June 27, 2023, 3:50 am | Read time: 4 minutes
Advisory board–what initially sounds cumbersome has a practical benefit. And although this body is not mandatory in a condominium owners’ association, it is advisable to establish one.
What exactly does an advisory board do in a condominium owners’ association (COA)? Not only new condo buyers ask this question. In general, there are quite different ideas among COA members. Some say it is an assistant to the manager. On the contrary, others believe it must advocate for the owners’ interests. According to the Condominium Act, the truth lies somewhere in between.
Whose Side Is the Advisory Board On?
“The advisory board is neither fully on the side of the manager nor on the side of individual COA owners,” clarifies Michael Nack, legal advisor at the Consumer Protection Association for Homeownership. It is an independent third body of the owners’ association, alongside the owners’ meeting and the manager. It essentially acts as a link between owners and the manager.
Among its most extensive powers is that the chair of the advisory board and their deputy can convene an owners’ meeting even if the manager refuses. This is important in case of disputes with the manager, such as when claims for compensation need to be asserted.
“However, the board does not have actual intervention powers,” says Michael Nack. Unless the board is granted veto rights over the manager’s actions without a resolution, according to the Condominium Act.
What Are Its Responsibilities?
The advisory board is supposed to support and supervise the manager. Once a year, it reviews the COA’s financial plan and annual statement and provides an opinion. “It is a supervisory body but not authorized to take over the manager’s tasks,” says Sylvia Pruß from the Association of Property Managers Germany.
However, the condominium owners’ association can authorize the board by resolution to make decisions on certain measures in collaboration with the manager. If this is the case, the manager can only initiate or confirm orders after consulting the board. If owners bring requests or issues to the board, it forwards them to the manager.
“Within the community, the board should be a point of contact for members, mediate between them, and point out grievances,” says Michael Nack. The actual influence of the board depends on the assertiveness of its members. And assertiveness, in turn, significantly depends on the board members’ knowledge. A board that educates itself in condominium law and technical matters that may affect the COA can naturally act more confidently.
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What Does an Advisory Board Specifically Handle?
“An example from practice would be the desire of individual owners for new playground equipment in the common property,” says Sylvia Pruß.
They can, of course, apply directly to the manager to have this item placed on the agenda of the next owners’ meeting for a vote. But it can be wise to first approach the advisory board. The board can gauge in advance how much support there is from other owners and what the chances are of the proposal being approved.
Does Every COA Need an Advisory Board?
An advisory board is not legally required. Therefore, each COA can decide by majority vote whether it wants an advisory board. “It is advisable to elect one because otherwise, there is no supervisory body,” says Nack. Additionally, the board chair holds a special position–they are the legal representative of the COA to the manager.
“Small COAs often do not have an advisory board. In larger communities with hundreds of owners, it is strongly recommended,” says Sylvia Pruß.
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Who Can Become a Member of the Advisory Board?
According to the Condominium Act, any owner in a COA can become a member of the advisory board. Generally, membership is an unpaid honorary position, but it often comes with an expense allowance. Specific prior knowledge of COA law is helpful but not required.
“Most advisory boards consist of committed members who are eager to address the concerns of their co-owners and ensure that the condominium is handled carefully and sensibly,” says Nack.
Are They Liable for Mistakes?
Since it is an honorary position, the liability privilege applies. Accordingly, members of the advisory board are only liable for mistakes made intentionally or through gross negligence.
With material from dpa