Hiring a new managing agent is one of the most consequential and far-reaching decisions most co-op and condo boards ever make. It’s no time for guesswork. “The right managing agent can bring a sense of stability to the building, reduce the workload of the board, and reduce the financial risks,” Bonnie Reid Berkow, a founding partner at the law firm Wagner, Berkow & Brandt, tells Brick Underground. She offers the following 5-item check list.
Assess the building’s needs
“A good strategy is to draft an outline describing what it is you are looking for in a managing agent and prepare an interview as well as a list of documents you would want your candidates to provide,” Berkow says.
Take stock of the technology that’s being used in the building and how it will be integrated with the management company's technology, as well as how it might be improved. For example, you may want to implement a system for virtual conferences between management and the board, possibly also including relevant building staff such as the super.
Consider references and relevant experience
The managing agent must have sufficient expertise and experience relevant to your building. “This includes size of the building, number of apartments, complexity of infrastructure or equipment, as well as past and upcoming issues,” Berkow says. You need to match the capabilities and resources of the managing agent with the culture and needs of the building.
A managing agent should also be able to demonstrate experience in the oversight and management of construction, renovation, maintenance and repair projects from small to major.
When interviewing a management company, ask how an agent is assigned to a particular property and the maximum number of building units they will be asked to manage. “If an agent has too many apartments to tend to, they cannot provide adequate, prompt or efficient service to any of them,” Berkow says. You should also find out if the agent assigned to your building will have an assistant.
Understand back office capabilities, systems and technology
An important function of a managing agent is to maintain the books and records of the co-op or condo. “The accounting program must be robust, accurate, and auditable,” Berkow says. “Back-up procedures should be in place. As bills are received, there should be a system whereby bills can be electronically forwarded to the board for approval and timely payment. Good technology is critical.”
Gauge responsiveness, active listening and communication
Managing agents need to take the time to understand the board’s needs, concerns and ideas. “They must be able to clearly and effectively communicate with the board members and, when appropriate, the residents of the building, as well as staff, outside vendors, or contractors and professionals, such as attorneys and accountants,” Berkow says.
They must also provide immediate responses to inquiries, send out written communications to residents when requested (after review by the board), be present at the building to attend to day-to-day issues (or be available to the building through technology), and rapidly and effectively resolve emergencies. On top of that your agent should prepare monthly management reports, projections and issues for consideration to the board and regularly attend board meetings.
Berkow recommends the board meet the personnel, including the principals of the company, as well as the individuals who will have primary responsibility for your building.
Prepare the contract
Once you’ve selected the management company, your board’s attorney needs to prepare a written contract. “It will include provisions requiring that the agent keep separate accounts for the building with limits on pre-approved spending,” Berkow says. “It may require that the agent perform regular searches of government agencies, court records and other public records for open violations, defects in title, liens or other matters that may have a financial impact on the building.”
The board needs to understand the compensation terms and any services for which the agent may be entitled to additional payment, like processing transfer applications or alterations. You also need to consider the terms for ending the agreement as well as the procedures for transferring books and records if the board decides to terminate the relationship.
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.
A free digital resource for co-op/condo board directors. Published twice a month. Read now on all digital devices.