Page 14 - Nevada Cooperator January 2019

14 THE NEVADA COOPERATOR
—JANUARY 2019
NEVADACOOPERATOR.COM
Munro, a property manager with Barkan
Management Company, Inc., in Bris-
tol, Rhode Island. “Thereafter, every six
months should be adequate, unless there
are specific concerns. Both parties need
to understand the terms of the contract
and expectations of the board.
“In my opinion,” Munro continues,
“if there is any kind of unhappiness with
site management, it should be addressed
as soon as possible. This allows the man-
ager to address any concerns. From a
board standpoint, it should be worried if
day-to-day items are not being taken care
of; if management does not communi-
cate well with residents; or if important
deadlines are not met or if a manager is
not retaining information. It is important
for the manager to ask for feedback after
a concern has been raised. Discussions
should always be followed up in writing
or with mail.”
Contractual Concerns
A carefully-considered contract is es-
sential in establishing the relationship
between management and association.
It can outline the terms of the manager’s
performance, establish a board’s expecta-
tions, and give both parties an out should
the fit prove to be poor.
“Generally, whether an association has
the right to terminate a contract without
penalty depends upon the language of
the contract itself, and/or perhaps the
terms of the declaration,” says Dawn
Moody, Principal at law firm Keough
& Moody, which has offices in Chicago
and Naperville, Illinois. “I believe that a
management contract is one of the most
important contracts entered into by an
association. Because of this, that contract
should be reviewed by the association’s
legal counsel to ensure that its rights are
protected and that it does not enter into
a contract which exceeds its authority. By
way of example, if the association’s decla-
ration limits the length of a management
contract, the board does not have the le-
gal authority to enter into a contract for a
longer period of time.”
Almost any management contract will
allow for the managing agent’s services to
be terminated for cause, notes Wurtzel.
“The better documented the problems
are, the easier it is to prove cause,” he
says. “Being able to show that numerous
letters addressing a particular issue were
ignored by management helps as well. Of
course, the scope of the agent’s services
are limited by the terms of the contract.
If the contract does not require the man-
ager to solicit bids, you cannot terminate
them, or be unhappy with them because
they failed to do so.
“And, when signing the contract,”
Wurtzel continues, “make sure expec-
ADDRESSING...
continued from page 6
tations and obligations are spelled out
therein. If the agent tells you in its sales
pitch that you will get monthly reports by
the 15th of each month, put that in the
contract. If it’s important for the agent to
visit the property at least once per week,
put that in the contract. This way, the
failure of them to do so becomes a clear
violation allowing for termination if and
when it does not occur.”
“The initial review of the contract is
vital, as it will allow the parties to fully
understand their rights if or when the
relationship between the association
and management sours and cannot be
salvaged,” adds Kreibich. “All too often,
the board does not address this issue in
advance, because, during the honeymoon
stage with a prospective new manager,
there are no signs as to what might go
wrong. But once the contract is signed,
it’s too late. Therefore, a close review of
the termination provision is paramount
to properly protect the association in
case something goes wrong. Through its
legal counsel, the board should be sure
that any penalty provision be removed
and addressed. Ideally, the board should
be able to freely terminate an agreement
if they are unhappy with the services ren-
dered without penalty. That said, the goal
should always be to avoid the need to ter-
minate management by maintaining an
ongoing and regular policy of communi-
cation.”
n
Mike Odenthal is a staff writer at The Ne-
vada Cooperator.
“In my experience, the non-resident
board members tend to approach the op-
eration of the association as a business;
they are protecting an investment. And
that business should be financially stable
and sustaining. This type of board member
is typically not as concerned about funding
reserves, paying or adopting special assess-
ments, or borrowing funds as needed. They
will want the parking lot repaved, rather
than simply patching potholes; while resi-
dent board members, on the other hand,
may have more concern for day-to-day op-
erations, and how the enforcement of rules
and regulations affect residents’ daily lives.
They tend to be more in touch with smaller
maintenance projects that can have imme-
diate effect on those at the property, and
are more likely to want to keep assessments
lower – even when assessments should be
raised – as they may not possess that inves-
tor mentality.”
Ain’t Nothin’ Goin’ on But the Rent
Non-resident board members may see
their units as assets to be monetized. These
individuals are likely to want to rent their
apartments to maximize their investment.
