New York's Cooperative and Condominium Community

Habitat Magazine October 2020 free digital issue

HABITAT

BOARD OPERATIONS

HOW CO-OP/CONDO BOARDS OPERATE

Teachable Moments: Finding Hidden Financial Revenue

in Board Operations on December 10, 2013

New York City

Dec. 10, 2013

 

Anton C. Cirulli
Managing Director, Lawrence Properties

When you have 87 years of management experience you become smarter just because you've already jumped eight decades' worth of hurdles, and you see everything through wise eyes. Because of this, we were able to reveal several crucial, undiscovered issues for a new client. For 10 years, individual owners were benefiting from improper wiring, and the building was paying for their electricity. We corrected the wiring and collected the money — all 10 years' worth. We also found an excess $12,000 in an escrow account because the bank held more money than was required. The lesson we teach is the importance of awareness.

 

Timothy Grogan
President, Grogan & Associates

We manage a 50-unit co-op where the sponsor had retained the commercial space under a master-lease situation. When we took over the property and were preparing the first year's financial budget, we found that the commercial rent was low. We then went back and looked at the master lease and recalculated what the rent should have been from the inception of lease up to the time that we had taken over the property. The net effect ended up being a $160,000 windfall for the corporation. (We calculated for six years, which is as far as the statute of limitations allows.) Following that, the additional rent that the corporation brings in has also increased because the base rent has been increased. This wasn't picked up by the building's accountants, the board or anybody else until we came on. The real lesson behind this is knowing how to address commercial leases and having commercial lease abstracts put together so that you know when your commercial leases are up, what escalation charges are out there, how to charge them, and when they need to be charged.

 

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