The words communication and community share a common root. It comes as no surprise, then, that the success of communities depends on effective communication between board members, managers, and residents. In multifamily residential communities like co-ops and condominiums, effective communication is a crucial component in achieving optimal results and operations. Lines of communication between boards, managers, and owners are the nerve system of the community.

Transparency

Dan Wollman, CEO of Gumley Haft, a real estate management firm based in Manhattan, sums it up neatly: “Effective communication is all about managing expectations,” he says. “It’s about how you can best communicate what people should expect, and what you’re going to deliver to them. Our business is about managing expectations—there’s no difference between boards and residents with respect to this.” Communications between board and resident, management and board, residents and management should be clear, easily facilitated, and transparent.

“We advise our boards to remain transparent to the ownership,” says Scott Wolf, CEO of BRIGS, a real estate management company located in Boston, Massachusetts. “We recommend they have open board meetings, so residents can listen and participate. We also recommend that meeting minutes and basic financial information be posted monthly on their website or web portal. That way, the owners can’t say they don’t know what’s going on. There’s overall better communication when things are done in a public forum—and then the board can switch to a private executive session when it discusses things like arrears and other confidential information.”

Best Intentions

“When we interview with boards for new management contracts,” Wollman explains, “communication is always at the top of their priorities list. They want to communicate. They understand how important transparency is to the success of the community. They want to have a newsletter, for instance—but often there’s not enough going on for every month, or even every quarter. There’s simply not enough activity that needs to be disseminated to the shareholders or unit owners 12 or even six times a year.”

Zach Kestenbaum is the CEO of BuildingLink, a supplier of software applications to residential buildings. Much of their product is designed to increase the effectiveness of management for residential properties. “In terms of communications, our general approach is openness and transparency wherever possible,” he says. “The reasons behind that are twofold: One is pure efficiency. If you are proactive in communication, you can address a concern or a question once, instead of a hundred times. In addition, there is also the nature of the relationship between board and residents—the trust that exists in the building. It’s very important for managers and boards to be proactive in managing that relationship as well. You can think of it like a brand. What is the brand we want the building to portray? When you are proactive, when you invite feedback and respond in a timely fashion, it leaves a positive impression for residents. It builds an environment of trust.”

Online services such as BuildingLink provide multiple options for communication.  While newsletters can be a great way to communicate, as Wollman mentioned previously, they may not be viable on a monthly or bi-monthly basis. Online services such as BuildingLink provide accessible digital libraries of documents, building policies, and so forth for residents, as well as bulletin boards. “The library component is a really important place for documents of all kinds,” says Kestenbaum, “for governing documents and monthly items as well. It’s a perfect source for a new resident to become savvy about their building’s documents and policies—but it must be kept up to date. We also provide email blasts, which are used very frequently for building service updates, etc., and channels for residents to connect back and send messages directly to management or board members, or to get contact information for special contacts.”

Lines of Communication

Instead of appealing directly to board members if there’s a question, complaint, or service request in a building, “residents should be writing to the management, if they have a manager,” says Wolf. “If management can’t address the question without board feedback, the manager will inform the board of the problem and they will discuss it. Their response should then go back to the resident through the manager. Regardless, every request should get a response. We’re not here to please everyone,” explains Wolf, “but to provide answers. We make recommendations, but the board makes the decisions. When a board is unresponsive, we put them on notice. My client is the board, but it’s a sticky position to be in. Management gathers data, the board makes decisions.”

Privileged Information

Clearly, there are some issues that should remain the private domain of the board.  Problems involving labor issues, unit owner conflicts, and individual residents’ financial issues fall under this purview, unless they involve the building as a whole.  “We had a hoarder in one building, and that can be a safety issue,” says Wollman.  “We want to be thoughtful about what information we send out to the other residents. We try to minimize the risk and apply remedies, legal and otherwise, to alleviate dangerous situations. It’s where business concerns cross personal issues.”

Of particular concern for boards is protecting residents’ personal financial information. No one wants their personal financial problems broadcast to the entire community—and in many cases, it’s illegal to do so. Boards must be particularly careful with respect to arrearages and health issues. Guarding personal information is as important as community transparency, and the line between them, while thin, must be absolute.

If residents feel their board is too secretive or unresponsive, Wolf says they should articulate those concerns to their management. “We will try to resolve the problem.  If not, owners can reach out to the board directly. If it’s still unresolved, we will outline to the residents how to change the board. We tell them to run for the board.  If you don’t like the board, vote them out.” A truly problematic or negligent board may also find itself out of a manager; “Frankly,” says Wolf, “I will terminate the contract if a board is too difficult.”

Legal Considerations

The communication pitfalls board members and associations or corporations may stumble into vary state by state, and governing document by governing document.  For example, according to Ellen Shapiro, a partner with Marcus, Errico, Emmer & Brooks, a law firm based in Braintree, Massachusetts, “There aren’t any requirements for regular communication under Massachusetts law, but there is a requirement that upon request, certain accounting documents must be communicated by the board to the residents. A copy of financial reports shall be made available. It might be an affirmative obligation to send it out, but my opinion is that the resident must request it. There is a provision that a CPA review statements in properties of more than 50 units. The penalty attached to failure to concur with this provision is reasonable attorney’s fees.”

Dennis Greenstein, a partner with the Manhattan offices of law firm Seyfarth Shaw, cautions clients to be on the lookout for potential communication problem areas. “If there is an unsafe condition, for example, such as construction defects that could put the residents in danger of physical harm, and the board chooses not to disclose or fully disclose; there could be financial problems due to a theft by a board member or agent of the building which has put the cooperative, condominium, or HOA at severe risk; there could be a gas leak or a similar dangerous condition that is being concealed—if the board members are found to have committed acts which are deemed to be exclusions under the building’s insurance policies, they likely will be denied insurance coverage to defend them from claims, and not be indemnified under policies that otherwise would have covered them under their directors and officers and other insurance. In such event, the board members also would likely not be covered by the indemnification provisions of the bylaws of the cooperative, condominium, or HOA. This would include not covering fines, penalties, and legal expenses for findings of such breaches of law.”

In the broader picture, clear and effective communication is the best policy for co-op and condominium boards. Transparency leads to a more cohesive community. At the same time, it is the board’s and management’s responsibility to handle sensitive information correctly both for the sake of the community as a whole and the individual residents.

A J Sidransky is a staff writer/reporter for CooperatorNews, and a published novelist. He can be reached at alan@yrinc.com.