Chapter 9 - § 9.10 • MANAGEMENT COMPANIES

• Jurisdiction: Colorado

§ 9.10 • MANAGEMENT COMPANIES

Most associations need a professional manager, either because the owners do not have knowledge to manage the association or because they do not want to invest the time needed to manage those affairs properly. Some associations — mostly small ones — try to cut costs by managing the association themselves or hiring a resident to be a part-time manager. Either choice can turn out to be a costly mistake.³⁶⁶ No matter how diligent or capable a resident may be, he or she is unlikely to be familiar with the nuances of common interest community law and management. Volunteer directors and officers rarely have the time or knowledge needed to manage an association. Small associations, or those with limited resources, are wise to hire a professional manager for at least some basic consulting services.

The CCIOA empowers associations, without specific authorization in the declaration, but subject to it, to hire and terminate managing agents.³⁶⁷ The association's contract with a managing agent is, by statute, terminable for cause without penalty to the association and is subject to renegotiation.³⁶⁸ A manager's contract is one of the matters that, under the CCIOA, may be discussed in an executive or closed session.³⁶⁹

There is much information available to associations to help them evaluate professional managers.³⁷⁰ Too often, associations hire a manger without assessing their needs or the manager's ability to provide services. Managers, as one expert notes, are often evaluated on how often they will be able to be on site, their knowledge of specific services (for example, landscaping), or availability in an emergency.³⁷¹ Negligence in hiring a manager, or negligent retention of an incompetent one, may subject the association to suit by unit owners, although these suits are unlikely to be successful.³⁷²

California requires prospective managers to provide written disclosure statements "as soon as practicable" but no more than 90 days before entering into a management agreement.³⁷³ The statement provides a governing board with basic information about the management company, including the principals and the licenses held by its employees. The statement must disclose the following information about the manager:

• The names and business addresses of the owners or general partners of the managing agent and, if the managing agent is a corporation, the names and business addresses of the directors and officers and shareholders holding greater than 10 percent of the shares of the corporation.³⁷⁴
• Whether any relevant licenses

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