When a community association enters into a contract with a professional management company, board members may feel a sense of relief. After all, much of the burden of running the community's daily operations has now been transferred to (hopefully) capable hands, leaving the board more time to focus on members' own affairs. And in many cases, this is exactly how things play out: management does its job capably and efficiently, and board members feel the stress leave their bodies.
But it's also true that not every manager or firm is the correct fit for every association, and some managers are outright bad! A board that entrusts too much responsibility to a manager, and falls asleep at the wheel, may not notice things are awry until the association has veered wildly off course. In light of that, it's imperative that a board keep in close contact with its management, conduct regular performance evaluations, and be unafraid to speak up when things aren't done to specification. The more time spent in a deteriorating relationship with an unfit management company, the more difficult it will be to undo any damage to the community – even under a trustworthy new manager. So boards should know when it's time to cut their losses and seek something better.
Management Bona Fides
It helps a great deal if a board identifies and declares its expectations for a management company before entering into a contractual relationship with anyone. This gives both parties a clear idea of where their responsibilities lie, and what the expectations for the association are going forward. If benchmarks are consistently failing to be met, it becomes somewhat more clear where the problem lies.
“In my experience, a board will seek to part ways with their current management company because the board is doing all of the actual managing of the community itself,” says Ian Novak, Vice President and Director of Condominium Management Services with Draper and Kramer in Chicago. “Boards can and should expect management to have proper proactive communication with the community, accurate financial reporting that is delivered on time, and cutting-edge technology platforms that serve the community.”
Poor communication is often the reason boards cite when asked why their last management situation did not work out, notes Jason Keller, Operations Manager with Scalzo Property Management in Bethel, Connecticut. “I ask each potential client what led them to seek me out and entertain a switch in management, and nine times out of 10, the answer is a lack of communication and lack of follow-up on the part of their current manager or management company,” he says. “Oftentimes, this leads to the board taking a proactive role in the day-to-day operations of the association, and essentially doing the manager's job – which in turn leads to frustration and burnout for the board members, since their role should be to set policy and make decisions, not manage the association.”
“There are many different reasons or circumstances that may cause a board to seek a new management company,” adds Michael M. Kayam, Esq., Senior Counsel at Lasser Law Group in New York City. “Sometimes the reason is as simple as new people coming onto the board, one of whom has a relative, friend or former colleague who works in property management, and the board agrees to give that person an opportunity. But typically, we see boards seek new management when they feel that their current management company is not properly handling issues at the building, not communicating with the board or providing meaningful updates on matters, not completing tasks, and recommending or entering into contracts with unsatisfactory vendors or contractors. In addition, poor communication between the management company and the building's shareholders or unit owners can lead to community backlash or resentment toward the board, which in turn causes the relationship between board and management to sour.”