pay for."

You should determine whether there will be an on-site manager, and how many hours that manager will devote to your project. Will the on-site manager be responsible for other associations as well as yours? And the proposed on-site manager must attend any interviews with the Board during the selection process. Obviously, if you are a small association, you will probably have to accept the fact that the manager will be working with other associations at the same time. Ask whether the management company is a member of the Community Associations Institute (CAI), a national organization dedicated to the workings of community associations. Do the managers actively participate in the many educational programs conducted by CAI?

According to one commentator on condominium activities, association management typically involves at least nine areas of responsibility: environmental standards, maintenance of common properties, the provision of common services, internal communications, financial management, general administration, procurement of insurance, the preparation of tax returns and other reports, and assistance to the Board of Directors on policy matters.

Narrow down the selection to two or three companies, and invite each company to meet with the Board for an interview. Even though you will only select one company, the interview is a great opportunity to learn how other companies operate; the interview process is a good learning experience, and all Board members should attend every interview.

Once a management company has been selected, a written contract must be signed between the company and your association. All terms and conditions -- including fees and charges -- should be incorporated in that written document. Your association attorney should assist with the negotiations and drafting (or reviewing) of the contract.

The contract must contain a termination clause, whereby – even without cause – the contract can be terminated by either side by giving at least 60 days advance notice. And it goes without saying that the Board should be able to terminate the contract with cause, and even sometimes — depending on the circumstances – without advance notice.

Once the new management company is on board, the Board should assign one (but not more than two) members of the Board to be the liaison with the management company. The liaison should also be responsible for issuing periodic status reports to the Board on the activities of the new management company. This is a form of quality control, which is important in any business operation.

A competent management company should furnish biweekly or monthly management reports consisting of a current financial statement (including any outstanding delinquencies), the services performed during the past reporting period, and any problem areas and future planning issues for consideration by the Board. This report must be given to each Board member for their review.

The Board should meet periodically with the company to review these reports and program future activities for the association.

I recommend that at least once a year the Board should request the management company to prepare a brief "state of the Association" report, which should be made available not only to Board members, but also to all owners in the association.

After the Board receives this report, it should be in a position to evaluate the management company based on its past practices. If you and your Board are dissatisfied with your management company, you should first give them an opportunity to explain their actions and make any corrections, if possible. Make sure to include your current company in the bid process. After all, your current problems may have been caused by the old Board – and not management.

Perhaps the most significant aspect of the relationship between the management company and the directors is that the Board should delegate responsibilities to that company and not get involved in the day-to-day activities of the association.

If Board members want to get involved, they should manage the Association themselves -- which I do not recommend. Learning to delegate is difficult, but not impossible.

After the management company is in place, ask its representative for periodic feedback as to whether the Board is getting too involved in the daily operations of the association. And, in order to uphold your pledge to the owners who voted you into office, periodically ask the owners for their feedback also.