Page 8 - New York Cooperator January 2019

8 THE COOPERATOR — JANUARY 2019 COOPERATOR.COM MANAGEMENT M ost of the time, when a problem arises in a multifamily building or community association, the go-to solution is to get management on the phone (or text, or email). The refrain usu- ally goes something like: “Management will take care of it!” “They’ve seen this a million times!” “What can’t they handle?!” This isn’t a bad thing, of course; the vast majority of association managers are thor- oughly-experienced professionals with the know-how to solve just about any problem. But what happens when management is the problem? What happens when the associa- tion manager just hasn’t been performing? To whom can a building or association turn when its trusted adviser has lost that trust? Better yet, how can all of this be avoided entirely? Breaking Bad In order to identify and attempt to rec- tify management problems, it helps if the both the terms of a manager’s role and the board’s expectations are laid out explicitly from the outset. The more the manager’s job is precisely defined, the easier it is to say with certainty that something has gone off track—and the easier it will be to right the ship. And a hands-on board should be able to deftly spot when it is not receiving the service it’s paying for. “The relationship between a board and its manager is one of the single most im- portant relationships which an association must maintain,” says Michael G. Kreibich, a principal at the law firm of Kovitz Shifrin Nesbit, which has offices in Illinois. “If that relationship breaks down, it can have last- ing and widespread ramifications for the community. However, because of the regu- lar turnover of board members, this often gets overlooked. Management is counted on to guide the voluntary board on nearly all aspects of association governance, and the manager is entrusted with a great deal of sensitive association information and mat- ters. Therefore, regular and ongoing stock should be taken about the performance of an association’s manager. Communication about that performance, whether positive or negative, is necessary to manage the ex- pectations of the board. And those expec- tations should be discussed regularly and shared with management in a constructive way, allowing management to address any issues before they drive a wedge between the association and the management com- pany.” Of course there are some crystal clear signs that the relationship between associa- tion and management has soured, such as if the manager absconds with the associa- tion’s reserve funds, or if the manager as- saults a resident or board member. But in many cases, the relationship erodes slowly over time, and the board needs to be more attentive to pick up on the signs of trouble. “It’s hard to identify any one factor when things go bad with management,” notes Stewart Wurtzel, a partner with the New York-based law firm Tane Waterman & Wurtzel, P.C. “It can sometimes start as a slower response to issues, or monthly re- ports come later and later or not at all, or the board increasingly receives complaints from unit-owners and vendors that man- agement is not responsive. Perhaps you see late fees on invoices from vendors that you were not anticipating. “The most important thing to do when questioning the quality of your manage- ment services,” he continues, “is to have a heart-to-heart with your agent and, if need be, a discussion with upper management or the owners. Boards should regularly re- view management performance; there is no minimum period that a board should have to suffer with subpar performance. If the board finds itself doing things that it pays management to do, that is certainly an in- dication that the agent may be underper- forming. “If things don’t start to correct after a few conversations or meetings with upper management, it’s time to start document- ing problems and issues via written com- munications. When something is not done right, don’t just call to complain; send an email or a letter documenting the problem. When you start to write, always include the agent’s boss and head of the agency on the copy.” Embrace the Review A board should neither shy away from conducting a thorough, honest and open performance review of its management agent—nor should it be afraid to up the frequency of reviews should management underwhelm. Confrontation is never easy, but the association is a client of the manag- ing agent, and as such can set the terms. “For the first year of a contract, quarterly reviews are important,” says Stella Munro, a property manager with Barkan Manage- ment Company, Inc., in Bristol, Rhode Is- land. “Thereafter, every six months should be adequate, unless there are specific con- cerns. Both parties need to understand the terms of the contract and expectations of the board. “In my opinion,” Munro continues, “if there is any kind of unhappiness with site management, it should be addressed as soon as possible. This allows the manager to address any concerns. From a board standpoint, it should be worried if day- to-day items are not being taken care of; if management does not communicate well with residents; or if important deadlines are not met or if a manager is not retaining information. It is important for the man- ager to ask for feedback after a concern has been raised. Discussions should always be followed up in writing or with mail.” Contractual Concerns A carefully-considered contract is es- sential in establishing the relationship be- tween management and association. It can outline the terms of the manager’s perfor- mance, establish a board’s expectations, and give both parties an out should the fit prove to be poor. “Generally, whether an association has the right to terminate a contract without penalty depends upon the language of the ISTOCKPHOTO.COM Addressing Management Problems Communication, Mediation, Cooperation BY MIKE ODENTHAL