Time to Call It Quits? When Management Breaks Up With a Client Community

Time to Call It Quits?
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In a New York TImes “Ask Real Estate” letter from last December, a co-op shareholder lamented the sorry state of her 10-unit building: the board president was abdicating his position with no willing successor, and the managing agent was opting not to renew their contract, leaving the co-op adrift as far as leadership was concerned. The latter development is particularly striking, since unlike the board president - who was most likely volunteering a generous amount of time to tend to co-op business - the managing agent was being paid to keep a firm hand on the tiller.

All of this raises some questions. How bad can a relationship between a co-op or condo community and its management get before the manager decides to cut their losses and bail? What can a manager do to right the ship when things are particularly turbulent?

Fixer-Upper

More often than not, a manager will fight tooth and nail to rebuild a wobbly working dynamic with a client community.

“We have never given a building back due to board members’ failing to work together,” says Joe Kanner, owner of Quantum Property Management in Elmsford, New York. “When an issue does arise, we would sit down with the board and try to work out any differences, whether between members, or with us. We would make this an agenda item for a board meeting such that it could be discussed openly and action taken. I honestly see no reason why we would ever terminate a relationship with a client.”

Of course, not everyone is lucky enough to have a perfect track record. “You have to assess whether working for an association is profitable enough to warrant any elevated stress,” says Ellen Kornfeld, VP of the Lovett Group of Companies in New York City. “You’re dealing with individuals with their own issues and their own egos; some admittedly are not playing with a full deck. I had one association with which I’d been working 10 or 15 years, in all that time having never raised the fee. Eventually, I did so by $1,500 and they scoffed. The reality was I’d been doing them a service all along, but they didn’t appreciate the time I’d put in or the quality of the work, so I stopped. You have to determine whether it would be more beneficial to take on a different client. And if you do that, you’ll probably make the amount of money you’d have made had the former association just accepted the raise in fees, if not even more.”

“I’ve had two occasions that pushed me to break with an association, one of which was fairly recent,” relates Steven Greenbaum, Director of Property Management for the Long Island City-based Mark Greenberg Real Estate. “A nine-member board was plagued with factional infighting, with one in-group representing the younger members. and the other the older. Two entirely different mindsets where everything one group wanted to do, the other adamantly refused, and vice-versa. The younger group, for example, wanted new amenities and to embrace the latest technology and services. The older group preferred to add nothing and keep maintenance charges stable.

“Should the younger group have won a close vote 5-4, when we’d implement whatever their decision was, the losers would get apoplectic, asking ‘Who told you to do this?!’ or ‘How dare you do that?’ And we’d have to explain to them the significance of the voting process. We could never make that board happy. We spent so much time at meetings playing referee and dealing with nonsense politics, that the whole atmosphere became unconducive toward getting things done. The groups would rally shareholders against one another, write slanderous letters, screaming matches would carry out into the halls...Nothing we did seemed to mitigate any of this.”

Greenbaum also recalls a board asking his firm to do things that were most likely illegal. “Things that may have constituted fraud, or lying to the Buildings Department… it was crazy,” says Greenbaum. “We had no idea where money was going, since they kept tight control of their reserve funds. They were bidding on contractors without licenses. We tried repeatedly to advocate for transparency, but they never complied. Eventually we resigned, as did the board attorney.”

What Can Be Done?

As a board deteriorates, so goes the building. Thus, it can fall to management to remind the board of its leadership role. When those reminders go unheeded, as illustrated above, that’s when the management-board relationship can sever.

Alex K. Kuffel, President of Pride Property Management, which has offices in New York and New Jersey, says he has seen many toxic situations in the 25-plus years his company has managed real estate.

“If a building is mired with bad decisions made by domineering board members, or the manager is unable to effectively do their job because of inconsistent or improper directives, I would do everything possible to realign the situation,” Kuffel explains. “Sometimes that means working with a board to develop a unified objective. In some cases, chaos abounds on many fronts and it takes some holistic evaluation to determine whether a common denominator can be found among the physical, political and/or financial problems afflicting a building.”

Mike Odenthal is a staff writer at The Cooperator.

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Comments

  • In my coop at Sherwood Village B Inc we have a similar situation but the building manger is acting in his interest as if they are doing the coop president a favor. The Board president violated the coop by law by setting up meting with the coop management First Choice with less than the required board member participation.with 2board member absent for a quorum the president and the management rep make up their own agenda and even conduct interview of accepting new shareholder to the cooperative. What an insult? Our coop president was elected in a murky situation and then took over the as if the coop belong to her. 2 members received the same amount of vote one decided to let the other one in for the on year slot then one year become 2 1/2 years and no one is saying a word because management is securing their pay check . The bid system is not working management brought their own bid board is ignorant as we the shareholder are spending good money for inferior work. Management was told not to get involved in building politics they did exactly what they were told not to do.This management company is a rip off the coop president mad a deal that is favorable for our coop she has no clue in management and on how to manage people Therefore the shareholder is paying the price. Most coop management does not know about the proper disciplinary system on how to discipline a worker the only they keep mentioning that 32 BJ . All of them has that weakness on how to proceed with a good disciplinary system.At the next seminar in April 11-2019 some of us will bring up the issues for discussion.