Page 6 - New Jersey Cooperator January 2019

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. “Regardless as to the nature of the ven- dor, associations should review a vendor’s performance on at least an annual basis,” says Martin C. Cabalar, an attorney with Becker & Poliakoff in Morristown, New Jersey. “The determination to make a change should not be based on price alone – meaning that you don’t necessarily have to go with the low bidder if you are satisfied with the capabilities of your management company and, more importantly, the ser- vices which you are being provided. “The association-management relation- ship is very unique,” he continues. “There are many qualified and well-respected management companies out there, and of- tentimes, the decision to make a change has everything to do with the manager – not the specific management company. And the main signifiers that management may be underperforming will usually be pretty obvious. For example, perhaps the manager was very responsive to the owners and the board during the first year or two of their contract, but as some level of comfort sets in, so does some apathy. Maybe you recog- nize that the manager is routinely showing up late, or leaving the office early.” Contractual Concerns A carefully-considered contract is es- MANAGEMENT Addressing Management Problems Communication, Mediation, Cooperation BY MIKE ODENTHAL ISTOCKPHOTO.COM 6 THE NEW JERSEY COOPERATOR —JANUARY 2019 NJCOOPERATOR.COM continued on page 16