Page 1 - New York Cooperator January 2020

January 2020 COOPERATOR.COM Like so many other sectors of the economy, residential real estate manage- ment has changed and evolved since the turn of the millennium—and like those other sectors, much of that evolution is directly linked to the development and adoption of technology. Yet the essence of the manager’s mission remains the same: one of close interpersonal interac- tion. Technological advances may have sped up response times and analytics in many situations, but good, old-fash- ioned personal contact still remains the keystone to effective management. The Game Changer, for Better or Worse What seems to have changed the most in the last couple of decades is the man- ager’s work hours. Daniel Wollman, the CEO of Gumley-Haft, a management firm based in New York City, explains that years ago, his job—while not a tradi- tional 9-to-5 position—was more or less limited to regular business hours. Par- ticularly during the summer months, the pace of work would slow as many people in the industry went away for long peri- ods of time, often as much as a month or even the whole season. With the advent and adoption of email as the primary means of communication between man- agers and their client communities, that’s definitely changed. “Email changed everything,” Wollman says. “Thirty years ago, there wasn’t an internet. Now I get north of 300 emails daily. This isn’t a criticism, but we now communicate 24 hours per day, 365 days per year. Email has substantially changed my life. Where we were virtually dead continued on page 9 Despite the best intentions of board members, residents, and even managers, co-op and condominium properties don’t always run like well-tuned machines. Sometimes they hit a bump in the road...and sometimes they break down completely. The reasons behind such a breakdown can come from many directions, including financial mis- steps, physical plant problems, and interpersonal disputes. Money and Maintenance In any business, money is always a potentially huge problem—and co-op corpora- tions and condominium associations are no exception to this rule. Financial com- plications tend to come from two directions: One is financing, the other is reserves. Financing tends to be the larger potential problem for co-ops, where there is usu- ally an underlying permanent mortgage on the entire property that must be paid monthly. That said, there are condominium associations that undertake community- wide financing for any number of reasons that can make the whole community liable in the event of default. Reserves (or the lack thereof) are the other area where co-op and condo proper- ties may find themselves in financial distress. Like just about everything else, physical plants and common elements age—and if proper reserves have not been built up and maintained, buildings may find themselves in the financial weeds if a major physical component like a roof or boiler suddenly needs repair or replacement, or if a bad win- ter or other unforeseen event causes extensive damage to the property. According to Stuart Halper, vice president of Impact Management, a co-op and condo management firm with offices in Manhattan, Westchester, and Long Island, “A distressed property is generally the result of fiscal mismanagement. For example, The governing documents of a hous- ing development—be it a cooperative, condominium, or homeowners associa- tion—spell out the rules, regulations, and policies that all unit owners or sharehold- ers are obligated to follow as a condition of their residence. There are three main documents in this category: the bylaws , which contain provisions for director- ship, voting, transfers, fees, and so forth; the proprietary lease (or declaration, in the case of a condo or HOA), which de- scribes the rights and responsibilities of unit owners or shareholders as well as of the corporation or association; and the house rules , which are usually a compo- nent of the proprietary lease and spell out the day-to-day rules and regulations for safe and harmonious multifamily habita- tion. The Cooperator spoke to several at- torneys specializing in co-op and condo law to get their take on the state of these documents: how often they should be re- visited and revised, what the procedures are for making revisions, and common mistakes clients make when they do de- cide to give their governing documents an overhaul. Entering the Void Dean M. Roberts, Esq. is the Practice Group Leader for Real Estate at law firm Norris McLaughlin, P.A., with offices in Manhattan, New Jersey, and Pennsylva- nia. He reveals that bylaws are sometimes drafted with no amendment provisions whatsoever, leaving boards “in this legal void on what the procedure is for amend- ing \\\[them\\\].” In such cases, the first step is to come up with language that makes sense for the particular population and govern- ing body of the co-op, condo, or HOA in question. For co-ops, where a shareholder vote is usually required to make any by- law changes, “You have to come up with what you think is the right quorum—is it half? Is it a majority of the shareholders? Is it two-thirds? Or is it bifurcated?” by which Roberts refers to having a different quorum requirement for votes on specific topics, such as changing the flip tax. boards may choose to undertake the wrong projects at the wrong time. They may decide they prefer to renovate the lobby when in fact they should be upgrading their boiler. Or they may decide to put in solar panels when they should be converting from oil to gas.” And those aren’t just theoretical, Halper is quick to note. “These are real examples that we’ve encountered over the years.” The Challenges of Managing a Distressed Property Getting Back on Track BY A J SIDRANSKY The Evolution of Property Management Big Changes in the Last Decade BY A J SIDRANSKY Updating Your Documents Is It Time for a Facelift? BY DARCEY GERSTEIN 205 Lexington Avenue, NY, NY 10016 • CHANGE SERVICE REQUESTED continued on page 8 continued on page 11