“Many associations prefer owner-occu-
pied units, so in instances where conflict
arises, it’s typically between those who live
there and those who do not, but who want
to rent,” notes Marc H. Schneider, a part-
ner with Schneider Buchel LLP, a law firm
in Garden City, New York. “But there is an
obvious commonality there as well, as they
presumably all want to keep the property
at maximum value. So it’s not an automatic
conflict of interest. But disputes can arise,
because someone who rents their unit out
may not want to improve the building in a
way by which they can’t immediately ascer-
tain value, and they feel will only cost them
more in common charges or maintenance.
But they have to remember that when you
sit on a board, you’re supposed to take your
‘I’ cap off and put your ‘We’ cap on, and
make decisions in the best interests of the
entire building.”
“Interestingly enough, at least most of
the time board members are on the same
page regarding the running of the associa-
tion, regardless of their living status,” adds
Coleen Crawford, Owner of Desert Com-
munity Management, LLC, in Las Vegas.
“They aim to save money where they can,
and to keep the biggest amenity – whether
pool, spa, what have you – open for as long
as they can during the year.”
Of course, renters are entirely capable
of making viable contributions to the com-
munity themselves, as Mary Breedlove,
Manager of the Augusta Village Home-
owners Association in Plainfield, Illinois,
observes. “We had a renter in a commu-
nity who wanted to get involved, and was
appointed to the board – not elected, as
we did not reach quorum to run an elec-
tion meeting,” she recalls. “He was a great
asset because his comments and decisions
were not emotionally triggered, but busi-
ness based. After a couple of meetings, due
to his methodical approach, the rest of the
board became more likely to put their emo-
tions aside and operate the association like
a fine-tuned machine.”
Further Inspection
Occasionally, a non-resident steps up to
join the board based purely on necessity.
“In today’s age and time, we can’t get
homeowners to complete their proxies
to even hold an annual election meet-
ing, much less run for the board,” laments
Breedlove.
And Schneider notes that, in instances
where there are ample volunteers to serve
on the board, non-residents are likely not
going to express interest. “The problems
occur on a case-by-case basis more than
they do conceptually” when it comes to
non-resident board members, he says. “In
instances where there are problems, the
bad actor normally just gets voted out. And
the community is going to be aware that
someone doesn’t reside in the building, so
they will take that into consideration when
NON-RESIDENT...
continued from page 7
voting.”
Occasionally the conflict boils down
to perception, notes Gary M. Daddario, a
law partner at Marcus, Errico, Emmer &
Brooks P.C., which has offices in Massa-
chusetts and New Hampshire. “Sometimes,
when non-residents are elected to a board,
there is real split interest,” he says. “Other
times, it is something that the community
perceives to be a split interest. But in gen-
eral, it just seems to be human nature that
people will treat something they perceive
as a home differently than they treat an in-
vestment.”
And communication issues can arise
when a board features members who aren’t
residents. “The biggest concern I have had
is when too many of the board members
are out of town at the same time in event
of a meeting,”says Crawford. “The owners
in attendance will be upset. That said, be-
cause of technology, board members can
and do conference call in to address own-
ers and conduct their board meeting. This
has worked out very well. Then, when the
board members are all in town, we’ll sched-
ule a workshop or a walking inspection of
the property.”
Regardless, non-residents are certainly
eligible to run for the board, unless the
association documents specifically pro-
hibit that. “Some argue that, if elected by
the community, the concern ends there,
because the people have spoken,” says
Daddario. “But I believe that it depends on
the circumstances. In any event, if a com-
munity finds [non-resident board mem-
bers] to present a problem, amendment
of the governing documents presents a
straightforward solution. If the amend-
ment passes by requisite vote of the owners,
then residency can become a qualification
for serving on the board.”
n
Mike Odenthal is a staff writer/reporter for
The Nevada Cooperator.
the old and new guard. For example, com-
mon areas that were once only accessible
during a fixed window of time during the
day may have those hours extended due to
increasing demand.
“An older population might put a clos-
ing time of, say, 9 p.m. on a playground
that isn’t used much,” says Brucker. “But if
there’s an influx of kids, [that might need to
change]. 16-year-olds, for example, aren’t
going to be happy with a basketball court
curfew in the summer. They’ll want more
access to the common areas, and you’ll see
those rules change.”
This also applies to gyms and fitness
rooms, which are notoriously loud while
occupied. An older resident in a nearby
unit may want to close up shop at 6 p.m.,
but the young professional who’s not even
in the building from 8 a.m. to 8 p.m. is like-
ly to protest. And an older demographic
AMENDING RULES
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