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Self-management of a condominium in Costa Rica or not?

Self-management of a condominium in Costa Rica or not?Not always can the condominium owners afford themselves to contract a condo manager. Is self-management of a condominium in Costa Rica a good solution?

The financial cost of hiring a condominium manager is quite high. Particularly when the condominium is a small one, it might be very necessary for a HOA to cut cost everywhere possible. The cost of managing a condominium effectively financially is an important task for the condo owners.

Older condominiums in Costa Rica, constituted many years ago have this problem. Those condominiums were much smaller than they are now. Therefore, the cost of condominium security was a lot lower than it is now.

Years ago, it was customary for smaller condominiums in Costa Rica to have an undocumented Nicaraguan security guard. This security guard would often live on the premises and would have no social security.

Labor law and immigration law

Since 2010, the new Immigration law #8764 prohibits a person or a corporation to hire illegals. This law obliges condominium owners and condominium administrators to hire security personnel with a working permit. This in turn obliges them to insure their personnel with the CCSS or Caja and with INS for workers’ comp.

Self-management of a condominium in Costa Rica or not?
The daily control and maintenance of the amenities can take up more time than available for a volunteer condo manager

This obligation more than doubles the cost of the security in the condominium. Besides the fact that if you have an employee who lives on the property, the supply of the living quarters is seen as salary in species by law. In that case, it is the home owner association that is responsible for the employees hired by the manager.

These facts oblige smaller home owner associations to self-management of a condominium sometimes.

Condo manager tasks

There are 3 main tasks at hand when managing a condominium

1) HOA Financials – This includes managing the funds and keeping track of incoming and outgoing funds as well as reporting on the financial status of the association to the board.

2) Project Management – Every project, no matter its size, need to be managed properly. This can be the hiring of a gardener or a security guard. This can also be the construction of a new roof of the condominium or a deck around the pool. The status of each project needs to be reported monthly to the board of the HOA.

3) HOA Rules Enforcement – The bylaws of the condominium that are registered property register give the HOA the duty to enforce restrictions, rules, covenants, and regulations in the community. It is the job of the condominium manager to enforce those rules. Failure to properly enforce the rules can result in lawsuits, lower property values and angry homeowners.

Professional condo manager

Having or not a condominium manager is entirely a decision of the condominium owners. It is a decision that has to be taken during the condo owner meeting that is held once a year. The bylaws will state what percentage of condo owners will be needed to elect a condominium manager.

Hiring a condo manager is not a financial option for every condominium. A large condominium, with large common areas, amenities like a pool, tennis courts and others has more work for a manager than a small one without those amenities. And a large condominium has of course more financial resources than a small one.

Self-management of a condominium in Costa Rica or not?
The financial cost of security can be tremendous for a smaller condominium in Costa Rica

Advantages and disadvantages

What are the advantages and disadvantages of the self-management of a condominium?

Advantages

  • In a small condominium there are not too many employees. For this reason little time investment is necessary to control employees.
  • There will be better control and correct billing over expenditures.
  • The self-management of a condominium can financially be attractive. The financial cost of having a professional condo manager can be high and maybe not affordable for some home owners.
  • The change to a new manager is usually difficult when a new condo management company is hired.
  • Self-management of a condominium will be a much easier transition with the change in management.

Disadvantages

  • The work load can be overwhelming, unless the homeowner who manages the HOA voluntarily has lots of spare time. A management company is on call 24/7.
  • A homeowner – manager might lack in experience in self-management of a condominium.
  • The administrator has to be personally available during any repairs, which takes up a lot of time.
  • There is possibly a lack of knowledge of the condominium and labor laws unless the manager is a lawyer. The manager should know all about the rights and obligations of a condo owner to take decisions.
  • Does the manager know all about the association’s tax obligations?
  • The manager might have to play the bad guy. It is much more difficult to enforce the HOA rules because there is a personal relationship with the neighbors. A simple parking dispute or an eviction of a misbehaving tenant can become a mayor headache.
  • There are too many amenities or employees for a volunteer manager to oversee.
  • The HOA might have to invest in the purchase of hardware, software etc. depending on the size of the HOA.
  • Hiring and firing employees and any daily management decisions are more difficult to make.
  • When the manager is sick, there is no replacement unless other neighbors agree to cooperate.
Self-management of a condominium in Costa Rica or not?
The eviction of a tenant or home owner who is breaking the rules can become a serious headache.

Pay or not pay the manager?

In my personal opinion, the HOA should pay the manager for all the effort if the HOA elects for self-management of a condominium. An unpaid manager will very quickly become frustrated and disillusioned, especially when the neighbors decide not to cooperate much.

It might be necessary to make an amendment to the bylaws of the condominium to make the payment of a stipend or salary to a home owner who acts as a manager.

Contact the AE MLS Costa Rica

Are you planning to purchase a condominium in Costa Rica? Contact us now; we have all the necessary expertise to assist you in your purchase.

Feel free to leave your comments on this blog.


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Ivo Henfling

Ivo Henfling started the American European Real Estate Network Costa Rica in 1996 and has grown it into the largest Costa Rica MLS with thousands of up to date property listings for sale and for rent. Ivo has written hundreds of articles about real estate and living in Costa Rica for The Tico Times and other online informational sites.

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2 thoughts on “Self-management of a condominium in Costa Rica or not?”

  • Thomas Rosenberger

    25 January, 2017 at 11:14 am

    The legally registered administrator of a condominium is the person authorized to provide a legal certification that an owner is up to date with their financial obligations to the condominium. Without this document, lawyers and banks will not be able to close the sale of a condominium.

    Reply
    • Ivo Henfling

      25 January, 2017 at 12:02 pm

      Yes Tom, many self-managed condos in Costa Rica are not up to date with the tax authorities. Any buyer of a condo in the community that doesn’t have its financials in order, will also become the owner of the problem.

      Reply

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