Page 11 - New England Condominium July 2019
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NEWENGLANDCONDO.COM  NEW ENGLAND CONDOMINIUM   -JULY 2019     11  ■    Depth of Knowledge & Experience  ■    Expert Advice  ■    Creative Approaches & Solutions  ■    Flexible Billing Arrangements  Thomas Bhisitkul  (781) 817-4611  Christopher S. Malloy  (781) 817-4604  Douglas A. Troyer  (781) 817-4605  Thomas O. Moriarty  (781) 817-4603  (781) 817-4900  30 B  RAINTREE   H  ILL   O  FFICE   P  ARK  , S  UITE   205  B  RAINTREE  , MA 02184  (617) 934-4550  265 F  RANKLIN   S  TREET  , S  UITE   1801  B  OSTON  , MA  02110  MTM is a full-service Condominium & Real Estate Law Firm  Experience,  Integrity,  & Drive Set  Us Apart  Uncommon Expertise for your Community of Common Interests  lenders for owners in a condominium.  “Financial mismanagement is another  whatever the maximum funds in their  edgeable coverage advisors are essential.  issue,” Mackoul continues. “Typically, it’s  custody is,” adds Mackoul. “Naturally,   the  board  who  makes the decision  how  the  management  firm  would  need  more  only one that almost ever gets the asso-  the association funds are handled – not  than this limit, since they likely manage  ciation substantial returns on money lost   the management firm, which takes di-  rection directly from the board. If there  multiple claims if   is an instance where a management firm  one individual were   mishandled association money, the board  stealing from mul-  could in fact sue the management. The  tiple associations.   management firm would then have to re-  port it to their errors & omissions (E&O)  limit is $1 million,   carrier, which, depending on what is be-  ing alleged, would defend the manage-  ment firm and provide a settlement or pay  require more.”  judgment if such was determined.”  The insurance limits recommended   vary by association. “The ideal minimum  come of financial   amount is at least one-fourth of the as-  sociation’s annual assessments,” suggests  board  or  manage-  Howes, “plus the average balance of the  ment level is an as-  reserve account – provided that the re-  serve account is under the custody and  the funds to keep up with  even routine  gets prosecuted,” adds Howes. “You can’t   control of the managing agent.”  “For a fidelity bond for a community  and owners/shareholders who’ve done  that money is long gone. There should be   association, three months of maintenance  nothing wrong can find themselves at  checks and balances for all accounting. I   fees is a minimum guideline, but realis-  tically they should maintain a limit of  having insurance and competent, knowl-  multiple  buildings  and  thus  could  see  is insurance,” says Jeffrey Diamond, an  als advise boards to check in with their   The standard E&O   but a larger associa-  tion could certainly   High and Dry  The worst out-  misdealing at the   sociation finding itself broke and without  holding the bag  – even  if  the  ‘bad  guy’   maintenance. Property values can drop,  get blood from a stone, and many times   a significant monetary loss. This is why  always tell clients to get two signatures on   “Of all possible remedies here, the  agers, as well as to always receive – and   attorney with Mar-  cus  Rosenberg  &  that all of the coverage and remedies   Diamond in New  mentioned above are in place. It would   York City. “Collect-  ing from the perp  – to request that insurance requirements   themselves is less  are spelled out explicitly in management   likely, even if they  contracts. There’s very little downside in   do end up going to  taking every precaution when it comes to   jail, which is why  preventing or recovering from theft or fi-  insurance is so im-  portant.”  “When there is   no  insurance  in-  volved, an asso-  ciation is often left   checks over $1,500, and to never give up   full control of the bank account to man-  review – monthly banking statements.”  Insurance and accounting profession-  insurance carrier annually to make sure   also be smart – even if not required by law   nancial malfeasance.   n  Mike Odenthal is a staff writer/reporter for   New England Condominium.   “If  there  is  an  in-  stance where a man-  agement firm mishan-  dled association money,   the board could in fact   sue the management.”             — Mary-Joy Howes

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