Most co-op and condo boards that hire managing agents, rather than manage themselves with in-house staff, are reasonably satisfied with them. After all, the managers are presumably trained and experienced professionals.

But now and then, a building or development wants to change its management company, or else its individual manager. What happens then? It could be a sticky situation.

There are several possible reasons why a building might want to change managers. One might be that new people come onto the board who have had links to particular managers in the past. Another might be poor service and cutting corners on the part of the current manager. Yet another could be the suspicion of wrongdoing—financial records missing, for example.

“If you have a to-do list and nothing changes, month after month after month, and the list keeps on growing, there’s a problem,” says Greg Carlson, executive director of the Federation of New York Housing Cooperatives and Condominiums (FNYHC) and president of Carlson Realty in Forest Hills. Other reasons given by Carlson include not getting callbacks and being ineffective with the residents. “The manager may not have the necessary public relations skills,” he adds.

The desire to change can also reflect the particular step in the co-op or condo’s evolution. For example, Basil Capetanakis, a veteran Bay Ridge real estate man and former property manager, has served as a sponsor for many co-op conversions. “When we change management in the beginning,” he says, “the sponsor does it. By law, after five years, we give up management, and the owners hire their own management company.”

What if the shareholders, in the case of a co-op, or the unit owners, in the case of a condo, want to keep the same management company but wants the company to change the individual manager? When this happens, says Mona Shyman, vice president of FNYHC, “the management company will try to accommodate them [the board] rather than lose the account.” She also says that a board can dislike a particular manager, but be satisfied with the company’s “back-office work.”

“If you’re having trouble with your manager,” adds Carlson, “call the director of management [for the company] and ask to have a conversation. Maybe you’ll give them a chance to straighten the manager out. You try that a couple of times. If all goes bad and nothing seems to be accomplished, [tell] the owner or director that you want to change your manager.”

Here’s what one head of a management company says. Jonathan Klein, president of Wentworth Property Management in Brooklyn, says, “We have our managers fill out a very extensive questionnaire and [give us] background information on every property. That immediately gives us an advantage on any internal transfers. Our company works in a team approach. Besides a building having an agent assigned to them, we also have an involved overseeing vice president, and a complement of other staff to assist the special needs of our clients.”

This translates into the fact that if an internal transfer does have to occur, it can go more smoothly—particularly if there’s the same supervisor for the two managers. As to why a board would prefer to have another manager, it could be something as simple as personal style, or chemistry.

And, of course, changes also happen because some particular managers decide to leave their company, or, for internal reasons, are reassigned to another building.

Switching Managing Agencies

Now, to the more difficult of these situations: switching managing agencies. Each board has its own reasons for doing so, but there are certain precautions buildings should take—they shouldn’t hire a new manager just because he or she is “a friend of a friend.” They also shouldn’t hire a new management company just because it will cost less than the old one.

One precautionary step that professionals recommend is talking to board members of other co-ops in the neighborhood. Also, remember that different management companies have different emphases—some may be strong on computer skills and record-keeping; others may be strong on people skills.

“You can have two identical buildings, but they both have different needs,” says Carlson. You have to know yourself: Do I need a management company with strong financial skills? Do I need one with a lot of capital improvement and construction skills? Do I need someone with good resident relations skills because all the people in my building are crazy and very demanding?”

Each company, Carlson says, will say that “they have it all,” but that’s clearly not so.

Here’s another comment, this one from Stephen Elbaz, vice president of the New York Association of Realty Managers (NYARM) and president of Brooklyn-based Esquire Management Corp. A small building, he says, should look for a small company. If a small building decides to go with a very large firm, he says, it will typically be placed with a “very junior person” and not be well represented.

Finally, of course, a board should talk to its accountant or lawyer before it takes such an important step. And also, the company you eventually choose should have a presence nearby, not 50 miles away.

There are also books on the subject, such as How to Choose the Right Management Company for your Residential Property by Leslie Kaminoff, the chief executive officer of AKAM Associates. The book has a section on the 40 most important questions one can ask when contemplating a change in management.

