Page 8 - New England Condominium January 2022

8 NEW ENGLAND CONDOMINIUM
-JANUARY 2022
NEWENGLANDCONDO.COM
Building EnvelopeYour
Restoration Specialists
Since 1981,
Alpha Weatherproofing Corp.
has served
building owners and property managers throughout
New England with comprehensive weatherproofing
and building envelope restoration services.
AFTER
BEFORE
•
Concrete Restoration
•
Façade Inspection & Repair Specialty Coatings
•
Masonry Restoration
•
Sealant Removal &
Replacement
•
Parking Garage Repair
& Traffic Coatings
•
Historic Restoration
•
•
Waterproofing Systems
•
Roofing & Roof
Maintenance
•
Structural Repairs
•
Emergency Repairs
617-628-8888 www.weatherproofing.net
•
Request a free consultation • View projects • Sign up for our e-newsletter
DAL
CPA
David A. Levy, CPA, P.C.
Certified Public Accountants
Areas of expertise in Condominiums
■
Cooperatives
■
Timeshares
ALL COMMON INTEREST DEVELOPMENTS
Call our office for a complimentary review of your financial needs
617-566-3645 or 866-842-0108
20 Freeman Place, Needham, MA 02492
DavidALevy_E4C_NEC_Sept15:Layout 1 10/7/2015 3:54 PM Page 1
SERVICING THE EAST COAST FOR OVER 30 YEARS
Member AICPA, CAI-NE
www.DALCPAPC.net
dlevy@dalcpapc.net
client—in this case a co-op corporation or a
condominium association—should be clearly
delineated.
What’s Typically Included
The scope of the managing agent’s or firm’s
work, including their compensation and any
caps on decision-making authority they may
have, must be included in the contract. “Man-
agement agreements are used to exclusively
appoint the agent to run and operate the build-
ing,” says Hakim, “from payroll, to transfers
and sales, to repair matters, to the supervision
of employees. For example, many boards will
allow agents to enter into contracts—for re-
pairs and supplies costing up to $2,500, say—
without the board’s involvement, though that
figure may vary depending on the size of the
building. Not having to stop and revert back to
the board for small decisions facilitates more
efficient and effective operations.”
Greenstein recommends that a contract
“designates the individual to be assigned to the
building by the management company,” along
with “a provision giving the board the right to
demand a change if it is not happy with that
person after [they’ve had] a reasonable time
and chance to correct any deficient behavior.”
Piekarsky agrees. “You will be assigned a
specific manager,” he says, “and you will like
or hate that manager—so you want to include
in your agreement the ability to interview your
replacement manager, not just simply be given
one—especially if there was a poor relation-
ship with the previous one. It’s also important
to consider that managing agents leave compa-
nies, and if your building is faced with that situ-
ation, you want to retain the right to interview
a replacement as well.”
“Another essential provision,” says Green-
stein, “is requiring the managing agent to notify
the board of violations placed on the property,
and of any condition in the building or prop-
erty which is known to be unsafe, or would be a
violation if noted by any governmental agency.”
Also, “a board should be very specific as to
what they want and need, particularly with re-
spect to inspections and site visits,” adds Piek-
arsky. “You won’t get more property visits than
what the contract dictates.”
The length or term of property manage-
ment contracts is usually one to three years.
Shapiro notes that in Massachusetts, the state
limits the length of management agreements
to no more than three years. Services can run
from basic, ‘no-frills’ type contracts to all-
inclusive. Fees for management are generally
flat, and not based on percentages of any kind.
As mentioned earlier, some contracts allow for
certain services outside the contract to be ren-
dered, but may charge the corporation or as-
sociation additional fees for those services. The
legal pros we spoke to for this article all agreed
that renewal provisions should definitely be
included in any management contract, but
should definitely not be automatic.
Parting Ways
Breaking a management agreement is
never an easy decision. “Before doing so,” says
Hakim, “we always suggest having a frank con-
versation with the upper management of the
company, and perhaps even having the prop-
erty manager reassigned. However, when it
becomes necessary, the exit agreement must be
reviewed to ensure that a timely termination is
sent. Generally, a building will have a right to
terminate upon 30- or 60-days’ notice without
cause. The building is generally only liable for
the costs to the date of termination. It’s quite
rare in a management agreement for a co-op or
condominium to see any penalties, but again,
the agreement must be reviewed.”
Greenstein points out that “breach of the
terms of the agreement, such as the agent act-
ing outside the scope of their authority under
the contract, mismanagement (or worse) of
funds, or willful default of the agreement,” can
lead the board of a co-op or condominium
to dissolve a management agreement before
its end. As to what legal or financial penalties
might be incurred, “someone can always as-
sert a claim against another person or entity,”
Greenstein says. “The board would have to
prove there was a breach or default and then
damages. And if successful, then they would
have to seek to enforce a judgment if obtained.”
Massachusetts regulations provide termina-
tion of an agreement upon 60-day notice, ex-
plains Shapiro, adding that “if the termination
is for cause, there is a 10-day notice require-
ment with an opportunity to cure.”
Piekarsky notes that disagreements over
broken management contracts rarely end up in
court. “Ninety-nine percent of the time, there
can be a negotiated resolution. Both manage-
ment and the condo board would have to hire
lawyers to go to court. Litigation isn’t cost ef-
fective.”
Proceed with Caution
When changing managing agents or firms,
say the pros, keep in mind that you’re seeking
a seamless—or near seamless—transition. Ha-
kim relates one not-so-seamless example that
demonstrates why it’s important to keep things
cordial:
“One of our condominiums terminated its
managing agent,” he says. “The old company
refused to assist in the turnover/transfer pro-
cess, and didn’t deliver the books and records
of the condominium to the new agent. So for
an extended period, the association was un-
able to access its bank accounts. Imagine a
condominium unable to pay its bills? Or not
having access to its own books and records?
We worked with the board and new manage-
ment, and the bank, and we were ultimately
able to assist in facilitating the transfer of the
accounts, and the books and records—but ob-
viously, it took the threat of legal action to do
so.” To minimize the chance of such headaches,
Hakim says, “Especially in this day and age of
digitized records, we recommend that a board
have real-time access to its files, and also that a
current board member always be a signatory to
any account.”
Management contracts are a critical cog in
the co-op/condo machine. Even if your board
includes members with contract negotiation
experience, it’s always wise to seek the advice
185 Devonshire Street, Suite 401, Boston, MA 02110
Quality Representation at Reasonable Rates.
(617) 988-0633
Contact Attorney Frank Flynn:
FRANK@FLYNNLAW-NE.COM
Flynn_E4C.qxp:Layout 1 12/8/14 2:30 PM Page 1
MANAGEMENT...
continued from page 1