Page 6 - New Jersey Cooperator January 2019
P. 6

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

   4   5   6   7   8