Page 1 - New England Condominium January 2022

What Size
Management
Company Is Best?
A Question of
Service & Scale
BY A. J. SIDRANSKY
Management Contracts 101
Negotiating Your Community’s Most
Important Contract
BY A. J. SIDRANSKY
January 2022
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There are elements of board service that can vex even the most committed, most intrepid
volunteer—and negotiating a building’s management contract is probably at the top of that list.
Vexing or not, however, the extent and quality of services available to your building community
hinges on what’s in that contract; managers and management companies are obligated to provide
what’s agreed upon in it—nothing more, nothing less. That’s why securing the appropriate terms
for the appropriate price is an essential component of maintaining a sound, properly functioning
building.
The Nuts & Bolts
“Management agreements are the basis from which managing agents assist and help operate
properties on a day-to-day basis,” says Mark Hakim, an attorney with Manhattan-based law firm
Schwartz Sladkus Reich Greenberg Atlas. “A management agreement is intended to be ‘soup to
nuts,’ providing a roadmap of the agent’s duties and responsibilities, including administrative and
financial matters. The agent is intended to be the arm of the board, generally handling all matters
during the term of the agreement, while the board continues to make the actual material deci-
sions. Some ministerial decisions, like purchasing of supplies and so forth, are delegated to the
managing agent so the board can focus on the bigger-picture items.”
And while “management agreements for co-ops and condominiums contain many boilerplate
provisions,” points out Dennis Greenstein, an attorney with the New York office of global law firm
Seyfarth Shaw, “the devil is in the details. There may be unique physical, financial, and staffing
considerations that should be considered and provided in the agreement to cover them.”
And while there are certain elements that are pretty much universal from one contract to the
next, “it’s not a standard real estate contract—every management company has its own form,” says
Scott Piekarsky, an attorney with Phillips Nizer in Hackensack, New Jersey. That being said, “items
that should be included and should be standard include, but are not limited to: the fee, whether the
fee may change and when, and by what fee schedule the client is to be charged for services outside
of what the contract specifies. It’s also important to define when the contract ends, whether it’s
cancelable with or without cause, and what the potential penalties for doing so might be.”
The State of the
Management Nation
How 2 Years of COVID Have
Changed the Profession
BY DARCEY GERSTEIN
Like just about every other occupation
on the planet, property management has
been profoundly altered by the coronavirus
pandemic and the changes it’s brought to
society at large, with many of the challenges
and stressors we’ve all had to face hitting resi-
dential management industry professionals
especially hard. Despite the proliferation of
apps and other innovations that have enabled
many tasks to be handled remotely, the fact
remains that for everything from physical
plant maintenance to apartment inspections
to resolving resident conflicts, property man-
agement remains a hands-on job. Adjusting
to the “new normal” of periodic lockdowns,
remote meetings, social distancing, and the
ubiquitous threat of a deadly virus has cer-
tainly taken its toll on everyone in the busi-
ness. But it’s also led to some silver linings and
unexpected bright spots along the way.
Going Remote, for Better or Worse
Depending on the industry—and who you
ask—remote work, virtual everything, and the
technology used to make it all possible have
been either a blessing or a curse (or a fair bit
of both). On the one hand, many can skip the
commute and work in their PJs, and compa-
nies can save on the overhead expenses that go
with a brick-and-mortar office. On the other
hand, many employees miss out on friendly
water cooler chat and the ability to conduct
business with colleagues in person.
Across the country, property managers
express the same duality in their experience,
finding that while platforms like Zoom and
Skype have enabled them to continue serv-
ing their client communities and keep things
operating despite restrictions on indoor gath-
erings and other face-to-face interactions,
there really is no substitute—and in many
cases, managers consider an in-person, on-
Co-op and condo communities come
in all shapes, sizes, and configurations.
They range from three-unit, wood-frame
houses to high-rise apartment buildings
containing hundreds of units, to sprawl-
ing townhouse communities in park-like
settings. Like these communities, firms
specializing in their management and op-
eration can be large or small, generalist or
boutique. The question for boards, share-
holders, and owners is, what type of firm
is right for you and your community?
Big vs. Small, General vs. Boutique
There are management firms that em-
ploy literally thousands of professionals
in all sorts of specializations, and small
firms that employ just a handful of spe-
cialists. Size does not dictate approach,
however. Some firms are more geared for
the efficient and effective execution of
basic, daily management tasks—let’s call
them generalists—and some take a more
tailored approach to provide each client
with exactly the experience they are seek-
ing. This dichotomy between generalists
and boutique firms has much more to do
with a company’s professional approach
than with how many people it employs.
“Large firms offer more redundancy
in terms of both services and personnel,”
says Stephen DiNocco, owner of Affinity
Realty & Property Management, based in
Boston. “Some clients view this as more
availability, in that there’s always some-
one there to cover their property’s needs.
That’s not to say that smaller, more spe-
cialized companies can’t do that, too, but
in general, larger firms have a larger client
base, so it makes sense to offer more ser-
vices. They may have an accounting arm,
an insurance arm, etc. In some markets,
they can also offer a slightly better pricing
structure.” However, he adds that bigger
companies are often more bureaucratic
and less flexible. DiNocco says that “cli-
ents also may be obligated to engage with
the ancillary services the management
firm provides. You will get ‘sold’ on their
in-house service providers, and may feel
you have to use them for those services.”
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Ellen Shapiro, an attorney with Marcus, Errico, Emmer & Brooks
in Boston, adds that once finalized, “management contracts are often
sacrosanct—very little can be changed.” She explains this to her clients
when they seek her expert advice before entering into a management
agreement. “Like any contract, though, the standard management con-
tract should contain start and end dates and financial considerations,
as well as the role and duties of the manager.” The expectations of the
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