Under New Management When You Have to Switch

Under New Management

For the most part, human nature is fearful of change, and that’s why people are more likely to stick with what they have and what they know, rather than explore new possibilities.

That’s definitely the case with condos and co-ops in regards to their management companies. Most of the time, a building will enjoy a long partnership with their company and individual manager, never even thinking about making a move. However, things do come up to warrant change.

Why Switch?

“The number one issue we hear when being interviewed by a new community is lack of customer service from their existing company is what’s prompting them to make a change,” says Nancy S. Hastings, CEO of MAMCO Property Management in Mount Laurel. “The number two issue is follow-up by management staff. There may always be some additional conflicts or expectation issues relating to facility maintenance but those are generally overcome with additional action.”

Bonnie Bertan, president of Association Advisors in Freehold, agrees. “There are various reasons that boards seek new management companies. The one thing we hear a lot about on interviews is customer service,” she adds. “Boards are becoming more conscientious about the needs of the homeowners and the need for open communication between the board and the owners via the management company.”

Also, if problem after problem arises and the building is no longer running smoothly, it might be time to consider making a change.

Changing Managers

Switching managers happens quite often and could be a really good thing to keep things running smoothly. A building may request a change as a first step before changing firms. There are many potential reasons for this, which could range from something as simple as a particular personality that doesn’t mesh well with the board, to slow response time on issues, or even a lack of knowledge.

“One reason we see associations wanting to change agents is that the manager lacks the ability to respond to the owners or board on pressing issues of the association,” says Brian Weaver, CMCA, AMS and director of business development for Wilkin Management Group in Mahwah. Another reason to consider a change, he says, is that the manager does not have the necessary support staff, like accounting and administration, to fully service the property.

Changing Managers

When a management switch is made, any good manager should be able to get up to speed quickly and without a board’s help. Putting basic information down on paper, and performing a walkthrough of the property should be enough.

“We’ve experienced the process of requesting and receiving association documents and files from most management companies. Some are cooperative and very organized in their process. Others are uncooperative and very unorganized,” says Weaver. “We always find a way to manage through the transition process with those that are not cooperative. However, I have found that the manager must be proactive in aggressively getting all of the necessary information and getting up to speed with the property issues. This shows leadership and will generally win a board over versus taking things as they come and eventually getting buried.”

Switching Firms

According to management experts, a board should look at several options prior to a vote on which firm to choose. They need to keep in mind why they are making the change in the first place in very specific terms and look to ensure those things are addressed upfront with the new potential firm.

“There are many models or requests for proposal (RFP) templates that should be obtained before switching firms. A CAI (Community Associations Institute) GAP report titled Choosing a Management Company is another good resource for members,” says Hastings. “An outline of community statistics, scope of work, insurance coverages and a proposal timeline should be included. Interviewing prospective companies is often boiled down to 30 minutes and a spreadsheet.”

“If an association is interested in bidding management services it should be done using a request for proposal,” advises Bertan. “The RFP should define the exact services that an association is interested in receiving. It should include questions about the management company and services they provide. The RFP allows for an apples-to-apples research comparison to be accomplished.”

A board should also ask for a list of buildings a potential management company has lost in the last 12 months and the reasons why, even perhaps trying to speak to buildings that have recently left that firm.

“I would recommend that a client ask about the company’s client retention,” advises Weaver. “If a company is in the habit of losing clients, something inside that company is not right. On the flip side, if a company has a very high client retention rate, their clients are generally satisfied enough not to be switching. If I were a board member, I would visit a company unannounced and see their operation without giving them any time to prepare. It will give you a good read on a company.”

Typically, the board will do their research and select their new management firm prior to providing notice to the original firm. Before making any change, they must review their existing contract.

When making a change in firms, there is normally a transition period that starts 30-45 days before the new company actually takes over an account with the transition probably lasting another 60 days into the official start of the relationship.

“Premade letters should be sent out to all vendors in advance along with notification to all local township, fire and police,” says Hastings. “This will be an ongoing process over the next few months. Reminders can be placed into check disbursements.”

From One to Another

Most management companies have specific people that handle all transitions from one firm to the next and it is usually a pretty smooth process. The new manager should first request a mechanical tour of the property with the outgoing manager.

“Confidential material can be transferred through a face-to-face meeting between management companies,” says Hastings. “This way any material can be discussed, reviewed and signed off on before transitioning.”

Records and contracts need to be turned over, vendors and suppliers need to be notified and the residents in the building must be informed.

“During a transition of documents, records and contracts are obtained,” says Bertan. “A checklist is provided to prior management to be sure all information is captured. Letters are sent out to the vendors advising them in the change of management. Follow up phone calls. Follow up phone calls are also made to be sure the change was recognized.”

The Right Reasons

As the saying goes, “If it ain’t broke, don’t fix it,” and that might apply to the situation as well. Sure, you want the best deal and best service possible for your building, but if you are already happy with what you have and are just making a move because of promises another company made, you could find out that they are not everything you thought.

Industry experts agree that a board should exhaust all options with existing management before making a change.

Unit owners don’t make the decision to change, but if a majority of residents feel a change is necessary and have good reason for the request, the board should listen and either work to correct the situation or vote to make a change.

“Before any change is made board members should actively solicit references from the prospective company, other community board members, vendors and professionals,” says Hastings. “I remember a very astute prospective group of board members that dropped into our office unannounced. They indicated they would be making their final selection based on how they were treated, the professionalism of the staff and the office facilities.”

Buildings don’t like change. But sometimes it is a necessary fact of life and business. Co-op and condo buildings don’t run themselves. They need a capable board/management team to make the important day-to-day decisions about the buildings they live in. And if that management relationship for some reason goes awry, it is up to the board to make a smooth transition to a new manager or new management company.

Keith Loria is a freelance writer and a frequent contributor to The New Jersey Cooperator and other publications. Staff Writer Christy Smith-Sloman contributed to this article.

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Comments

  • Any potential management company will tell you how good and efficient they are, however unless you take that in writing you will be stuck with the same problems and issues. This comes after changing 3 management companies in 7 years.