A commercial association differs from a homeowners association and a condominium, but they do share some similarities. It is important to understand how these entities differ in terms of structure, members, governance, and responsibilities.
What is a Commercial Association?
A commercial association is an organization responsible for managing and maintaining shared spaces and services in commercial properties, such as office parks, retail centers, and industrial complexes. It operates similarly to a homeowners association, but instead of governing residential communities, it oversees properties used for business purposes.
Some may wonder what a commercial owner is or how these associations work. It’s important to understand that a commercial association serves the collective interests of the businesses or property owners within its jurisdiction.
What is the Purpose of a Commercial Association?
A commercial property association is formed to manage common areas and services for commercial properties. For example, in a shopping mall or office park, the association takes care of shared spaces such as parking lots, landscaping, exterior lighting, and even security services. Commercial owners contribute to the upkeep of these areas by paying regular fees, similar to how residential homeowners pay dues to an HOA.
A commercial association’s primary goal is to maintain the value and functionality of the commercial properties it oversees. It also enforces rules and guidelines to ensure that businesses within the association comply with standards related to property maintenance, signage, and overall aesthetics.
Differences Between Commercial Associations and Other Associations
How does a commercial association differ from an HOA and a condominium association? Although they share some similarities, they have features that make them vastly distinct. Understanding these features is essential before entering one community or another.
Commercial Association vs. Homeowners Association
A commercial owners association operates differently from a residential HOA. While an HOA manages residential communities to enhance the quality of life for homeowners, a commercial association focuses on business interests. Its goal is to maintain an environment favorable to businesses and commerce in general.
An HOA typically prioritizes resident satisfaction, common area maintenance, and property value preservation. In contrast, a commercial association usually prioritizes accessibility, functionality, and appearance to attract customers, clients, or tenants.
The structure works differently, too. An HOA is usually a neighborhood association with individual homes and common amenities. A commercial association is generally a building or complex primarily consisting of businesses. There are no homeowners.
A development that combines businesses and residential units is commonly referred to as a mixed-use development.
Commercial Association vs. Condominium Association
A commercial building association is distinct from a condominium association, which typically manages residential units in multi-family buildings. While a condo association focuses on residential common areas like pools, hallways, and lobbies, a commercial association focuses on business infrastructure. These include parking, public signage, and exterior maintenance of commercial buildings.
Condo communities are more similar to homeowners associations. Both types of associations are home to unit owners or homeowners. People use the building or development as a place of residence, with shared facilities in common spaces. A commercial association is more distinct from these two, chiefly catering to businesses and customers.
Key Responsibilities of a Commercial Association
A commercial association management team is responsible for a wide array of tasks. These tasks help maintain the functionality and appeal of the commercial properties under their care.
Here are the key responsibilities of a commercial association.
1. Maintenance of Common Areas
The association manages shared spaces such as parking lots, outdoor areas, building facades, and landscaped areas. Keeping these spaces clean, safe, and visually appealing is essential to maintaining a professional and inviting environment for businesses and customers.
The association must ensure proper cleaning, regular maintenance, and prompt repairs when necessary. When common areas aren’t properly maintained, tenants will complain as they can potentially lose customers. This is because poorly maintained buildings tend to scare away customers and visitors.
2. Enforcement of Rules and Regulations
A commercial association enforces rules regarding property appearance, signage, and the use of common areas. For example, restrictions may govern how storefronts display signs or use outdoor space. Rules and regulations help ensure uniformity, appeal, and professionalism. Again, it all circles back to attracting customers and other businesses who wish to lease a space in the development.
3. Financial Management
One of the association’s main roles is managing finances. Tasks include collecting fees from tenants, creating a budget, and maintaining a reserve fund for future repairs or improvements. The association is also responsible for preparing financial reports.
Of course, financial management is one of the most difficult aspects of running a commercial association. Therefore, many associations seek the help of an accountant or association management company.
4. Vendor Coordination
The association is responsible for hiring and overseeing vendors who provide cleaning, repairs, landscaping, and security services. To avoid problems, it is important to select the right vendors for the job. Similarly, it is essential to manage contracts effectively to ensure smooth operations.
How is a Commercial Association Managed?
Managing a commercial association is no easy feat. Several moving parts are involved, and roles must be fulfilled to ensure success.
Here are the key contributors to commercial association management.
Board of Directors
Like an HOA, a commercial property association is typically governed by a board of directors. However, unlike an HOA, a commercial association’s board typically consists of property owners or business representatives within the association. In an HOA or condo association, the board consists of members or homeowners within the community.
The board is responsible for making key decisions about the property’s management and operations. It sets policies, manages finances, and oversees the maintenance of common areas. The association’s bylaws provide more detailed responsibilities and details on how board members are selected.
Governing Documents
The association operates under legal documents, such as bylaws and declarations. These documents outline the responsibilities of the board, the property owners, and the tenants. They dictate how the association collects fees and assessments, resolves disputes, and makes decisions.
Annual Meetings and Voting
Property owners within the association typically vote on significant matters, such as budget approval, rule changes, or electing board members. These votes often take place at annual meetings, at which the board also provides updates on the association’s operations and financial health.
How a Professional Management Company Helps
Many commercial associations hire a professional management company to handle day-to-day operations. These companies specialize in managing commercial properties and can offer various benefits.
Here are the aspects of commercial association management that a company can help with.
1. Day-to-Day Operations
A management company can handle routine operations like maintenance, financial reporting, and administrative tasks, allowing the board to focus on larger strategic decisions. They also ensure that common areas are well-maintained and that all essential services run smoothly.
2. Compliance and Legal Support
A professional management company ensures that the association is compliant with state and local regulations and can offer legal support if disputes arise. This is particularly important when managing complex commercial properties where local zoning laws or safety regulations may affect operations.
The Commercial & Industrial Common Interest Development Act governs commercial associations in California. The Davis Stirling Act used to apply to commercial associations, but that changed in 2014.
3. Financial Planning and Budgeting
These companies help the board create and manage budgets, collect fees, and plan for future repairs or improvements by maintaining a healthy reserve fund. Board members may choose to take on this job alone, but they often struggle with this part of management. Therefore, a management company comes in handy.
4. Vendor Management
Professional managers coordinate and negotiate contracts with service providers. They ensure that vendors are reliable, that work is completed on time, and that the services provided are of high quality.
5. Tenant and Owner Management
A management company can also handle tenant and owner management. This includes communicating with them, sending notices and updates, fielding concerns, and responding to requests or work orders.
Benefits of a Well-Managed Commercial Association
A well-managed commercial association offers many benefits to commercial building association members, including the following.
- Increased Property Value. Proper maintenance and professional appearance help maintain or increase property values, making the area more attractive to businesses and investors.
- Efficient Business Operations. When common areas and services are well-managed, businesses can focus on their operations without worrying about exterior maintenance or security issues. This, therefore, improves efficiency and customer satisfaction.
- Conflict Resolution. A well-managed commercial association can help resolve conflicts between business owners, tenants, or the association. This ensures smooth operations and avoids unnecessary disputes.
A Wise Decision
A commercial association plays a vital role in managing shared spaces, maintaining property values, and ensuring smooth operations within commercial properties. Given the mountain of responsibilities, most commercial boards opt to hire a management company.
Personalized Property Management offers expert commercial management services around Southern California. Call us at 760-325-9500 or email us at info@ppminternet.com for more information!
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