Shared facilities—such as parks, garages, recreational areas, or communal buildings—are an essential part of many residential, commercial, and mixed-use properties. However..when multiple parties share these spaces, determining how to manage them, allocate costs, and ensure fair use can be complex. Key challenges include determining how to allocate costs, ensuring fair access, and making decisions about maintenance and improvements.
To address these challenges, property owners and corporations often rely on different operating models to guide the day-to-day management of shared spaces. We’ll explore three common approaches used to manage shared facilities, each with its own unique set of benefits and considerations.
Three common approaches used to manage shared facilities
Committee-Managed Shared Facilities
One of the most common operating models for managing shared facilities is the committee-based approach. In this model, representatives from each party that shares the facility sit on a committee responsible for overseeing the operation and management of the shared space. This committee typically has a shared bank account, where all parties contribute their agreed-upon share of funds to cover ongoing expenses.
The committee is tasked with creating an annual budget for the shared facility, setting up maintenance schedules, and allocating costs for repairs and improvements. It’s a collaborative model where all parties involved have an equal say in how the space is maintained, how money is spent, and how decisions are made.
Charge-Back and Reconciliation Model
In some cases, especially where one party is tasked with the primary responsibility for repairs or maintenance, the charge-back and reconciliation model is used. Under this system, one or more parties are responsible for handling repairs, maintaining the facility, and covering certain costs. After the work is completed, the responsible party sends invoices to the other parties for their respective share of the costs.
This model is often used when the parties involved prefer to handle maintenance on an as-needed basis or if the repair work is specific to one part of the facility, such as a section of a parking lot or a building. Once the work is completed, the responsible party reconciles the expenses and sends the charge-back for payment.
Control by a Single Freehold Owner
In some cases, particularly when there is a freehold component involved, a developer or freehold owner may choose to retain control over the shared facility. Rather than creating a committee to manage the space or relying on charge-backs, the freehold owner has full authority over the shared facility, including decisions about maintenance, repairs, and budgeting. This model is often seen when a developer or declarant retains control over a facility after the initial construction phase.
The freehold owner is responsible for hiring management services, organizing repairs, and ensuring that the space is properly maintained. In exchange, the other parties—often tenants or condo owners—are expected to pay their share of the costs, but they have little input into the management or decision-making process.
Are you a resident, owner, property manager, or board member? Which approach best describes how your condo's shared spaces are managed? Let us know!
Operating Models of Shared Facilities in Condos: In Conclusion
The way shared facilities are managed can significantly impact the success of the collaboration between the parties involved. Each operating model has its own advantages and challenges, but the key to success is clear communication, transparency, and fairness in allocating responsibilities and costs. Understanding the operating model for shared facilities in your condo is key to how decisions are made, costs are allocated, and maintenance is handled. Knowing this can help you better navigate the processes and responsibilities involved in managing shared amenities.
Whether you’re managing shared spaces through a committee, charge-back model, or freehold owner control, it’s important to ensure that all parties understand their roles and that the financial obligations are clearly defined. With the right approach, shared facilities can be managed smoothly, leading to a positive experience for everyone involved.
-Stratastic Inc.
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