Running the day-to-day business of a co-op, condo or HOA of any size—be it a self-contained high-rise in Fort Lee or Jersey City or a sprawling, multi-building community in Sparta—requires not just a functional board, but a team of competent outside professionals. These professionals keep things running smoothly and efficiently for residents and boards—from the legal counsel who advises board members on their responsibilities under the law, to the accountant who balances the books and keeps tabs on the building’s assets, to the property manager who juggles board, resident, and municipal concerns.
Since the professionals working for your building are so essential, it’s critical that you as a board collectively choose the best people to work for you, whether as an attorney, accountant, or manager. Figuring out how to choose those people is the difficult part however, as there are hundreds of professionals in each market, all clamoring for your community's dollar.
While just about everyone in your association or building will have an opinion on who should be hired to do a particular job for the community, ultimately that's a decision made by the elected board. Board members get to figure out which management company to select, along with which accountants, attorneys and other professionals to hire, says Andrew S. Fortin, senior vice president of external affairs at Associa, the largest association management company in the country with offices nationwide, including two locations in New Jersey.
Bigger buildings with lots of complex amenities have to choose people to run the amenity team, along with the cleaning team and everyone else who helps support the community and its facilities. The bigger and more expansive a building, the more people needed to run it—and the more complicated the situation can become.
“The board should give special thought to how each professional level service provider is hired, and should engage in due diligence to confirm professional licenses, uncover any ethics complaints or other potential red flags,” Fortin says. “Some management companies offer pre-screened vendors that the association may choose to use if they wish. This can be a benefit to the board, as many of these vendors are pre-screened to ensure they are fully licensed and insured.”
In some jurisdictions, state law requires that any service to a community above a certain dollar threshold—say, $5,000 or above—must be obtained through a competitive, sealed bid process, Fortin says. But most buildings may find that obtaining a competitive bid for any significant job—even if it is less than $5,000—is a good way to do business to make sure that the building saves money and gets the best company to do the job.
Hey, Big Vendor
The most important vendor of all is the management company, says Frank Riggio, president of Country Pointe at Coram Homeowners Association, which is located in Suffolk County, New York. That’s because the management company is almost like the mother hen, and can take over making nearly all the other decisions if necessary, he says. Once you’ve found a good management team, they can help you figure out the rest of your professional team, and they usually have many suggestions and recommendations to make to the board, though the board always get to make the final say via a vote by the majority. “They will offer selections with regard to getting the right person you need,” says Riggio. “They should come with a Rolodex full of service providers.”
In the case of Country Pointe, they inherited the property manager when the board was formed in the community. The board decided that after the transition, they would give the manger 6 months to see how the relationship fared, and when the manager did a good job, they kept the company along, and now they’ve been together for 11 years. In that time, they have had two different property managers through attrition and retirement, but the company is the one that the association takes stock in, and they’ve remained loyal to it.
Once the condo board decides on its management company, the management can look for the other professionals via bids or via their own recommendations.
Riggio says that they rely on their management company for big and small issues, and the management company provides them with recommendations for service providers. “If we were looking for someone for security, they’d provide us with a few names, and we would put up bids for that and we’d take the lowest responsible bidder,” he says. “If it’s a smaller type of an item, we’d trust the vetting that the property manager has done. If it’s a larger item, we’d want to know more about the guys—who we’re giving our money to.”
On their end, management companies do their share of vetting.
“The last thing we do is go to the yellow pages,” says Alex Kuffel, the president of Pride Property Management with offices in New York and New Jersey. And while Kuffel's firm doesn't use the popular online reference site Angie's List, some other firms are beginning to tap it, and others like it, to help in their vetting process.
Kuffel says his company tends to rely on their own contacts that they’ve made via their history as a company. “We know who the good ones are, and we know who aren’t as good, and with any new up and coming professionals, it’s either generated through word of mouth or through other experiences through other companies,” Kuffel says.
Most professionals should be licensed—and this includes community managers, attorneys and accountants—but you should also check to see whether their licenses are current, and also to see if any complaints have been filed against them, Fortin says. Most licensing agencies or Bar Associations can provide this information.
Also, it is critical that the board ensure that vendors have the appropriate bonding and workers compensation policies in place to protect the association, Fortin says.
“I have seen instances where a community hires a local handyman to help with the landscaping, and the person does not have insurance or proper bonding,” he says. “The vendor is injured on the property or damages a home, and the association is on the hook for the damages.”
The professional dealing with the building must also click socially and professionally with the board, because they’ll be working together closely on personal and business matters.
“Anyone who deals with residential matters should have an outgoing demeanor, be pleasant and look professional,” Fortin suggests. “Professional association members are a good sign that the professional or his business support the industry as a whole, and educational credentials provide evidence of an investment in their skills set and also can provide recourse should the professional not live up to their obligations.”
For example, if they aren’t satisfied, a resident or board member can file a complaint against any manager with a professional designation issued by a trade group.
“But the bottom line is that the evaluation process should look at the totality of factors available that included professional designations, word of mouth, references,” Fortin says.
The issues usually start when there’s a problem with the partnership between a professional and the management, adds Kuffel..
“When it comes to accountants and attorneys, it could be a partnership opinion with the board and the management—the management could be experiencing a delay, and they could be telling the board about it,” Kuffel says. “At the end of the year, if the accountant isn’t making the time to come in, those are concerns that the management company would convey to the board because we need to be triple checked as well. There have been instances where we’ve seen difference professionals not do their due diligence, and our main goal is to appreciate the asset of the building we represent.”
If that happens, the board could try to fire the professional.
But they have to be wary of the contracts already in place before doing so, Fortin says.
A management company tends to have a contract and usually a contract has a 90-day notice, Kuffel says. Other companies have very strict and stringent agreements.
When it comes to accountants, annual contracts are signed, while attorneys usually have retainers that are done by a task-by-task basis, Kuffel says.
Even if there is dissatisfaction, it’s hard to break the terms of the contract unless extreme measures are taken. “The professional contract usually spells out the terms by which the contract should be terminated, and these terms should get close review prior to signing the contract,” Fortin says.
And then they simply have to trust that they made a good decision, and shut the door on the subject.
Danielle Braff is a freelance writer and a frequent contributor to The New Jersey Cooperator.