And finally, interested board members can avail themselves of the resources of trade groups, whether it’s NYARM, the Real Estate Board of New York (REBNY), FNYHC, the Council of New York Cooperatives and Condominiums (CNYC), or another organization.

The Transition

Say you’ve finally found a new management company you really like. What kind of notice should you give your originally management firm?

That’s usually covered in the contract, say professionals. Some typical times are between 30 and 60 days. Elbaz believes that a shorter time, such as 30 days, is better, since it would give the outgoing management company less time to commit mischief, such as “lose” important documents.

Thankfully, most management firms are reputable. Indeed, REBNY has written guidelines for the transition of a co-op or condo building from one management company to another, guidelines that members must adhere to.

The guidelines specify that files should be labeled and turned over in good order, and that both the outgoing and incoming firms should name one contact person to serve as liaison for the transition process. They also spell out which documents should be transferred immediately, which should be transferred five to 10 days before the actual transaction, and within 60 days.

Klein says that, in his experience, “We receive information [from an outgoing management firm] in two batches. Initially we sent out a letter listing the information that we require for a transition. The first step before we even take over management is opening bank accounts, setting up and verifying billing information, obtaining their federal tax ID number and mortgage information.

“The second batch of information contains all of the files, open invoices, legal cases and a check for transfer of funds.”

Of course, there’s also the matter of vendors or contractors that the building uses. How are they notified of the transition? In several ways: by making calls, by sending letters telling them who to contact now, by having meetings. In some cases, such as dealing with government-linked firms, you have to deal with the vendors in “their way,” by filling out their special forms.

Some management firms, says Capetanakis, will want to bring in their own vendors and suppliers. “Each management company,” he says, has a relationship with contractors, roofers, etc. But if the board is satisfied with the old vendors and suppliers, it can tell the management company, “We like our plumber, we like our carpenter.”

Bringing Them Up to Date

Dealing with the vendors and contractors is one thing. But say you’ve hired the new management company and they’ve been with you a month or two. How do you bring them up to date on the various issues that are important to your building or development?

The management company usually talks to the president of the board. The board also can call a special meeting to which the representatives of the new management company are invited—you wouldn’t want to wait until the annual meeting.

Klein says his company reviews the old minutes from meetings, and not only meets with the board, but also with the building’s lawyer and accountant.

All in all, says Carlson, when you take on a new management company, “It’s like a blank piece of paper. They need to know from the board, whether the president or the whole board, what the needs of the building are.”

Do shareholders or unit owners get to vote on the matter of who’s managing their building? The basic answer, according to professionals, is “no.” That’s the responsibility of the board.

However, that’s not to say that the owners have no input—there are several ways they can make their wishes known. They can petition the board. They can act through committees. And, in the case of a co-op, says Carlson, they can call for a special meeting if they get the signatures of 25 percent of the shareholders.

Checks and Balances

One final concern: What kind of checks and balances should the board have in reference to gaining access to money and accounts that the outgoing manager might have had? Does a building have to change all its accounting information?

Klein says all management companies you might use should be bonded and insured. At times, he says, when his company is taking over a new account from another manager, they might request that the board have its lawyer call the old company. If there is any real problem with the changeover, he adds, it might be in the change of software—“all management companies use a specific property management accounting software.”

You also should bring in your accountant to make a special audit around the time of the changeover, independent of the usual yearly audit. And, says Carlson, “after a certain point, for example the last 30 days, you can say that the outgoing manager can’t issue checks—only a board member can.”

“Our biggest thing,” says Capetanakis, “was changing all the checking accounts over. But in all the years I was in management, I never had a problem with that. The only problem I had was getting all the records.” If you have a serious problem, he adds, “get a lawyer.”

And remember—all the documents, records and so forth are really the property of the building, development or association—even if they’re in the possession of the management company. Also, much of this information has already been made public, such as the building’s financial statements and the minutes of board members. Breaking up is hard to do, but in most cases, by following some prudent guidelines, the transition should be smooth and beneficial to your building and your shareholders.

Raanan Geberer is a freelance writer and editor living in New York City.