New York's Cooperative and Condominium Community

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Chargeback Systems


March 26, 2010 — A fact of co-op and condo life: Your super and handypersons do odd jobs for your residents during regular staff work hours —little things, like hanging closet doors or installing an air conditioner. You probably forbid it, and then look the other way. So why not turn this fact of life into a fund-raising opportunity that also benefits both residents and staff?

How? By creating a simple chargeback system. It's not hard — but there are pitfalls you need to avoid. Here's what to do.

First, let's define what a chargeback system is and isn't. A chargeback system is a formal set of work orders and fee schedules in which qualified staffers do minor repairs and similar tasks within co-op shareholders' and condo unit-owners' apartments.

Fees are split between the worker and the co-op/condo, which generally puts its share into the operating account, says Brooklyn accountant Douglas Condon, who notes: "The board could charge a flat fee billed to [a resident's] account, or it could take a percentage, or it could even do a hybrid – the building gets a minimum fee, and then a percentage over that."

Typical jobs include hanging drapes, fixing door hinges and light switches, installing faucet assemblies, moving heavy objects, and dealing with sticky window frames and sashes. Generally not allowed: painting, plastering, oven or refrigerator repairs, and anything that could be construed as an alteration, which requires board approval.

Regaining Control

Since staffers doing odd jobs are "an unspoken part of the business," says Eric Lash, director of management at Alexander Wolf & Company, creating a chargeback system gives co-op and condo boards control over scheduling. It's also often safer for the building, since it reduces the chance of, say, a self-installed air conditioner falling out a window.

Sample Form 

What's a chargeback form look like?
View and download this actual sample
used by a New York City co-op.

For residents, says Lash, the advantage of having staff doing minor out-of-wall repairs (as opposed to in-wall, building-system work for which the co-op or condo is responsible) is "a reduced price as compared to the market, and the convenience of easier scheduling and communication compared with calling outside vendors."

"We're providing a service to the shareholders," says Anthony Giaimo, a property manager with Buchbinder & Warren. "And it makes a little money for the co-op."

Nuts and Bolts

The challenge is creating a chargeback system that's easy to operate, that addresses liability issues and has clearly articulated limits concerning what the staff can and cannot do.

The most common method utilizes a formal work-order form in conjunction with an a la carte menu of services and prices. "It's difficult to employ a chargeback system without some form of documentation," says Lash. A work order "details the services provided, the time and materials involved, and any purchases of material that need to be made."

Giaimo describes the system at one of his buildings in the East Village: "We have a [one-page] form, and it has a couple of little jobs on there with prices that the co-op assigned and that the super is able to take care of for the shareholders," such as minor plumbing repairs, air conditioner installation/removal, and window-guard installation, with a space for miscellaneous work.

Scope of Work

What kind of jobs should the staff take on? Something as simple as replacing a light bulb. Says attorney Steven D. Sladkus, a partner at Wolf Haldenstein Adler Freeman & Herz: "Many buildings have very high ceilings and the average person can't get up there to change the bulb," either because apartment dwellers seldom own high ladders or because the resident may have physical difficulty climbing. Small repairs can loom as major obstacles for older residents in particular.

Even for the more able-bodied, one thing demands professionally competent work: air conditiones. "Besides minor plumbing, etc., the most important item regarding this whole thing is the installation of the air conditioning units," says Giaimo. "Having the super install all air conditioning units benefits the co-op in the area of safety by insuring that they are installed correctly and as per code" with approved support brackets and the like to keep them from crashing to the sidewalk.

Next Page: Fees, Liability Issues >>

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