Bill Morris in Board Operations on January 7, 2019
The market for them might be softening, but new condominium towers keep opening in New York City. And every time a new one opens, the buyers of apartments are faced with a challenge few of them have ever faced before: forming and running a successful condo board.
Patrick Wong is the exception who proves the rule. Wong, a banker, is currently serving on his second fledgling condo board. On the first board, he was the treasurer in a rental building that the sponsor converted to a condominium. In April, Wong closed on an apartment in a newly constructed seven-unit condo in Bedford-Stuyvesant, Brooklyn, where he’s now president of the four-member board.
“The first building was not run effectively,” Wong says. “You have to have board people who are business-savvy, who understand that a condominium association is a business. If the condo doesn’t remain solvent fiscally, it can affect the sales of units. You have to predict future costs, but the board wasn’t even reviewing the monthly financial statements. They were very laissez-faire.”
At his current building, Wong faced a different set of problems. For starters, the day he closed on his apartment, the unit was flooded from a leaky skylight in the upstairs apartment and rain runoff from the roof of the building next door. Since warranties were still in place, the sponsor was responsible for two rounds of major repairs to the floors, ceiling, and kitchen in Wong’s apartment.
“The board wasn’t even formed yet,” Wong recalls. “I used my prior board experience and started reviewing the offering plan and the bylaws. I tried to reinforce the need for cohesion. In collaboration with our management company, Impact Real Estate Management, we made sure that the sponsor finalized the certificate of occupancy and filed the paperwork for the 421-a tax abatement in a timely fashion.”
Perhaps Wong’s biggest coup was to create a spreadsheet to illustrate that common charges were artificially low – a sales ploy used by many sponsors. Wong was able to make the case that common charges would have to rise to cover basic amenities and mandated operating costs, including taxes, garbage collection, cleaning of the building, fire alarm and sprinkler inspections, and an accountant’s annual financial statement. His fellow unit-owners realized that paying higher common charges was a smart business decision.
The building is now fully sold, and the board is in what Wong calls “a transition period.” For condo boards in a similar phase, Wong offers some advice. “With brand-new buildings, you always have problems,” he says. “You have to think holistically. If something structural happens to more than half of the units, that’s when the board has to step in because it’s considered systemic. If a problem arises, fix it quickly and document everything. You have to pick your battles.”
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