As in any healthy marriage, an association board and its manager must be compatible or else the relationship will oftentimes end in a messy divorce, experts at a Community Associations Institute (CAI) Big Apple panel told an audience of New York board members and managers.

The seminar, which took place on July 21 in Manhattan, featured speakers Marc Schneider of the New York City and Garden City, N.Y.-based law firm of Schneider Mitola, LLP; Stuart Halper of Impact Real Estate Management Inc., and John LaGumina of the Purchase, N.Y.-based law offices of The LaGumina Law Firm, PLLC.

Schneider, Halper and LaGumina outlined what to look for in a new management firm, what should be in the contract, and how both sides can find common ground and get along with one another. They also stressed that management firms should take the interviewing process as seriously as co-op boards, that in effect the interview runs two ways: the agent is interviewing the board, just as the board is interviewing the agent.

Do Your Homework

The hiring of a new managing agent and the success of the relationship, “has to do with personalities,” said Schneider, “and ultimately with the person working with you.” Also, meeting the principals of the firm is not enough--a co-op board should request to meet with the managing agent that will be handling their building directly.

Schneider provided an example to drive home his point. “If you don’t trust them to pay a bill, they’re not the agent for you.” The contract between the managing agent and the co-op is, “like a pre-nup,” he said, and then outlined the steps a board should take to search for and vet a new managing agent.

Perhaps the most important step in finding new management involves observations. Halper suggested that board members take the time to thoroughly research prospective agents by visiting other buildings managed by the prospective manager; chatting with cooperators in those buildings; visiting the company’s office to see it in operation; and calling there, particularly at off times of the day or night to determine how responsive the managing agent is to its clients. 

He also stressed that it is imperative to ask “how many units, as well as buildings, the manager assigned to your co-op manages,” so as to assure that the agent is not too thinly stretched between the properties he or she manages. For example, there is a difference between managing eight buildings with 10 units each, and 8 buildings with 300 units each.

On the manager’s side, Schneider suggested that “not every building is worth the fee they want to pay you.” Halper added that “management firms are like baseball managers, they are hired to be fired.” There are many reasons why a board decides to change management. They can range from something as serious as financial malfeasance, to something as simple as a new board coming in and wanting to make a new start.

Put It in Writing

Marc Schneider of the law firm Schneider Mitola, LLP was also one of the featured speakers at the CAI Big Apple event (Debra A Estock).

Schneider, Halper and LaGumina all stressed that there are several components to a good contract vital to success and to protect both sides in the event of a dispute that could lead to an end to the relationship. They include a renewal clause, a termination clause, an indemnification clause, and a fidelity bond. Responsibilities should also be outlined in great detail including, but not limited to, when and how often the managing agent will be visiting the property and when they will be attending meetings. Halper added that in his firm “no agent attends more than eight two-hour board meetings a month,” as experience shows managers who did tend to burn out. 

On renewal and termination clauses, Schneider explained that these are at the bedrock of protecting the association. Notification periods for both should be long enough so that there will be a smooth transition to a new manager, or sufficient time to locate one should there be a parting of the ways. Alternatively, a management company should also have the comfort of knowing that if the synergy isn’t there, they can end the relationship with enough lead time for the board to procure a replacement.

Asked about the level of involvement a managing agent should have in making decisions for the building relative to the co-op board, Schneider said, “It’s great if the board lets the management manage, but there has to be some involvement from the board.” 

Halper added, “The role of the manager is to offer options based on the building’s needs.”

Clearly, locating and choosing the management agent that’s right for your co-op or condo is a complicated task. The same is true for management companies in choosing their clients. This process is not an exercise in speed dating for either side.

For more information about future CAI Big Apple events, visit www.associationhelpnow.com or www.bigapplecai.org.

A.J. Sidransky is a staff writer at The Cooperator and other publications.