Any major change takes some getting used to and hiring a new management company for your co-op or
condo is no exception. Even though you're anxious to ring out the old, you can't help but be a little apprehensive about whether the new company will live up to your expectations. And no matter how meticulous you were during the interview and selection process, there's no way to be absolutely certain that the new company will be able to deliver the efficient and attentive service it has promised.
As you begin this new (and hopefully long-term) relationship, it helps to keep in mind that no transition is absolutely glitch-free. In fact, seasoned boards and management companies report that it can take up to a year before you're fully acquainted and working together at peak efficiency.
The M-Take-Over' Manual
According to Steve Osman, managing director at Metropolitan Pacific Properties, a property management company located in Manhattan, the board should ask prospective companies for their punch list, also known as a take-over manual. The punch list shows that the company has a sense of order. It's your first sign that the company would know what it's doing if hired by you, Osman explains. There's a certain order to how you have to do a variety of tasks including taking over all the accounts, communicating with the insurance broker for the building and handling individual tenants' histories. The new company should be offering its punch list to you. If not, just ask for it. If you don't get it quickly, they probably don't have it.
Those shareholders who aren't on the board, and who sometimes feel that they're out of the loop, would probably put communication at the top of the punch list. According to Heather Gross, a board member at a 250-unit Upper East Side co-op, some residents in her building were upset at the beginning of the recent management transition.
They had heard we were getting a new agent, she explains, but it would have been nice if the new company had sent out a letter to the residents or posted a notice in the lobby beforehand, alerting them to the fact that their invoices might be a little late due to the transition. When shareholders feel that they're being kept informed, they're more cooperative.
Getting an Early Start
The more notice you can give your incoming managing agent, the smoother the transition is likely to be. According to Steve Greenbaum, a principal of Mark Greenberg Real Estate Co. (MGRE), a property management company in Port Washington, New York, the time to begin ensuring a smooth transition is during the last month that you have the old company. We offer this month free, Greenbaum explains. Let's say you terminate your management company effective January 31, and give them 30 days notice. During that month you basically have a lame duck management company. They probably won't be wanting to do any proactive work. There might even be a little animosity.
MGRE uses this month to get things up and running. According to Greenbaum, the board should meet their on-site agent as early as possible to ensure a good match. The second the board has that inkling that they don't feel comfortable with the managing agent, they need to let the owner of the company or their account executive know. The new management company also needs to become educated about the buil ffb ding's policies and house rules. This is a good time for the board to rethink policies or institute new ones, Greenbaum says. We also go over the board's immediate and long-term priorities. If there is a good understanding of what is expected, the transition period should be blissful. There should be a big sigh of relief that whatever you weren't getting in the past, you're getting now.
Records Reflect Building Nuances
Each building is a unique entity with its very own environment, says Ken Lovett, a principal of John B. Lovett and Associates, Ltd., a property management company based in Whitestone, New York. Even two buildings that are right across the street from one another can have very different cultures. It may take an agent several months to grasp all the nuances, and a full annual cycle to become fully aware of how the building handles all situations, including seasonal ones. Some buildings believe in dressing up the lobby during the holiday seasons, Lovett says. Others don't.
Once the new company has stepped in, regular meetings with the board can help ease the transition; however, in some cases the board can't provide a detailed picture of all of the corporation's policies and procedures. Since the only history of the building is what's in writing, good record-keepingincluding board meeting minutesis essential.
When we get the records from the previous management company, we go through each folder and find a wealth of information about the building, says Lovett. You can expect problems if the old agent is slow in sending over all the paperwork or didn't maintain good files for the building. Unfortunately, managing agents change a lot and so do boards. We've been in situations where the board has said M-this is the rule for this,' but no one can remember when it became effective and it was never put in writing.
Another important tip that can help ease the transition (and something that all buildings should do, even if they aren't thinking about switching agents) is making a board member a signer on all of the corporation's bank accounts. This ensures that the board doesn't have to wait for the old management company to close the account and transfer the money out.
What we've seen happen on several occasions, Lovett explains, is that the board decides to change companies and then they have to chase down their own money. That should not be. Having a board member who is a signer can be especially helpful during the first month of a management transition in cases where the building's mortgage payment is due on the first of the month, but the building doesn't get paid by the shareholders until the 10th or 15th.
Records Held Hostage
The management transition that began last November at Heather Gross's co-op building has been going smoothly in most respects. But, unfortunately, the outgoing company has not been helpful. The changeover hasn't been a priority with them, explains Gross. We weren't sure if it was spite, or a reflection of the fact that our old company seems to be falling apart. The information needed by the new management company, including unpaid bills from the previous month, didn't come over in a timely manner so notices had to be sent to all vendors (including those that may have already been paid) asking them to submit any unpaid bills to the new managing agent.
According to Osman, you can have the corporation's attorney subpoena the missing records from the old management companyor contact the attorney general's office, a lengthy process that can take months or even yearsbut usually you don't have to go that far. Even if you get nothing, you can still put together what you need to get started within 48 hours if the board has saved a monthly statement from the old company. This document contains an enormous amount of information about the rent roll and monthly maintenance. This buys you some time until you can get more records from the old company or you can start from scratch.
Planning is Everything
Other co-op and condo residents feel t c99 hat planning is the most important element of a stress free transition period. According to Carmen Lee Shue, an Upper West Side board member and the president of Lee Shue Realty, Inc., a residential brokerage firm in Manhattan, the building usually knows in advance that next year it won't be renewing the managing agent's contract. Don't wait until then to select a new one, she suggests. Put together a small search committee as early as possible. The more research they do, the better. If you start early, you'll be better prepared when it's time to switch and the transition will go more smoothly.
Shue also stresses the importance of the board working with the managing agent until he's up to speed. She has found that it takes about a year to know the logistics of the building, but a six-month evaluation can be beneficial to both the board and the new agent. When you meet with him, tell him what you think. Is everything satisfactory? Are there any areas to focus on? Remember that the ultimate burden is on the management company, if the site manager doesn't work out.
Ms. Mosher is Associate Editor of The Cooperator.